The top official in Eastern Kentucky's most populous county accused the Kentucky Association of Counties of spending public money "like drunken sailors" and called for swift corrective action, including replacing those who made improper purchases.
Pike County Judge-Executive Wayne T. Rutherford e-mailed a three-page letter on Wednesday to his colleagues in county courthouses across the state that says KACo's executive committee officials "completely failed in their duty of oversight of the executive director" and of KACo's spending.
Rutherford wrote that he was particularly troubled by charges made on KACo credit cards to "gambling casinos (and) strip joints" at the same time the organization increased administrative fees on its insurance and finance products.
He also called on the non-profit organization — which provides insurance, project financing, training, lobbying and legal services to counties — to lower its rates and cut dues, which each county pays from tax coffers.
In a review of KACo's spending, the Herald-Leader found last month that the top five officials spent $600,000 on travel and other expenses in two years. In addition, KACo's 2008 president, Spencer County Judge-Executive David Jenkins, spent nearly $20,000 during his one-year term.
Among KACO's expenses were two $7,000 dinners, hotel rooms costing $450 a night, charges to two Louisville strip clubs and $445 spent with a Lexington escort service.
In a play on KACo's motto — "working for you in ways you never imagined" — Rutherford wrote that "these people spent money in ways I never imagined!"
One of Pike County's magistrates, Chris Harris, serves on KACo's executive committee as the second vice president. Harris and KACo President J. Michael Foster, the Christian County Attorney, have been outspoken in pledging reforms at KACo.
Harris said KACo leaders will listen to Rutherford and others as they look at ways to tighten oversight, but he said Rutherford seemed to be taking "cheap shots."
"What's behind that is you've got a man who's afraid that I'm going to run against him for county judge, and he's trying to use this against me," Harris said.
Rutherford didn't mention Harris in the letter. He did single out Jenkins, whose KACo-issued credit card was used to pay for many of the charges Rutherford found objectionable.
"Not only am I upset with the board of directors and officers, but also with the Spencer County judge-executive's poor judgment because this type of conduct tarnishes the image of all Kentucky officials," Rutherford wrote.
Jenkins admitted to making charges at the Belterra Casino in Indiana and at the Hooters Casino in Las Vegas, although he denied that the $937 he spent at the casinos was for gambling. Jenkins has disputed charging $620 at Louisville strip clubs and a Lexington escort service. But the credit card issuer denied KACo's request to refund the money.
Jenkins didn't return a phone call Wednesday.
KACo's general counsel and chief financial officer, Tim Sturgill, said in a statement that KACo officials "will respond directly to Judge Rutherford regarding his concerns."
Many local officials have praised KACo for its services, including insurance policies that often cost less than those offered by private companies. The organization must clean up any problems to preserve those beneficial programs, said LaRue County Judge-Executive Tommy Turner, who is a KACo board member.
"There is quite a sentiment to right the KACo ship," Turner said.
Some ideas, such as tightening expense oversight, "should be simple to implement," he said. Other moves "could involve changing some of the personnel," which will probably be a more complicated debate, Turner said.
State Auditor Crit Luallen announced this month that her office will investigate KACo's spending. In May, she released 28 recommendations to help non-profit boards increase oversight, which Rutherford said KACo's board should adopt at once.
Rutherford dispatched his letter Wednesday as county officials convened in Louisville for a four-day joint conference of the Kentucky County Judge-Executive Association and the Kentucky Magistrates and Commissioners Association. KACo Executive Director Bob Arnold and Luallen are among the officials scheduled to address the group on Thursday.
Rutherford offered 11 recommendations of his own to "bring this great organization back in line with its intended purpose," including calling for the resignation of officers or board members who participated in casino or strip club entertainment. He also suggested that KACo's board should "consider replacing the present director and chief financial officer."
One charge to the Lexington escort service Campus Cuties, which bills under the name Calypso Enterprises, appeared on Arnold's KACo credit card in May 2007. Arnold, who is legally blind, denied making that charge but conceded that his credit card statements weren't thoroughly vetted.
Rutherford also recommended that KACo release to the media a list of participants who were present at expensive meals, trips and entertainment events paid for by KACo. Receipts and credit card statements of KACo leaders rarely included a report of which officials or staff attended, the Herald-Leader's review found.
He called for further cost savings at KACo, such as canceling advertising during University of Kentucky sporting events and renting out the $12 million headquarters that KACo is building instead of moving into it.
"I have been concerned about KACo for some time," Rutherford wrote, addressing the county officials who serve on KACo's board. "I cannot overstate how strongly I urge you to use your position of influence as KACo board of directors and officers to bring this organization back to its intended purpose, that is one which serves Kentucky counties rather than its own leadership."
His letter ended with a quote from Galatians: "for whatsoever a man soweth, that shall he also reap."