Bourbon County

Military school property in Millersburg sold for $450,000 to Farmers Deposit Bank

The Bourbon County property where Kentucky’s only military academy operates was sold for $450,000 Thursday to a bank.

Farmers Deposit Bank submitted the only bid for the 14-acre Millersburg property where the U.S. Army Cadet Corps has offered some weekend and summer programs to youths. The school has been most commonly known as Millersburg Military Institute.

John Wilson, credit administrator for the bank, declined to speak about plans for the property. But Jay Whitehead, the school headmaster, said in a written statement that the bank planned “to evict us.”

The master commissioner’s sale in the Bourbon County Judicial Center took about a minute Thursday morning. A judge ordered the sale after the bank said the Cadet Corps had defaulted on two loans totaling $1 million.

The master commissioner’s sale came a week after the Cadet Corps filed a civil suit in Paris against Farmers Deposit Bank. The Cadet Corps alleges the bank breached its fiduciary duty and “unjustly enriched” itself.

In 2008, a Pennsylvania corporation called U.S. Army Cadet Corps took out a mortgage with the Deposit Bank of Carlisle. (In 2013, that bank merged with Farmers Deposit Bank of Cynthiana, which has banks there and in Paris and Carlisle.) However, the suit says the Pennsylvania corporation did not transfer legal title of the Millersburg property to a newly formed organization called U.S. Army Cadet Corps of Kentucky.

The suit says the Kentucky corporation “was deceived into being responsible for the obligations” of the Pennsylvania corporation. The suit says the Kentucky corporation was “induced into incorrect understanding that USACC-Kentucky had an ownership interest in the land” in Millersburg.

Nevertheless, the Kentucky corporation made payments on the mortgage “as if it were the owner of the property,” the suit says.

U.S. Army Cadet Corps of Kentucky says it has paid more than $500,000 on notes associated with the property. In addition, its says it has made $600,000 in improvements to the property, including the demolition of a residence hall, the addition of a fire-suppression system, and abatement of asbestos on the property.

In a written statement, Whitehead said, “Farmers Deposit Bank was happy to take our $7,500 a month, month after month, year after year to the tune of over $500,000. ... But now, eight years later, they are saying we have never owned the property, and are trying to evict us and sell it.”

Whitehead said the issue “is not about the money. We believe in the over-100-year-history of the property. We want to keep it to train our cadets and to also leave a legacy for not only the citizens of Bourbon County but the citizens of the commonwealth.”

Wilson, credit administrator for the bank, had no comment Thursday on the litigation. The bank has not filed a formal response to the suit.

The school opened in 1893. In the 1940s and 1950s, it had an enrollment in the hundreds, but that had decreased over the years.

The school has been in receivership for two years after the state attorney general’s office began investigating allegations of mismanagement.

The school ceased its boarding school operation in December 2014 because of low enrollment. Since then it has held camps for high-school youths.