Audit finds $37,000 missing from Harlan County sheriff's office

The Harlan County sheriff's office could not account for more than $37,000 in drug-buy money during the most recent audit of the office, state Auditor Adam Edelen said Tuesday.

During a surprise count of cash in Sheriff Marvin Lipfird's drug-buy account in July, auditors found $2. Comparing the cash on hand, checks from the account cashed at a local bank and the amount advanced to detectives to make drug buys, there was $37,668 unnacounted for between Janaury 2007 and the end of June 2012, according to the audit.

The sheriff's office receives money from drug cases and can use it for law enforcement purposes, including making undercover drug buys.

Lipfird said in a response to the audit that he had put in place a system to account for the money similar to that used by state police.

After auditors brought the issue of money unaccounted for to his attention, Lipfird said, he asked state police to investigate.

Lipfird said that before the discrepancy was discovered, he had fired an employee who had access to cash in the drug account.

The audit said Lipfird's office had not reconciled bank statements monthly, which would have better accounted for the money. Lipfird said he had fixed that issue and some other accounting problems noted in the audit.

The audit also said Lipfird's office had bought a 2004 Ford Explorer from the spouse of a former employee, paying $7,500 from the drug account. The former owner had registered the vehicle in January 2011 with a value of $2,700, the audit said.

Lipfird traded in the vehicle in January for an allowance of $3,000 toward another truck, the audit said.

Edelen's office said it would refer the matter to the county ethics board to see if it was a violation of the ethics code for Lipfird to buy the vehicle from the spouse of a former employee.

Lipfird said he had checked with the county attorney before buying the SUV and was told the purchase was acceptable if the price was at or below fair market value. The vehicle booked for more than $7,500 once repairs were made, Lipfird said.

Lipfird also said the former employee had disclosed that her husband owned the business where he bought the vehicle, so it was an "arms length transaction."