Report of sex-toy business being operated out of state office was factor in firing, whistleblower suit claims

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A former attorney for the state Public Protection Cabinet filed a whistleblower lawsuit alleging that she was fired because she reported that employees were using state time and offices to operate online businesses, including one involved in the sale of sex toys.

Jacqueline Heyman, 55, of Lexington, alleges in the suit that two administrative support employees in the Insurance Legal Division were "abusing their positions by operating outside businesses during operational hours and utlitizing their office computers." One employee was engaged "in the sale of 'Pure Romance' sex toys, sensual enhancement items and premium lubricants," the lawsuit says.

Heyman was notified of her termination Aug. 31. The firing was in violation of the Kentucky Whistleblower Act, the suit says.

Cabinet spokesman Dick Brown had no comment Thursday on the complaint, which was filed this week in Franklin Circuit Court.

The Cabinet was served the suit on Thursday, "so our attorneys are looking it over, and right now it's too early to comment on these allegations," Brown said.

Shane Sidebottom of Covington, the attorney for Heyman, said there is an ongoing Executive Branch Ethics Commission investigation into allegations mentioned in the lawsuit. He said the Insurance Legal Division "is in charge of overseeing fraud and abuse and waste, and here they are committing fraud and abuse and waste."

Heyman's duties included managing, supervising and evaluating employees in the Insurance Legal Division, the suit says. She has been an attorney for nearly 20 years. She served as associate counsel to the chief justice of the Kentucky Supreme Court and deputy director/executive counsel of the Kentucky Administrative Office of the Courts.

On Aug. 10, Heyman told her supervisor that two employees were operating online businesses during regular business hours and using state resources to do that.

"They were approved to do this off-site and to make secondary income," Sidebottom said. "They were never approved to run a business on state facilities, on state computers, using state mailing to mail products out. They had stuff shipped into the office and shipped out."

One employee was approved to host Pure Romance "pleasure parties" on her time and in her house, Sidebottom said.

"But she started selling products online" in breach of her Pure Romance contract, Sidebottom said. "She was taking the products and then reselling them on Amazon at a higher profit in violation of her Pure Romance contract."

In doing so, the employee made the state "a facilitator of the contractual breach," the suit says.

Heyman also reported additional mismanagement issues related to personnel "intentionally trying to get employees fired without cause."

Also, Heyman reported that "there was widespread falsification of Commonwealth payroll time sheets by certain employees."

Heyman spoke with the executive director/general counsel of the Executive Branch Ethics Commission and disclosed all activities "she believed involved an inappropriate allocation of state resources and that constituted mismanagement, concealment and fraud."

Those disclosures alleged that her supervisor "was engaged in mismanagement of the Insurance Legal Division because he knowingly allowed rampant ethical violations and employee abuse of state time, policies, procedures and resources," the suit says.

Eleven days later, on Aug. 31, Heyman was called into a meeting and presented with a notice of termination. Heyman asked why she was being fired "but was told no reason would be provided," the suit says.

The complaint says her personnel file did not contain any indication that "any disciplinary actions, peformance improvement plans or similar corrective action had ever been taken against her due to unsatisfactory performance."

Heyman seeks a trial by jury, compensatory and punitive damages, reasonable attorney fees and any other relief.

Sidebottom has filed several whistleblower suits. In 2012, he won a sexual harassment case against the Fayette County Detention Center.