City audit board approves legal action without holding a public meeting

Without ever holding a public meeting, a majority of the city's Internal Audit Board agreed last week to fight a subpoena with legal action.

Under Kentucky law, public agencies can meet in secret to discuss litigation, but they must first convene in a meeting that's open to the public and must later return to open session before taking any action.

Bruce Sahli, director of the internal audit division, canvassed three of the board's four voting members by phone before he authorized external attorney Terry Sellars to file a petition to block a subpoena from an Urban County Council investigative committee, Sellars said.

"They couldn't get together to vote on it, and the situation was urgent," Sellars said Friday.

Sellars said the board would meet publicly on Tuesday to retroactively approve the action.

"The very fact they'll meet Tuesday is an acknowledgment of the doubtful validity of what they did in the first place," said Jon Fleischaker, a Louisville lawyer who specializes in First Amendment cases.

Attorneys for the Herald-Leader sent a letter to Sellars on Friday, outlining the newspaper's objections and requesting a full vote in a public meeting.

Sellars said Sahli contacted internal audit board members Ed Lane, an Urban County Council member; Jennifer Burke, acting chairwoman of the board; and Linda Rumpke, the city's commissioner of finance.

Burke did not return calls for comment Thursday or Friday.

Sahli did not call audit board member George Myers because he had recused himself in a previous board meeting from discussion of the matter, according to Sellars.

Myers is the chairman of the council's special investigative committee, which is looking into a city employee's fraud allegations and how they were handled. The committee issued a subpoena to Sahli and the internal audit board for the fraud allegations and related documents.

Myers did not return calls for comment Friday.

Lane said the board had discussed the committee's subpoena at a meeting July 21, but the matter became urgent last week because Myers had spoken publicly about penalizing Sahli for ignoring the subpoena.

Sahli "had a basic legal right to respond to that," Lane said, "but he didn't want to do that without discussing it with the board.

Fleischaker, though, said he doesn't buy it.

"In my judgment, there's no emergency," said the Louisville lawyer. "They could have done this any time in the last two weeks, but they waited and waited. That's not an emergency; that's just bad planning."

The petition, filed Tuesday, appeared before Fayette Circuit Judge Ernesto Scorsone on Friday. A hearing was scheduled for next Friday.

Currently, the Internal Audit Board has four voting members because former chairman DeWitt Hisle resigned after questions were raised regarding his position as Mayor Jim Newberry's campaign finance chairman.

Sahli investigated the allegations made by Patrick Johnston, the city's director of risk management. Both Sahli and the city's external auditor, Mountjoy Chilton Medley, found there was no "material misstatement" of the city's finances due to fraud.

According to recent testimony, Johnston's allegations involved questions about the city's insurance procurement from the Kentucky League of Cities.

Numerous questions about the internal audit process have been raised.

On Monday, Logan Askew, the city's chief lawyer, said he had seen a heavily redacted version of the 2009 allegation, which he received under an open records request after being tipped off by Newberry adviser Joe Kelly.

The redacted version of the allegation contained Johnston's name. Johnston's job was later targeted for elimination as part of a broader reorganization of the city.

Newberry has called for Mountjoy to make the documents public and has said the investigative committee should be dissolved because Johnston told the committee he didn't accuse any individual of fraud. That issue could be raised as soon as Tuesday, when the full council holds a work session.

The council's investigative committee will meet on Monday.

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