A suspended manager within the administrative arm of Kentucky’s courts system filed a whistleblower lawsuit Wednesday that includes detailed allegations of mismanagement and wrongdoing within the Administrative Office of the Courts.
Scott Brown, an AOC employee since 1999, is seeking unspecified damages for alleged retaliation after he reported possible law violations to the FBI and others, according to his 19-page complaint filed in Franklin Circuit Court.
The lawsuit spells out Brown’s concerns about a variety of alleged financial irregularities, including: the AOC’s decision to lease office space for a Supreme Court justice from a member of the judge’s family; a $1,200 monthly payment to a Supreme Court justice for travel expenses that allegedly was used to rent a condominium in Frankfort; the use of a particular heating and cooling company to perform millions of dollars worth of unauthorized maintenance at courthouses around the state; and irregularities in payments to court-appointed attorneys in a Northern Kentucky county for their work on behalf of vulnerable children.
The lawsuit says Brown was interviewed by FBI agents in May 2015 about his concerns regarding the heating and cooling company and that a federal grand jury issued a supboena to the AOC in August 2016 that requested all documents regarding a specific AOC employee and the maintenance company, among other things.
FBI Louisville Field Office Chief Counsel David Habich said the agency would neither confirm nor deny whether there was an investigation.
Leigh Anne Hiatt, a spokeswoman for the AOC, said in a written statement Wednesday that “the AOC rejects Mr. Brown’s whistleblower claims and the allegations in his complaint.”
Brown, who is executive director of the AOC’s Department of Administrative Services, was suspended earlier this year after Attorney General Andy Beshear’s office began investigating irregularities in surplus vehicle auctions held by the AOC. The Herald-Leader reported in April that Beshear’s office was investigating a 2014 “employees only” sale in which four surplus vehicles were sold for prices 70 percent or more below their value.
Hiatt said Brown’s behavior during the investigation “resulted in a loss of confidence in his ability to lead his department.”
“He was later notified of his impending termination following his suspension,” Hiatt said. “Mr. Brown’s suspension will expire on June 30, 2017.”
AOC director Laurie K. Dudgeon said Brown’s “impending termination is solely the result of a loss of trust and confidence in his management abilities. To characterize this as anything else is completely unfounded.”
Dudgeon declined to comment on specific allegations of wrongdoing in Brown’s lawsuit, but said his claim of being a whistleblower is without merit and the AOC will aggressively defend itself against the accusations.
“As head of the Auditing Services and Facilities divisions, it was Mr. Brown’s duty and responsibility to report these things to management, which he did,” she said. “Corrective measures were taken immediately to address the issues that were raised.”
Earlier this month, the AOC asked state Auditor Mike Harmon to review the agency’s financial operations.
“I’ve long been a proponent of transparency within the administration of the judicial branch,” Kentucky Supreme Court Chief Justice John D. Minton Jr. said on June 2. “Requesting this audit demonstrates our commitment to openness and accountability.”
The AOC administers the budget for the judicial branch of state government, is responsible for court facilities, maintaining court statistics, and administering personnel policies and payroll. It has an annual budget of $74.85 million
Brown’s lawsuit says that in early 2014, Brown informed his direct supervisor, the AOC’s deputy director, of “multiple concerns” about a manager in the AOC’s Department of Facilities. The suit does not name the employee.
Brown had discovered “possible illegal activity involving HVAC contracts where competitive bids were not obtained and preferential awarding of those contracts went to one particular HVAC company,” the lawsuit alleges.
Brown also said he informed the deputy director that the employee had improperly used a state-owned vehicle. The employee later resigned but Brown said he learned between May 2014 and May 2016 that AOC’s auditing department continued to identify unauthorized HVAC repairs in counties across the state and that many of the repairs were performed by a specific company, which the lawsuit does not name.
Brown continued to provide this information of suspected wrongdoing to the deputy director, the suit said.
Between January 2014 and December 2016, it was discovered that about $3.1 million in unauthorized HVAC repairs and $2.2 million in “non-preapproved repairs” had occurred across the state, the lawsuit alleges. Half of the unauthorized repairs were performed by the company which had been first identified and reported to the deputy director.
Brown said he also discovered other issues within the facilities department and reported them to the deputy director. They included no formal lease agreements in about 60 percent of leased space occupied by Court of Justice programs and a long history of noncompetitive bidding policies for all courthouse facility reimbursements statewide.
The suit said Brown also discovered and reported to the deputy director double payments on several facilities’ expenses and janitorial contracts that were awarded to a company whose owner had a personal relationship with the employee he had previously reported.
Dudgeon became less interested in Brown’s accusations and told him on several occasions she could not “deal with all this,” the suit claims.
Brown also alleges that Dudgeon was upset with him after he became involved in an audit of payments to court-appointed lawyers for children.
After being contacted in April 2014 by a circuit judge in Northern Kentucky who was concerned about irregularities in guardian ad litem fees, Brown said he conducted a “quick review of data” and told the judge his concerns appeared to be valid, according to the lawsuit.
Brown and the judge later submitted a request under the state’s Open Records Act to the state Finance and Administration Cabinet for all guardian ad litem payments in 2012 and 2013. The AOC’s auditors then conducted a county-by-county audit of the payments and turned over their findings to Dudgeon’s office, the suit said.
The AOC’s audit revealed that court-appointed attorneys for children in one Northern Kentucky county received about $3.6 million in a three-year period, or nearly 11 percent of the statewide payments during that time.
Brown alleges that, in early 2015, Dudgeon “was very upset with Brown for having been involved in the guardian ad litem audit and made it clear to Brown that AOC did not need to be involved in the matter.”
Supreme court justices
In November 2015, the AOC’s facilities department was asked to find private office space in Letcher County for a newly-elected Supreme Court justice, according to the lawsuit. The lawsuit does not name the justice, but Samuel T. Wright was elected that month.
The AOC published an ad and the only response was a home-office building owned by the justice. Brown and others reported their concerns about renting space from the judge to their superiors, the lawsuit claims.
The justice then sold his building to SWP Properties LLC, which is a company owned by the justice’s son, and the AOC leased the property, the suit said.
The lease payments included thousands of dollars for renovations and the AOC paid for a security system and furniture for the space, the suit said.
Wright could not be immediately reached for comment Wednesday afternoon.
Also, the suit said an AOC audit uncovered a recurring monthly payment of $1,200 to a Supreme Court justice for travel reimbursement.
The reimbursement, the suit said, was actually a monthly payment to the justice for the rental of a condominium in Frankfort. The lawsuit does not name the justice.
The suit also contends that Brown, following an inquiry from the Herald-Leader in April 2017, was told to gather information on past sales of surplus vehicles to AOC employees. Brown said he discovered “several errors” that occurred during the sales. Many of the same errors were later discovered by AOC auditors, he said.
Brown said that on April 11, he was interrogated by investigators from the state attorney general’s office about vehicles that he had purchased. During the interrogation, Brown was referred to as a “liar” and was threatened with comments such as “how much financial trouble are you in, is that why you did this,” according to the lawsuit.
Brown said he believes the interrogation was retaliation for his reports of suspected wrongdoing.
On April 12, Brown said he received a phone call from the AOC director and deputy director that he was being placed on leave for five days to see “what the AG’s office was going to do with him after the investigation was completed.”
Brown said a human resources director later told him that AOC leaders were scared about bad publicity regarding AOC’s policy of selling surplus vehicles to employees. The executive branch of state government does not allow employee-only sales.
On April 26, the human resources director met Brown in the McDonald’s parking lot in Lawrenceburg and told him he was being placed on indefinite unpaid leave and should retire or resign by May 15 or be fired, according to the lawsuit.
Brown said Dudgeon told him he was being fired because of the cars he had purchased and that he was facing potential criminal charges.
Brown is being represented by attorneys Tom Clay of Louisville, Mark A. Wohlander of Lexington and Thomas P. Jones of Beattyville.