Politics & Government

Kentucky’s courts got a scathing audit two weeks ago. Here’s how lawmakers responded.

The Frankfort offices of the Administrative Office of the Courts
The Frankfort offices of the Administrative Office of the Courts ddesrochers@herald-leader.com

Leaders of Kentucky’s courts system faced questions from a panel of largely friendly lawmakers Thursday, two weeks after a state audit found a “pervasive lack of accountability” within the Administrative Office of the Courts.

Throughout the hearing, lawmakers emphasized the importance of the separation of power in government and commended Kentucky Supreme Court Chief Justice John Minton and AOC Executive Director Laurie Dudgeon for requesting the audit, the first comprehensive external examination of the AOC since it was founded in 1976.

The audit, which was requested after the Herald-Leader and the Office of Attorney General began asking questions in April 2017 about how the AOC sold its surplus equipment and vehicles, found several examples of “unchecked leadership” within the AOC and Supreme Court that created a branch of government ripe for abuse.

At points, the lawmakers downplayed some of the findings of the report, including its criticism of spending $410 on personalized mint julep cups for members of the State Justice Institute Board.

“It seems to me nothing is wrong with that,” said Rep. Jason Nemes, R-Louisville, chairman of the Budget Review Subcommittee on Justice and the Judiciary. “In fact, it seems to me that that is desirable that when an outside group comes to Kentucky, that we advertise ourselves.”

Nemes, who is a former executive director of the AOC, also asked the toughest questions of the hearing.

In a moment that Dudgeon said felt “like a deposition,” Nemes critically questioned her about the two most controversial findings of the report: the private sales of surplus equipment and the decision to lease office space from the sons of a Supreme Court justice.

State Auditor Mike Harmon’s office found that the AOC held several employee-only surplus sales, often failed to report accurate inventory from the sales, and was inconsistent about applying sales tax to the items sold. Among those items, the AOC sold 28 surplus vehicles between 2012 and 2017. Seven of the vehicles were sold privately, including one to a Supreme Court justice.

A Herald-Leader investigation last spring found that one of the surplus vehicles, which was purchased for $1,250, was sold by Glen Nissan for $4,500 two years later.

Dudgeon defended her actions, placing the blame squarely on Scott Brown, the recently-fired administrator who ran and participated in the employee-only sales.

“I knew about the employee-only sales when the email went out to all employees,” she said. “That’s when I knew about it.”

The AOC has not demanded the return of any profits or property from the sales.

Dudgeon also defended the AOC’s real-estate contract with Supreme Court Justice Samuel Wright’s sons, saying that aside from a lack of documentation behind their decision to lease the space, the contract was legitimate.

“Had we engaged in exactly all of that, if we had the checklist and everything documented, without a policy from the Supreme Court that told me that was not appropriate, yes, I would sign it today,” Dudgeon said.

Minton was deferential. He accepted blame for the lack of clear policies and structure within the AOC and said they were already working to fix the problems. He pointed to an open records policy the AOC introduced last summer and a change in the leadership structure of the AOC as signs of progress.

“Ultimately it is my job,” Minton said. “It is my responsibility. And this whole discussion we are having today is my responsibility. And I need to tell you that I own it wholly and I intend to fix it.”

Both Democrats and Republicans said the findings of the report were serious but that they trusted the judicial branch of government to make the necessary changes.

Minton and Dudgeon said the courts system has accepted about 95 percent of the report’s recommendations, although Harmon said earlier this month he was disappointed they did not accept his recommendation to undergo an annual audit and create an independent ethics body to investigate complaints.

To date, Brown is the only AOC employee who has been fired because of the investigation. He filed a whistleblower lawsuit in June 2017, alleging retaliation for reporting possible law violations to the FBI and others.

State Auditor Mike Harmon says he was disappointed that the Administrative Office of the Courts did not agree to undergo an outside audit every year and ignored suggestions about forming an independent ethics body.