Politics & Government

Audit finds financial problems in office of controversial Jackson County sheriff

Denny Peyman
has had a rocky term, including arresting the county judge-executive.
Denny Peyman has had a rocky term, including arresting the county judge-executive.

Jackson County Sheriff Denny Peyman, who arrested the county judge-executive earlier this year over audit deficiencies, faces some negative audit findings of his own.

Peyman had deficits of $112,889 in his 2011 fee account and $5,217 in his 2012 tax account and discrepancies in bank deposits, according to reports released Friday by state Auditor Adam Edelen.

Edelen's office referred the findings to Attorney General Jack Conway for possible further investigation.

The audits were the latest development in a term pockmarked with financial problems and controversy for Peyman.

The $112,889 deficit was first identified in an earlier audit, which recommended Peyman take steps to satisfy the shortfall.

Attempts to reach Peyman on Friday were not successful. He lost his bid for a second term in the May Republican primary and will leave office at the end of the year.

In addition to the deficits, the two audits released Friday found problems in Peyman's office that include poor record-keeping, failure to deposit some receipts as required and inadequate control over spending.

Peyman responded that several problems had been fixed. He also criticized the county fiscal court, saying it had not paid for sufficient help for him to handle the bookkeeping duties in the office.

However, Peyman did not respond to the finding about the big deficit from 2011.

In January, Peyman arrested Judge-Executive William O. Smith during a fiscal court meeting on charges that included tampering with public records, forgery and falsifying business records. Peyman arrested the county treasurer, Beth Sallee, on the same charges.

Peyman filed the charges without getting a warrant from a judge or an indictment from a grand jury, saying he based the charges on findings from a 2011 audit of the fiscal court.

The audit cited problems with how the fiscal court handled county finances, including failing to pay employee payroll and retirement withholdings and failing to spend some money as required by law.

A special prosecutor quickly dropped the charges, however, saying there was a lack of evidence of any criminal wrongdoing.

Smith sued Peyman in federal court for $5 million over the arrest. The lawsuit is pending.

Smith and Peyman have been at odds often. The fiscal court accused Peyman of malfeasance in one lawsuit, claiming he had failed to repay much of a $600,000 advance from the county.

The fiscal court ultimately took control of Peyman's finances and set up an alternative county police force. At the time he arrested Smith, Peyman had only one employee and was patrolling in a beat-up Ford Mustang.

Peyman gained some notoriety outside the rural county in 2013 when he vowed not to enforce any new gun-control laws he considered unconstitutional. At the time, there was a debate over tougher gun laws because a gunman had killed 20 students and six staff members at a Connecticut elementary school.

Related stories from Lexington Herald Leader