Politics & Government

$62,500 settlement reached in lawsuit alleging false arrest of Jackson judge-executive

Jackson County Sheriff, Denny Peyman. Photo Provided
Jackson County Sheriff, Denny Peyman. Photo Provided

A $62,500 settlement has been reached in a lawsuit that alleged the sheriff in Jackson County falsely arrested the judge-executive last year.

The settlement deal was reached Thursday following a mediation session, said Ned Pillersdorf, a Prestonsburg attorney who represents former Jackson County Judge-Executive William O. Smith.

Pillersdorf said Smith was in custody about an hour before being released on bond the day then-Sheriff Denny Peyman arrested him, so the settlement payment to Smith represents about $1,000 a minute.

"Hopefully, other sheriffs won't engage in similar publicity stunts," Pillersdorf said.

Smith was leading a fiscal court meeting in January 2014 when Peyman interrupted the meeting to arrest him and county treasurer Beth Sallee.

Smith and Peyman had been at odds for some time. Smith had been critical of Peyman's performance and said Peyman's failure to repay a loan from the fiscal court had caused financial problems for the county.

Peyman said the fiscal court forced extra costs on his office without giving him additional funding.

The fiscal court ultimately took control of Peyman's finances and set up an alternate county police force.

When Peyman arrested Smith, he said the charges were based on findings from a 2011 audit that found several problems with how the fiscal court handled finances, including failing to pay employee payroll and retirement withholding on time and failing to spend some money as required by law.

Peyman charged Smith with tampering with public records, forgery, falsifying business records, criminal facilitation, abuse of public trust, and taking part in organized crime through extortion or coercion.

Peyman filed the charges on his own, without obtaining a warrant from a judge or an indictment from a grand jury.

Peyman argued he had good cause to arrest Smith, but a special prosecutor from another county quickly moved to dismiss the charges against Smith and Sallee, saying he found a lack of evidence of any crime.

Auditing deficiencies don't necessarily involve criminal acts, the prosecutor said.

Smith sued Peyman in federal court, saying the arrest was based on an "unlawful and evil motive" to retaliate against Smith and humiliate him.

The payment will cover an award to Smith and fees to Pillersdorf.

Peyman did not admit wrongdoing as part of the deal, said his attorney, Jonathan C. Shaw.

Shaw said he could not confirm the amount of the settlement because it has not yet been signed.

Peyman's insurance carrier, the Kentucky Association of Counties, agreed to the settlement, Shaw said.

Both Smith and Peyman left office at the end of 2014.

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