Special Reports

Kentucky League of Cities exec expensed $80 at strip club

A Kentucky League of Cities executive charged $80 on a League credit card at a Las Vegas strip club that he and three other men visited during a June 2006 trip, according to expense documents reviewed by the Herald-Leader.

The League's chief insurance services officer, William Hamilton, reimbursed the League this spring for the charge at the Diamond Cabaret after the newspaper requested the organization's expense records, said Robin Cooper, the League's spokesman.

"It was bad judgement," Cooper said of the charge. "They saw what it was, and they realized it was an inappropriate charge and something that slipped through that probably shouldn't have."

Cooper said the four men — Hamilton, League Deputy Director Neil Hackworth, Mike Goff, the League's administrator of product development, and James Johnston, president of Collins Co., a Chattanooga, Tenn.-based insurance adjuster and appraiser — were in Las Vegas for an insurance meeting.

The men didn't initially realize the Diamond Cabaret was a strip club, Cooper said.

"They went in and sat down and got to looking around and figured out this wasn't the place they needed to be in. When they got up to leave, they were hit with a minimum charge," Cooper said. "That minimum charge was $20 a person."

However, photos of the Diamond Cabaret on the Internet that are dated December 2006 show that the word "nude" is above both sides of the front door in large, red neon letters. The club, which advertises its three-pole stage, is located two blocks off the Las Vegas strip.

On Hamilton's receipt, dated June 12, 2006 at 9:34 p.m., someone wrote that the purpose of the expense was for "dinner." The Diamond Cabaret, however, only offers a variety of snacks, not meals, according to its listing on Vegas.com.

Overall, Hamilton and Hackworth charged nearly $2,000 to the League during the five-day trip, including more than $1,500 to stay at the Paris Casino Resort.

Last month, the Herald-Leader reported that the League's three leaders, including Hamilton and Hackworth, spent $300,000 on trips and expenses in three years.

The $80 expense is the only known strip-club charge made by the League, which receives taxpayer money from cities in dues and provides them with a range of services, including insurance coverage, legal advice and financing for projects or equipment.

However, the League is the third non-profit or quasi-governmental organization whose expenses were examined by the newspaper that paid for bills at such establishments.

Former Blue Grass Airport officials charged more than $5,000 at a Texas strip club, the Cabaret Royale in 2004, while another former employee charged $168 to the airport at a Northern Kentucky topless bar in July 2006.

Officials at the Kentucky Association of Counties are trying to determine who made $890 worth of charges to two Louisville strip clubs and a Lexington escort service between May 2007 and February 2008.

Several of the charges appeared on a card given to KACo's 2008 president, Spencer County Judge-Executive David Jenkins, while one payment to Calypso Enterprises — the billing name for the Lexington escort service — showed up on Executive Director Bob Arnold's card.

The men disputed the charges with the credit card issuer, Central Bank, but the bank declined to refund the money. KACo board members have now launched their own investigation.

Meanwhile, three city officials who serve on the League's board said Tuesday that they were unaware of the strip club charge made by Hamilton.

"I have not seen that, no," said Bowling Green Mayor Elaine Walker, who serves as the League's second vice president.

Mayfield Mayor Arthur Byrn and Lexington Mayor Jim Newberry also said they weren't aware of the charge.

"There is no excuse for charging a visit to a strip club to a Kentucky League of Cities credit card," Newberry said. "The public is disgusted with this sort of conduct and lack of good judgment, and you can't blame them."

Cooper said the League's chief financial officer, Douglas Goforth, first noticed the charge to the Diamond Cabaret this spring as he was compiling expense records to comply with the Herald-Leader's request.

It may have fallen through the cracks initially because it was a relatively small charge, Cooper said.

"If it had been anything over $100 ... it would have been caught earlier," he said.

Earlier this month, State Auditor Crit Luallen announced that her office will audit the League and KACo. In addition, both organizations' boards have begun discussing ways to tighten oversight of travel and other expenses.

Walker, the Bowling Green mayor, said a task force of the League's board should begin meeting in the next month to discuss suggestions for such improvements.

She'd like the League to create an internal audit committee made up of elected officials and private business people who could review, in detail, the operations and spending of each of the League's programs.

"I just think it's a good idea to get differing viewpoints," she said. "And I think it would be helpful to have people who have specific business or accounting backgrounds."

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