Special Reports

KLC card used at 2nd adult club

A state audit of the Kentucky League of Cities turned up a second charge at an adult entertainment venue on the credit card of the League's insurance chief, but a League internal review was unable to determine whether the charge was inappropriate.

William Hamilton, head of KLC's Insurance Services, told League officials he could not remember the evening in question, and the credit card receipt he turned in had no detailed information.

Hamilton and his wife, Denise, were in Reno, Nev., in December 2006 for a National League of Cities conference at Harrah's Hotel. According to the state auditor's office, which recently released an audit of KLC, Hamilton charged $76 at the Sapphire Lounge. The lounge serves food and has an "adult burlesque show" featuring the Sapphire Sirens: "They're enchanting, they're alluring, they're the ultimate tease," according to the Web site.

The Herald-Leader previously reported that in June 2006, Hamilton and three others said they mistakenly entered the Diamond Cabaret strip club in Las Vegas, accruing an $80 charge that was later reimbursed to the League.

Both charges were part of nearly $70,000 that Hamilton charged on his League credit card between 2006 and 2009 that State Auditor Crit Luallen described as having an unclear business purpose, inadequate documentation or being excessive.

Doug Goforth, the League's chief financial officer, said the League has reviewed the most recent charge brought up by the auditor but couldn't determine anything from it. The information will be presented to the League's executive board of directors later this month.

Goforth said that under new travel and expense regulations passed last summer, strip club charges or any charges without receipts would not be reimbursed.

Board Chairman Mike Miller, the mayor of Jackson, said he would reserve comment on the incident until the board retreat on Jan. 12 and 13.

At that time, Miller said, the board will review the 222-page audit released on Dec. 17, which details an array of spending, conflicts of interest and high salaries for League executives. Luallen forwarded the report to law enforcement authorities.

Former KLC Executive Director Sylvia Lovely announced last summer that she would resign following Herald-Leader stories about spending at the League. The audit concentrates on spending, salaries and perks for Lovely, deputy director Neil Hackworth and Hamilton.

Miller would not say whether current leadership of the League could survive the audit. The League is looking for an executive director to replace Lovely.

"I think we need to determine what kind of search process we're going to go through and go through that process," he said.

Executive board member Ed Burtner, the mayor of Winchester, said he did not know about the Sapphire Lounge charge.

"I think the issue of whether or not the present leadership will stay is one that will be addressed when the executive board gets together again," he said. "The board has an obligation to review the report in its entirety and take the appropriate actions."

Hamilton did not respond to calls for comment on Tuesday, but KLC spokeswoman Terri Johnson said that Hamilton had not reimbursed the League for the Harrah's charge because he was in Reno on business.

Other expenses incurred by Hamilton that are included in the audit with an unclear business purpose or little documentation are $858 at Tim Dudley Golf Sales in Bronston, $506 at the Pro Shop at the Rosen Hotel in Orlando, Fla., and $572 at Citronelle Restaurant in Washington, D.C., for two League employees.

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