Kentucky

Audit of ex-Jackson County sheriff finds deficits and poor bookkeeping

Denny Peyman
arrested the  judge-executive last January, citing findings of earlier audit.
Denny Peyman arrested the judge-executive last January, citing findings of earlier audit.

The former Jackson County sheriff who arrested another local official over audit findings did such a bad job of keeping his own books that the accuracy of his financial activities could not be verified, according to new reports.

However, auditors said they were able to determine that Denny Peyman had a $112,889 deficit in his 2011 tax account and shorted the fiscal court $27,312 in fees in 2012 and $49,013 in 2013, according to reports released this week by state Auditor Adam Edelen's office.

The audits covered Peyman's fee account for 2013 and his property-tax settlement for April 2013 to April 2014.

Findings from both will be referred to the state attorney general's office, according to a news release.

The audits found that Peyman did not properly manage the financial activities of his office, did not maintain adequate records on revenue and spending, and that the records he had contained numerous errors.

Peyman said in response that the county fiscal court restricted his budget so badly beginning in October 2012 that he could only pay one part-time employee besides himself.

That made it impossible to properly handle financial reporting and to have good controls over collecting taxes and keeping records, Peyman said.

Peyman said that the fiscal court deliberately hobbled him to make him look bad on audits.

Edelen's office, however, said having a small number of employees did not relieve Peyman of his responsibilities to comply with minimum accounting standards.

The audits echo earlier findings on Peyman from a term in which Peyman clashed with Judge-Executive William O. Smith.

Peyman lost in the May 2014 Republican primary and left office at the end of the year.

Under Smith, who also left office after 2014, the fiscal court accused Peyman of malfeasance for allegedly failing to repay much of a $600,000 advance from the county.

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

In January 2014, Peyman arrested Smith during a fiscal court meeting.

Peyman said he based the charges on a 2011 audit that cited problems in county finances, such as failing to pay employee payroll and retirement withholdings.

However, a special prosecutor quickly dropped the charges because of a lack of evidence of any criminal wrongdoing.

The audits released this week said Peyman owes the fiscal court $49,013 in fees he collected in 2013 but did not turn over, and recommended he pay it.

Peyman said in response that he did make the payment but that it was not properly noted in the fiscal court's books.

However, the auditor's office said the finding was based on Peyman's records, not those of the county.

Peyman also said he paid the county the $112,889 noted as a deficit from 2011, but that the county "intentionally misappropriated" the money.

Again, however, the auditor said that finding was based on Peyman's records.

One audit said there was a known deficit of $15,421 in the 2013 tax account of the sheriff's office. Peyman should pay that, the audit said.

In another finding, one audit said Peyman's office waived penalties and fees 183 times on 2013 tax bills, which the report described as excessive waivers.

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