Auditors question more than $700,000 in spending by Laurel officials

State auditors have questioned the spending of more than $700,000 by Laurel County under a federally funded program to help counties prepare for a possible nerve-gas leak from Blue Grass Army Depot.

Among other things, the county spent more than $11,000 of the money for five black marble monuments in front of the local emergency-operations center, two featuring etchings of the county judge-executive and a former commander of the state National Guard, according to audits released Thursday.

That spending was "neither reasonable nor necessary for the operations" of the nerve-gas preparedness program, the audit said.

Luallen's office has referred findings in the audit to the FBI and the U.S. Department of Homeland Security, according to a news release.

Laurel is one of 10 counties that get federal money to prepare for a possible chemical leak from the depot.

In 2007, the county's emergency-management director, Brian Reams, served as purchasing director on a $1.8 million grant to buy equipment for the 10 counties.

A 2009 audit of fiscal 2007 found that Reams gave a business partner — a woman whom he later married — a contract for more than $530,000 to supply emergency-response trailers and generators.

Auditors initially questioned the propriety of how the county spent the entire $1.8 million.

They later received information showing more than $1 million of the spending was proper, according to the latest audits, but continue to question the $530,000 that went to Reams' partner.

The equipment the woman supplied did not meet the specifications in the grant, the audit said.

Laurel County Judge-Executive Lawrence Kuhl reportedly fired Reams after the earlier audit findings last year.

The latest audits cover fiscal years 2008 and 2009, ending June 30 of last year. With the earlier figures, the total questioned spending over three years is more than $700,000, according to a news release.

Reams also gave his partner and future wife another contract for more than $13,000 to supply and maintain equipment at the emergency center. That amount was excessive, the audit concluded.

The county also paid more than $10,000 in the 2008 and 2009 fiscal years to a locksmith company owned by a county deputy sheriff, the audit showed.

Auditors recommended a local board review whether those "related party" transactions violated the county ethics code.

In addition to not properly overseeing spending in the chemical-preparedness program, the audits listed a number of other financial and accounting problems of the fiscal court, such as paying insurance premiums for people no longer on the payroll; issuing purchase orders after the work they described already started; and inadequate controls over the jail canteen fund.

Kuhl said in responses in the audit that he had made a number of changes to improve the fiscal court's financial oversight and bookkeeping, and that he would make others.

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