, Corbin, KY

Local News

January 8, 2014

‘Lax controls and oversight’

Report indicates mayor, others exerted ‘undue influence over financial activities’

CORBIN — By Becky Killian / Editor

A special state examination of the City of Barbourville “found lax controls and oversight” resulting in “financial mismanagement and abuses,” according to a report from Kentucky Auditor Adam Edelen.

The report indicates Barbourville Mayor David Thompson and others exerted “undue influence over financial activities” and likely benefited personally as a result, Edelen said.

Edelen said the audit will be referred to the Attorney General, the Kentucky Department of Revenue and the Cabinet for Health and Family Services.

The audit began last summer after five of six city council members sent a letter to the auditor’s office in March requesting the audit.

The audit, which looked at certain financial activities from July 1, 2007, through Aug. 31, 2013, resulted in 28 findings and recommendations that criticized the city’s financial practices and oversight.

Noted among the state’s findings were the city’s practice of giving checks to the mayor or Street Superintendent Jim Baker for distribution to contractors and employees.

The state found 183 instances where checks totaling $38,585 were co-endorsed by either the mayor, his wife Wendy Thompson, or both Thompsons. Those checks were either cashed or deposited into the mayor’s personal bank account. Of those checks, $27,001 were payroll checks for the city’s water park employees.

From 2007 through 2012, Wendy Thompson served as the manager of the water park. She resigned from the full-time position in order to manage her own day care facility.

The state’s report noted the mayor explained he and his wife cashed checks as a convenience for the park’s employees.

After the report’s release, Thompson reiterated the check-cashing practice was a convenience he and his wife offered to the park’s employees, many of whom were young and did not have bank accounts, which would have allowed them ready access to free check cashing. He said he and his wife did not charge for this service.

In criticizing the check-cashing practice for employees and vendors, the state said it gave “the appearance of commingling public and private funds.”

“It indicates the possibility that payments to some individuals were not solely for the benefit of the city,” Edelen said in a press release.

The report indicated water and ball park concession income and expenses weren’t reported to the recreation board as required and the mayor and his wife did not provide that documentation to auditors upon request.

“The public has no idea how much money these park concessions made or how it was spent,” Edelen said. “Parks may seem like small potatoes to some, but they are important community assets.”

Auditors also found that Wendy Thompson potentially reaped greater profits by reporting inaccurate payroll expenses to the city.

The state also criticized the city’s practice of paying contract workers and a vendor using invoices prepared by the street superintendent or the mayor, rather than relying on detailed invoices provided by the contractors seeking payment.

Auditors determined community service time sheets submitted to the state’s Cabinet for Health and Family Services for individuals receiving benefits from the Kentucky Transitional Assistance Program were “grossly overstated and not accurate.” That determination was made after auditors visited the city’s recycling center eight times and counted the number of individuals present. Those counts were compared to attendance logs prepared by the mayor and submitted to the Cabinet.

“In all instances, the number of participants is significantly over-reported,” the audit states.

Auditors also raised a concern about a conflict of interest related to the mayor’s oversight of the participants in the Cabinet’s program and the enrollment of participants’ children in Wendy Thompson’s day care facility.

“The examination determined of the 26 participants assigned to the Recycling Center, 11 of these participants enrolled a total of 25 children in the Mayor’s wife’s day care. In total, the Mayor’s wife received state child care funding for these 25 children totaling $7,468 for the month of August,” the report states.

On Tuesday, Mayor Thompson said he has implemented as many as nine community service programs since he took office and said he doesn’t ask the participants about their child care arrangements.

Mayor Thompson said the months’-long audit had negatively affected the morale of the city’s employees. As a result, he said he was “tickled to death” the audit was finally complete and said he had expected the state would have more findings than it did.

The findings have been reviewed with the appropriate city departments and Thompson said those that have not already been corrected will be corrected within 30 days.

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