, Corbin, KY

Whitley County Sheriff Investigation

August 24, 2011

Former Whitley Sheriff’s office has known deficit of $240K

CORBIN — By Becky Killian / Managing Editor

2009 Whitley Sheriff's Audit.pdf

2010 Whitley Sheriff's audit.pdf

Two of the latest audits of former Whitley County Sheriff Lawrence Hodge’s office have revealed a total known deficit of more than $240,000.

The audits of Hodge’s 2009 tax and 2010 fee accounts were released Tuesday by Kentucky Auditor of Public Accounts Crit Luallen.

Luallen said the audits have been forwarded to the FBI. So far, Luallen’s office has forwarded a total of 11 audits to the FBI that found discrepancies in how money was handled in Hodge’s office.

The release comes two days before Hodge is set for sentencing on federal charges in London’s U.S. District Court.

The $240,379 deficit includes $162,634 in unresolved tax account deficits that occurred from 2005 through 2007; $60,952 in personal funds the auditor recommended Hodge repay to close prior years’ fee accounts; and $16,793 in personal funds the auditor recommended Hodge repay for disallowed expenditures from the Drug and Alcohol Account.

As in prior audits of Hodge’s tax account, the state noted “continuing concerns” with how he handled tax collection and distribution in its audit of his 2009 tax account.

The state found that Hodge’s office had inadequate segregation of accounting duties; deposits weren’t reconciled to daily collection reports or to a daily receipts journal and he did not properly account for second notice fees; that he should not have collected taxes before signing the official receipt; that Hodge should settle 2009 taxes and that he should settle taxes for all prior years.

Hodge offered no response to any of the findings, the audit indicates.

Because of inadequate accounting records, the state said it wasn’t able to apply auditing procedures to Hodge’s 2010 fee account. Auditors did find disallowed expenditures in his drug and alcohol account.

The audit notes the following findings:

*Hodge didn’t maintain accurate accounting records

*Hodge lacked internal controls over holiday and overtime pay

*Hodge paid unused vacation benefits which auditors found “questionable”

*Vehicle repair and maintenance costs weren’t properly accounted for

*Hodge failed to provide adequate oversight of fuel purchases made with credit cards

*Accounting duties weren’t properly segregated

*Some Whitley County assets weren’t titled to the county

*Hodge spent seized assets prior to court forfeiture proceedings and has not paid amounts due to others from forfeitures

*Hodge didn’t maintain proper documentation for receipts and disbursements from the drug and alcohol account

*Hodge should use his personal funds to repay the drug and alcohol account disallowed expenditures

*Hodge didn’t take corrective action for prior year findings

*Hodge should submit additional excess fees to the fiscal court

According to the auditor’s office, one more audit will be completed on Hodge’s office. It will likely cover the last quarter of Hodge’s 2010 tax account.

During a May court appearance in London’s U.S. District Court, Hodge pleaded guilty as part of a plea agreement to federal charges of  conspiracy of commit extortion, conspiracy to distribute pain pills and conspiracy to launder money.

If the judge accepts Hodge’s plea agreement Thursday, the document calls for a sentence of 15 years and six months. He would also have to forfeit $50,000 to the federal government and pay $64,897 in restitution to Whitley County.

Hodge also faces a 21-count indictment on state charges after a special grand jury looked into reported wrongdoings in his office. The indictment charges Hodge with 12 counts of abuse of public trust over $10,000, six counts of abuse of public trust less than $10,000 and three counts of tampering with evidence.

In May, Hodge’s former bookkeeper, Abby Vicki Paul, pleaded guilty to felony embezzlement while in London’s U.S. District Court.

During her court appearance, Paul said Hodge began taking money his first year in office and admitted she altered the books to conceal the missing money.

Paul is set to be sentenced Sept. 1.

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Whitley County Sheriff Investigation
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