A couple days ago, news broke of the ATF taking over a break-in investigation at the Whitley County Sheriff’s office.

Whattya know? There’s more trouble for the sheriff. Auditor of Public Accounts Crit Luallen has released (you guessed it) two audits of the Whitley County Sheriff showing a total deficit of more than $216,000. The audits have been referred to the FBI for a $92,015 deficit. In June, five sheriff’s audits were referred to the FBI for a $124,000 deficit.

Some highlights:

• 2008 fee account, used for day-to-day operations, had a $4,426 deficit
• 2007 fee account was used for 2008 fee receipts, creating a cumulative deficit of $15,054, including $10,628 from the 2007 account.
• The tax account has a deficit of $87,589.
• The audits recommend personal funds be used to cover the deficits

From a random sampling of taxpayer checks to the sheriff, auditors found:

• Eight taxpayers’ checks for 14 tax bills totaling $3,600 more than the amounts marked as paid on the tax bills and reported by the sheriff’s office
• Three of these 14 bills were marked as if they were paid during the face period and were reported to the taxing districts at the face period amounts.  However, the sheriff’s office received payment at the five percent penalty amount.
• The remaining 11 bills were marked as if they were paid during the five-percent penalty period and were reported to the taxing districts at the five-percent penalty period amount. However, the sheriff’s office received payment at the 21-percent penalty period amount.

Auditors found that the sheriff didn’t maintain proper documentation for receipts and disbursements of the drug and alcohol account. This has occurred in previous audits of the office.

It only gets worse from there, so let’s dig in to the 2007 tax account and 2008 fee account audits…

REPORT OF THE AUDIT OF THE WHITLEY COUNTY SHERIFF’S SETTLEMENT – 2007 TAXES

The Sheriff’s Office Did Not Properly Account For And Distribute All Tax Payments Received From Taxpayers — As I mentioned earlier, 8 taxpayer checks for 14 tax bills totaled $3,600 more than the amounts marked as paid on the tax bills reported by the sheriff. 3 of the 14 were were marked as if paid during the face period. However, the sheriff received payment at a 5% penalty. The other 11 bills were marked as if they were paid during the 5% penalty period but were paid at the 21% penalty amount.According to the audit, supplemental reports can be used to conceal the theft of tax payments.

The sheriff didn’t respond.

The Sheriff Should Not Deposit Fee And Drug Account Money In His Tax Account — 127 checks that should have been deposited in the 2007 fee account totaling $3,923, one drug fund check totaling $1,400 and 239 checks meant for the 2008 fee account totaling $25,677 were deposited in the 2007 tax account.

3 of the 2008 fee checks totaling $10,029 were reimbursements for 2008 deputies’ salaries paid with Kentucky Law Enforcement Foundation Program Funds. 2 other 2008 fee checks totaling $5,023 were payments to the sheriff’s office for transporting prisoners and serving as a bailiff of the court. All 5 of the payments were posted to the 2008 fee receipts ledger. The auditor found that deposit details were altered after deposits had been made. They were able to determine that several smaller checks and cash made up the deposits to the 2008 fee account.

The sheriff didn’t respond.

Trust me – you’re going to want to read the rest of this mess after the jump…

The Sheriff Should Accurately Account For All Franchise Tax Collections And Distribute Taxes By The Tenth Of Month Following Collections — During the 2006 tax collection period, 8 2006 franchise tax bills and 2 prior year bills totaling $167,258 were collected and deposited in the tax account prior to July 31, 2007. The bad news? Those tax bills were shown by the sheriff’s office as unpaid as of that date.

5 paid franchise bills included 10% add-on fees of $1,514 and $1,145. Those penalties were not included on the 2007 monthly tax reports and weren’t distributed to tax districts.

2 paid bills including discounts totaling $122 that were not included on the monthly reports

1 bill was overpaid by $51,203.

10 bills totaling $107,507 were paid and deposited in the 2007 account. Those bills were shown as unpaid by the sheriff and were not reported and paid to taxing districts until the 2008 collection period. Of that amount, $98,093 was transferred from the 2007 tax account leaving $9,414 in the account.

6 prior year franchise bills totaling $14,710 were confirmed with the companies to be unpaid. The sheriff reported them as paid.

The sheriff didn’t respond.

The Sheriff’s Office Did Not Properly Account For All Paid Tax Bills — On the day of the 2007 tax sale (when a company buys unpaid taxes to make a profit), an investment company purchased a portion of the delinquent tax bills and the remaining unpaid bills were turned over to the County Clerk. After letters were sent out by the investment company, one taxpayer contacted them to prove they’d already paid the sheriff their $297 tax bill but it had been marked as unpaid. Naturally, there was no surplus in the account.

The sheriff didn’t respond.

The Sheriff Had A Known Deficit Of $87,589 In His Official 2007 Tax Account — Because of known undeposited receipts of $87,589, the sheriff had a known deficit of $87,589 in 2007. Auditors couldn’t determine the complete amount because deposits weren’t made intact on a daily basis.

The sheriff didn’t respond.

There were several other financial statement findings to which the sheriff didn’t respond. Feel free to read them for yourself by downloading the 2007 audit. Click here (Warning: PDF Link) for that.

REPORT OF THE AUDIT OF THE WHITLEY COUNTY SHERIFF – YEAR ENDING DECEMBER 31, 2008

The Sheriff Should Maintain Accurate Accounting Records And Account For All Receipts In The Appropriate Year  –

• $29,600 of 2008 fee receipts were deposited in the 2007 tax account.
• A court-ordered restitution payment of $25 wasn’t recorded by the sheriff
• $1,034 in overdraft fees weren’t posted by the sheriff to the disbursement ledger
• 2 state telecom payments totaling $546 were not transferred from the 2006 tax account, weren’t posted to the 2008 receipts ledger. One 2009 telecom payment of $273 was deposited to the 2008 fee account and was posted to the 2008 receipts ledger.
• $30,785 or receipts for serving papers were deposited to the 2008 fee account but were not posted to the receipts ledger
• $1,500 in bank note origination feeds were borrowed but not repaid and not posted
• Employee wages of $11,603 were posted to office supplies and materials.

The sheriff didn’t respond.

The Sheriff Lacked Controls Over Deposits And Did Not Provide Adequate Oversight — An original deposit ticket of the sheriff dated August 22, 2008 stated “checks $14,518.20″ and “cash $327.04″ – however the sheriff’s information and that obtained from the bank were quite different. Take a look:

FROM THE AUDIT

The sheriff didn’t respond.

The Sheriff Did Not Deposit Receipts Of The Office In A Timely Manner — Checkout sheet from Nov 18 through Nov 26, 2008 included 7 days of receipts. Deposits for that checkout sheet cleared the bank on Nov 21, Dec 1 and Dec 8. That’s a 3-14 business day difference between the dates receipts were received and the dates they were deposited. Receipt copies attached to the checkout sheet and receipts ledger indicated that two state checks totaling $472 were included but were not. Deposits also included 11 $40 checks for serving papers that were not reported.

Another checkout sheet in March had similar problems. And receipt copies weren’t always attached to correct checkout sheets.

The sheriff did not respond.

The Sheriff Had A Known Deficit of $4,426 In His Official 2008 Fee Account — Because of known undeposited receipts totaling $2,093 and unallowable expenditures of $2,333, the sheriff had a deficit of $4,426 in 2008. Since he used the 2007 fee account for the 2008 fee receipts, that led to a cumulative deficit of $15,054. Auditors couldn’t determine a complete amount because – you guessed it – nightmarish record keeping.

Here are those $2,333 unallowable expenditures: finance charges and late payments of $751; overdraft charges of $1,034; $513 in IRS late payment penalties; $35 in dues paid for a former employee.

The sheriff did not respond.

The Sheriff Should Submit Known Excess Fees To Fiscal Court — The sheriff presented an annual financial statement on March 17, 2009 to the fiscal court for approval. Excess fees on that statement? Less than a dollar. But based on records available, there were known excess fees of $46,061 that were due the court for calendar year 2008. Auditors couldn’t determine the precise amount owed because of – what? – bad bookkeeping.

The sheriff didn’t respond.

The Sheriff Should Adequately Document Payroll Expenditures — Auditors found 2 employees were paid $2,496 for unused vacation time in 2007. Though the Whitley County Personnel Policy says unused vacation and sick time is to be paid the first pay period of the following year, the sheriff couldn’t provide complete time sheets or other documentation to prove employees hadn’t used the vacation time in 2007.

The sheriff didn’t respond.

The Sheriff Should Submit An Amended Report Of Employee Wages To The Appropriate Authorities — As we mentioned earlier, two employees earned income that was not reported – totaling $11,063 – posted as Office Materials and Supplies.

Naturally, the sheriff didn’t respond.

The Sheriff Did Not Maintain Proper Documentation For Receipts And Disbursements Of The Drug And Alcohol Account — Ready for this? The sheriff – during 2008 – didn’t maintain adequate documentation for receipts and expenditures from the drug account. Handwritten logs were maintained, but no documentation was maintained to show that checks cashed were given to informants. The sheriff’s log didn’t include explanations for $700 made payable to the sheriff in two separate checks.

The sheriff didn’t respond.

The Sheriff Did Not Take Corrective Action For Prior Year Findings — As of August 26, 2009, the sheriff hadn’t taken corrective action for findings in prior years. In 2007 Fee Audit, auditors recommended the sheriff transfer the following because it was deposited into the wrong calendar year account: $55,342 from the 2006 fee account to the 2007 fee account; $22,991 from the 2006 tax account to the 2007 fee account; $273 from the 2005 tax account to the 2007 fee account.

Auditors recommended that the sheriff deposit $10,628 in personal funds to eliminate the deficit in the 2007 fee account. And to pay the Fiscal Court $134,428 for excess fees. The audit also recommended that the sheriff pay $5,407 to the Attorney General for the County Attorney’s portion of the sale of forfeited assets.

The sheriff didn’t respond.

You should read the rest for yourself by downloading the 2008 audit. Click here (Warning: PDF Link) for that.

In summary, no wonder the feds have descended upon Southeastern Kentucky! Jesus H!