State Govt Problems: Luallen Audit Part 2

Crit Luallen just released part two of her annual audit of State Government. And it’s a doozy.

The Auditor’s office has found that the Kentucky Division of Emergency Management failed to properly oversee a $1.8 million federal Chemical Stockpile Emergency Preparedness Program grant for ten (10!) counties. And because of irregularities at the local level, the finding has been handed over to the Office of the Attorney General, FBI and the United States Department of Homeland Security.

As it turns out, failing to properly oversee the purchase of emergency response equipment can get you in a heap of trouble.

It the latest volume of the state government audit, auditors have 14 findings, which includes 3 instances of material non-compliance– which means an agency shows significant deficiencies in overseeing federal funds (2 in the Dept of Military Affairs and 1 in Transportation).

From the press release:

Auditors discovered the Laurel County CSEPP program was provided a $1,874,615 grant to allow the county’s CSEPP director to act as the purchasing agent for specific equipment for all 10 Kentucky CSEPP counties.

With chemical weapons housed at the Blue Grass Army Depot in Madison County, Central Kentucky counties receive federal dollars through CSEPP, which is administered through KyDEM under the Department of Military Affairs.

These counties include: Madison, Clark, Powell, Estill, Jackson, Rockcastle, Garrard, Fayette, Jessamine and Laurel.


The bid was ultimately awarded to PREP, a business owned by the business partner of the Laurel County CSEPP director. The business partner is now the director’s wife, according to the audit.

The more than $1.8 million expenditure handled by Laurel County’s CSEPP Director is 24 percent of Kentucky’s $7,856,193 annual CSEPP grant award.


The project included the acquisition of 40 specially equipped emergency response trailers, as well as additional equipment necessary to make the trailers operational, according to the audit, which found that these purchases took place without appropriate oversight by KyDEM.


[T]he project called for Homesteader brand trailers but PREP delivered 40 LA Cargo brand trailers.

Auditors note that questions were raised by one county CSEPP coordinator as to whether these trailers were “even new due to deteriorated conditions in some areas.”


According to the audit, county CSEPP officials brought their concerns about the equipment they received to monthly FEMA meetings; however, KyDEM and FEMA failed to initiate a formal investigation.

Head exploding yet?

Other audit findings include:

1.) KyDEM and Military Affairs did not comply with federal requirements concerning subrecipient single audits. Federal guidelines require subrecipients with $500,000 or more in funding to receive a single audit of its major federal programs.

During audit procedures performed on both CSEPP and Public Assistance grants, auditors found numerous instances where subrecipients were not asked to certify whether or not they were required to have a single audit or did not have their single audits reviewed.

This included 15 of 20 Public Assistance (grants for major disasters or emergencies declared by the President) subrecipients examined and nine of 10 counties receiving CSEPP grants. The 15 Public Assistance subrecipients received $388,807 in fiscal year 2008, while the CSEPP counties received $6.8 million in CSEPP grants, $41,766 in Public Assistance and $224,067 in other FEMA grants.

The audit recommends KyDEM revise its procedures to ensure that all subrecipients, regardless of type, are properly monitored, including providing single audits for review when applicable. This is a material non-compliance finding in the audit.

2.) The Transportation Cabinet should implement formal policies and procedures for subrecipient monitoring regarding grant awards from the Highway Planning and Construction Program.

This is a repeat finding from last year’s audit, though improvements have been made. Auditors were unable to review this list during last year’s audit because the Office of Local Programs did not maintain a subrecipient list. During last year’s audit, the Office of Local Programs was unable to readily identify its subrecipients or show documented evidence of its monitoring procedures.

In the current audit, auditors tested several sample areas for subrecipient monitoring and noted that being able to review subrecipient files for this office is an improvement; however, there are still issues with inadequate monitoring.

“Overall, we did not see sufficient evidence of monitoring occurring during the award period. Documented site visits, regular contact, reporting or other means of monitoring were not documented in the subrecipient files,” according to the audit.

3.) The audit also recommends that the Cabinet For Health And Family Services improve the security over Electronic Benefits Transfer (EBT) Cards at local offices. An EBT card allows participates to access the Food Stamp Program. Auditors reviewed local offices in Casey, Fayette, Hardin, Jefferson, Lyon and Madison counties.

Report Volume II & Report of the Audit

When will we learn, Kentucky?

This Legislative Session Accomplished SO Much!


On Friday, Governor Steve Beshear, Greg Stumbo and David Williams released a joint statement:

“We have conferred throughout the day today about the remaining issues confronting this session, determined to end this process as we began it – with a spirit of cooperation and resolve to move forward.

This session began with a commitment to work together to address the significant issues confronting the commonwealth. Today, we are continuing to honor that commitment and move forward in a way that will create jobs and economic opportunities for more Kentuckians.”

So everything must be all puppies and rainbows, right? Even Reginald Meeks is acting like everything is a-okay. We raised taxes on several occasions and instead of working together, both sides of the aisle sold out for personal gain. It’s all good, right?

We’ve saved our budget and our economy and the state retirement system!

Oh, wait. We haven’t done anything of the sort. The KRS is in shambles, we have a potential crook running the retirement system (he’s triple-dipping and spending a heck of a ton of money on a conference filled with belly dancers and strippers):

You have to kind of admire a guy that can triple dip from a pot of money.

First Klausner makes hundreds of thousands of dollars from the KRS, he then makes money off of referral fees on class action (see Forbes) and finally, (and this is the best) he makes more money by charging hundreds of thousands to money managers (the talking heads in the video) to speak at the conference, where else are the speakers going to get access to a potential investors with billions of dollars to invest, like our own KRS Trustees.

So here are some things that Greg Stumbo, David Williams, Jonathan Miller, Steve Beshear, and all of the media should be looking at.

Why are four or five Trustees and perhaps staff, many with spouses and girlfriends, spending 3 and 4 days at the Hyatt on the state dime?

While Steve Beshear, Greg Stumbo and the legislature look in the other direction.

And people like Keith Hall shirked his duties as a State Representative to attend an SEC ball game.

It gets better…

Not only did we accomplish very little this legislative session (I’m sure to receive tons of calls after saying this, begging me to cut some slack and take one for the team for a change), but our legislators have redeveloped the good old boy system.

On Wednesday we told you that Kelly Flood was hosting a party to celebrate the end of the legislative session. We were told it’d be held in Speaker Pro-Tem Larry Clark’s suite, so we gave Kelly the benefit of the doubt and assumed that an alcohol-fueled shindig would take place at the Capitol Plaza Hotel where it’s a little more legal.

Turns out that’s not what happened. According to four legislators who attended the event, Kelly Flood’s party took place in Larry Clark’s office suite inside the Capitol Annex. There were boxes of alcohol– wine, beer, hard liquor. The Speaker of the House and dozens of others were in attendance. Not only did Flood and these legislators skip out on various committee meetings during the day to throw down, they broke the law. It’s illegal to take alcohol into the capitol and the annex. Illegal. And we hear the Kentucky State Police is poking around and considering an investigation, as they should.

We accomplished SO much in Frankfort.

(Oh, Kelly– Keep trashing me for reporting the facts. It’ll get your lying butt everywhere on the pages of this website, sweetie.)

TGIF! Frankfort Was a Waste of Time…

but the Governor’s office keeps harping on how “so much was accomplished” and “what a great session it was.”

We’re essentially at the end of the legislative session in Frankfort so now you may breathe a sigh of relief. And try as we might, we don’t see much accomplishment or progress. All yesterday we heard from legislators who were hot-headed and angry. We’re not sure if they were upset because:

  • Gambling was heard in Appropriations & Revenue after Greg Stumbo promised it was dead for the session
  • It’s beginning to sink in that the five members of House leadership took care of themselves in the road plan and HB 433
  • The Senate took all the road plan fixes out of HB 433 and now plan to kill the pork bill
  • The right-wingers are upset that promises made during the leadership race that led to the abortion and gay hate bills would be heard on the house floor haven’t come to fruition (and that’s led to a lot of PMSing)
  • The most important policy bill on education is being handled by four freshman with absolutely no experience while there are House members who have worked on the issues for years
  • Or the realization that David Williams is still running everything in Frankfort

This is EXPLOSIVE! The University of Louisville has another major problem on its hands. A nursing student was expelled after a post on her MySpace account, her freedom of speech violated. Nasty, nasty mess. The student filed a lawsuit yesterday and we broke the story last night. Check it all out and pray that UofL gets real leadership sometime soon. Heads-up to UofL… this is already a national issue. [Page One]

Westboro Baptist Church nuts protested against the scary ho-mo-sexuals near the University of Chicago and a group of students welcomed them with some hilarious dancing. I wish someone would gather 40 or 50 people like this to descend upon Frank Simon’s next meeting. [Absolutely Hilarious]

Joni Jenkins’ House Bill 383 regarding high school athletics passed the State Senate last night with her amendment. [HB 383 & Joe Gerth]

Hahaha! This was totally written about Jake. Or Stephen George. [Stuff White People Like – Moleskine Notebooks]

James Hammes of Lexington is being sought by the FBI in a money laundering case. He allegedly directed $4.6 million to his personal bank account over a five-year period while working for a Cincinnati Pepsi bottling company. [C-J]

Jason Nemes has finally resigned as director of the Administrative Office of the Courts. He’ll be practicing law at Dinsmore Shohl. [C-J]

Lexington Mayor Jim Newberry says he’s running again. Does he have a hope or has the curse of CentrePointe ruined his chances? We don’t think he should hold his breath. [Barefoot & Progressive]

Seven major topics to watch in Frankfort today. [Ryan Alessi]

The Louisville Peace Action Community will commemorate the 6th anniversary of the U.S. invasion of Iraq on Thursday, March 19 from 3:00 – 6:00 P.M. Courthouse steps at 6th & Jefferson in Louisville. A program featuring several speakers (and John Gage) will begin at 4:00 P.M. [LPAC]

Just to Make You Feel Better About Kentucky

We just spotted an amendment to House Bill 195, an act relating to the justice system and declaring an emergency, that will blow your mind.

Retain original provisions except amend KRS 64.090, relating to sheriffs, to add a $40 fee for service of domestic violence or emergency protective orders

Here are the specifics from the SCS, page 15:

For service of domestic violence or emergency protective orders, to be paid by the respondent … $40.00

(2) Sheriffs may charge and collect a fee of forty dollars ($40) from any person not requesting the service of the sheriff on behalf of the Commonwealth, any of its agencies, or the Department of Kentucky State Police for the services provided in subsection (1) of this section where a percentage, commission, or reasonable fee is not otherwise allowed. If a percentage, commission, or reasonable fee is allowed, that amount shall be paid. If payment is specified from a person other than the person who requested the service, then the person specified shall be responsible for payment.

Charging perpetrators of domestic violence $40 for protective orders.

Can you imagine? Actual progress in Kentucky!

So much for jeopardizing the Violence Against Women Act funding and making us look more ignorant and barefoot to the rest of the country.

More on the Kentucky Equality Federation, as We Previously Promised

In April 2008 nearly all of the General Advisory Council of the Kentucky Equality Federation resigned. But according to a Wikipedia article that’s no doubt maintained by KEF’s leader Jordan Palmer (formerly known as Brian Day, prior to a name change), the council (nine of the 14 members) was “terminated” after the organization condemned the Kentucky Fairness Alliance. And we all know Wikipedia is a bastion of accuracy and honesty. So you know everything you read is 100% truthful.

Why’d these people abandon the organization? Let’s explore the issue a bit…

We have learned, through several months of research, that the Board of Directors/General Advisory Committee is usually composed of Palmer, his mother Nancy Couch Bowling, a guy named Paul and a friend of Palmer’s named Casey. Occasionally that board structure fluctuates when Palmer has a disagreement with anyone or when he feels (we believe) that his authority is threatened. Or when someone departs the organization on their own accord, obviously.

During 2007 Palmer was in charge of KEF’s finances. And by finances, we mean there is not a system of checks and balances and the organization shares/shared a bank account with Palmer’s records removal service. Without a segregation of funds and with no system of accounting, there is no way to prove where funds have been appropriated and there’s no way to determine if, how or when funds were received. After interviewing a half dozen former directors/council members of the organization, we are still unable to get clear answers.

One of the major financial issues we have uncovered (and previously reported): KEF won money from MySpace and it (according to MySpace and all other accounts) wasn’t intended for Palmer individually, as he has suggested in comments on this very website. According to the six people we have interviewed, KEF won the funds by popular vote of MySpace membership. Since there’s no separation of funds and accounting, it’s pretty clear how the MySpace award could easily disappear. Palmer and the KEF officially settled with the Office of the Attorney General and were legally required to disperse funds to several university organizations which had been promised the money. See our previous stories here and here.

According to one of our sources, suspicions of fraud were reported to major KEF contributors and donations stopped rolling into the organization. The board/council then planned a surprise for Palmer, telling him that they wouldn’t allow him to be the sole individual responsible for funding and financial management. Palmer refused to comply, as you’ll see below, and the organization at that point fell apart with nine individuals walking away. Within a few weeks the Office of the Attorney General launched a major investigation.

Read the rest of this exposé and peep salacious emails leaked to us by former board members after the jump…

Read moreMore on the Kentucky Equality Federation, as We Previously Promised

The Latest Installment from AG Jack Conway

Kentucky consumers can be assured that my office is continuing to investigate allegations of price gouging in the wake of January’s ice storm. We have received more than 550 complaints related to gasoline prices, hotel rooms, generators, kerosene and other storm related necessities. My Office of Consumer Protection is currently investigating each complaint and sending notices to retailers to allow them to respond. If we find that these retailers were reaping excessive profits during the time of a disaster, I will take action.

Because of the extent of the storm damage across the Commonwealth, Governor Steve Beshear has extended the period for filing price-gouging complaints for another 30 days. If you suspect that you’re a victim of price gouging, send us the information at When possible, please include digital photos or scanned copies of receipts. You may also call my office at 888-432-9257.

Cybercrimes Legislation Passes House 97-0

I am also pleased to report that we are a step closer to enacting legislation that will better protect Kentucky children from Internet predators. The Kentucky House of Representatives overwhelmingly passed the cybercrimes legislation that Representative Johnny Bell and I are promoting during this legislative session. I am hopeful that the bill will find the same bi-partisan support in the Senate.

Budget Cuts

While protecting consumers and improving cybersafety in the Commonwealth have been top priorities, I have also been tasked with maintaining the mission critical services of the Office of the Attorney General during a time of unprecedented budget cuts and a lingering economic recession.

I have joined many Kentucky families in doing some serious belt tightening. Since taking office, my budget has been cut by about 20%, taking this office back to funding levels last seen in 1999. However, I assure you our budget cuts and streamlining of operations have in no way affected our commitment to uphold the laws of the Commonwealth, pursue our priorities and protect our citizens.

Read the rest after the jump

Read moreThe Latest Installment from AG Jack Conway

Rick Spent 17 Hours in Jail, I Was Pissed

By now you’ve all read Rick’s tale of being arrested and spending seventeen hours in jail. While I believe, as I say below, Rick is responsible for his failure to be a responsible driver and that it’s stupid of him to have let something so simple turn into a nightmare scenario, the system is so jacked up that I have to vent/complain for a few minutes.

At 3:58 I received a call from Pre-Trial telling me that Rick would be out within an hour. Then it took four hours to find out that he was still there, after getting the run-around from Metro Corrections– people telling me throughout the afternoon that he was there and that he wasn’t there, with some individuals refusing to answer questions, literally hanging up.

I was given the run-around by the Clerk’s office until finally demanding that someone give me a solid answer (so, maybe I called an elected official to find out, whatever). It’s then that the guy at the window determined there was never a bail/bond set, that the judge had released Rick on his own recognizance at 4:00 or so in the afternoon. I was assured then that he would be processed within a couple hours by Metro Corrections and that it’d be best to wait for him.

Unfortunately, from there, Rick was never released. And “Roger” and other individuals at Metro Corrections gave me constant contradictory answers. For a while he was an inmate, for a while he wasn’t. On two occasions while trying to get an answer, I was told he’d already been released and picked up.

Read the rest of this mess and find out why I was in rare form after the jump…

Read moreRick Spent 17 Hours in Jail, I Was Pissed