Auditor: Agency served itself, not the public

LEXINGTON, Ky. (WKYT) - A Lexington agency that's supposed to help local governments is now accused of serving itself instead of the public.

On Tuesday, the state auditor released an audit showing major problems with the Bluegrass Area Development District. ADDs are supposed to help local governments plan for economic growth. State Auditor Adam Edelen began investigating the group last summer after getting complaints about activity.

Bluegrass ADD's Lexington office serves 17 counties in central Kentucky and has an annual budget of $24 million. Most of the money comes from federal and state grants. The audit says the agency failed to report possible criminal activity by one of its employees, engaged in activities beyond its scope and had questionable financial oversight. The audit also found undocumented, excessive spending that totaled more than $500,000. Much of the money was spent on meals and travel.

"It strayed from its mission and seemingly convinced itself that because it doesn't receive direct payments from taxpayers. Today is the day we are holding it accountable," says State Auditor Adam Edelen.

Edelen says his office found the development agency even used federal grants to pay out employee bonuses, which is illegal.

In its response, the agency says the public trust is imperative. The agency says, working with the audit team, its board took immediate and decisive actions that even included the resignation of its executive director. The audit will be given to eight agencies, including the state Attorney General, Kentucky State Police and the FBI.