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Jackson County embezzlement case sent to FBI, state police

Published: Oct. 10, 2017 at 9:06 AM EDT
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The FBI and Kentucky State Police are being asked to follow up on allegations that the former Jackson County treasurer pocketed more than $100,000 in taxpayer funds, according to a newly released state audit.

The audit of the fiscal court's 2015 and 2016 financial statements found abuse and intentional override of internal controls by one employee, according to Kentucky state Auditor Mike Harmon.

The former treasurer is Beth Sallee. She was arrested in 2014, but those charges were dropped. She won a settlement from that case. This audit comes after Sallee was suspended in July 2016 when the fiscal court started noticing possible fraud.

"Main thing she was doing was just administering herself checks and she done it without anyone’s attention. Unbeknownst to anyone," said Jackson Co. Judge-Executive Shane Gabbard.

The new audit found those problems had a serious effect on the county's finances.

Here are some of the findings:

  • The former Jackson County Treasurer was overpaid a total of $114,506 in 2015 and 2016 from the payroll account and the Chemical Stockpile Emergency Preparedness Program account. According to the audit, there are additional missing funds and discrepancies in accounts over which the treasurer had control. Meanwhile, legitimate county expenses went unpaid. The auditor says this finding is being forwarded to the Kentucky Attorney General, Kentucky State Police, the FBI and the Kentucky Department of Revenue.
  • The fiscal court incurred significant deficits in 2015 and 2016 due to lack of budget monitoring. The deficit was $372,967 in 2015 and $287,898 in 2016.
  • The county did not manage and monitor its payroll consistent with state law and its own policies. The audit found the county overpaid and underpaid employees in both 2015 and 2016.
  • The audit found staff in the Judge-Executive's office collected private rent payments on behalf of the former Judge-Executive. It also found jail employees were allowed to buy items from jail vendors at discounted rates not available to the public. Both actions are prohibited by Jackson County's Code of Ethics. The auditor says those findings will be referred to the county's local ethics board.
  • The audit also found an overall lack of control of jail finances. “These are just so overwhelming. It’s just a failure of at systems across the board," said Auditor Mike Harmon.