DECEMBER 17, 2015
A comprehensive examination of the city of Prestonsburg, conducted by the office of Kentucky Auditor Adam Edelen, returned 17 findings in a report released Wednesday that include what Edelen’s office called “questionable activity by the former mayor” Jerry Fannin and former comptroller Yvette Latta, among others.
The investigation into these alleged improprieties, Edelen’s office further announced, has been turned over to the Kentucky State Police and Kentucky Attorney General.
“The former administration was cutting sweetheart deals for itself, wasting taxpayer dollars and generally running the city for the benefit of a few,” Edelen said in a press release announcing the report.
The first finding identifies a conflict of interest in Fannin’s real estate dealings. When the city turned over 100 acres of land to the Prestonsburg Industrial Corporation, the agreement stated the city would be reimbursed at a rate of $5,000 per acre sold. Between 2005 and 2009, Fannin, the report said, bought two acres for only $3,000.
When the Floyd County Emergency and Rescue Squad relocated, they obtained a $200,000 grant that was channeled through the city, with $100,000 to obtain land and $100,000 going towards construction of the new building. The rescue squad bought Fannin’s land for $100,000, netting him $97,000 in the process, Edelen’s report said.
“This created a conflict of interest given that the mayor appears to have personally benefitted from his official position, both in having the opportunity to purchase property at a lower cost than it was intended to be sold to the public and by having knowledge of and influence over the Rescue Squad’s purchase of his personal property, including providing City assistance in acquiring grant funding that he personally received, in part,” the report stated.
The second finding concludes there is a possibility that Fannin was gifted a Chevrolet Tahoe in exchange for ordering a controlled burn to demolish an abandoned building. Taxes on the property were being billed to an ambulance service owner, who fulfilled a $10,000 lien on a Tahoe that was then deeded to Fannin, the report said. The city has an ethics ordinance capping gifts to city employees at $100 value.
In addition, paperwork permitting the burn was apparently never filed, according to the report.
The report also brings to light details about the city’s dealings with the East Kentucky Drillers, an arena football team Fannin played for. Ten checks totaling $4,750 were paid from the Mountain Arts Center, 911 wireline, fire department support and other accounts, either directly to the team, for lodging for the team, or for gas for transporting the team, according to Edelen’s report. Another $2,500 was paid from the senior citizens’ fund for cabin rentals for the team, which led the United Way to revoke funding for the Meals on Wheels program. In addition to that, the report said, senior citizen’s center vans were used to transport the team as far away as Michigan, and city gas cards were billed $585.06 for gas auditors believe was used to transport the team.
In another finding, the report said, former comptroller Yvette Latta took out payroll advances that were not paid back in full, with a $1,925 balance still outstanding. Another city employee was allowed a $1,000 payroll advance, after the city council voted to prohibit any more advances, on the request of then-Mayor Fannin; that money, the employee reportedly said, was used to buy a car from Fannin.
Another finding said Latta used city-purchased accounting software on city-owned computers to do personal and business tax returns for individuals on city time, while charging for it. The report said her customers included, “at least eight city employees, a business owned by a city employee, a business owned by the former comptroller’s family member, and several other individuals.”
The more than $7,500 paid for the software without any oversight was identified as another problem.
The examination also found more than $10,000 in checks written within one year to Latta’s husband, Jackson Latta, and his former media consulting business, Latta & Associates. Of the 10 checks, auditors were only able to find invoices for two.
The most recent Facebook post from Latta & Associates, dated Nov. 2, states they are “re-opening with a new direction. Bringing professional tax and bookkeeping services to the Eastern Kentucky area.”
The report also alleges:
• Fannin received another inappropriate gift in the form of scrap metal
• The city failed to bid out projects that paid contractors $105,000 for an awning project at StoneCrest and $112,000 for a sidewalk project
• Supporting documentation was not maintained for hotel and food expenses, and the city paid for Fannin’s HVAC and Master/Journeyman licensing
• City employees failed to fully repay the city for cell phone bills for their families by more than $3,300
• Yvette Latta wrote herself checks to pay for the prizes in a healthcare initiative, but in 2013 wrote the check for $100 more than the prizes offered, and in 2014, wrote the check for $600 more than the prizes offered
• The city failed to withhold some insurance premiums from employee paychecks
• The city gave $25,000 to the MAC as sponsorship money, which was actually used for bonuses and salary advances
• The MAC wrote $28,500 in checks to “cash,” in order to obtain cashier’s checks to pay performers, a process which is vulnerable to fraud
• The city tourism commission bought a $9,000 cabin for the Middle Creek Battlefield that was dismantled and has yet to be used
• The MAC was awarded $75,000 in grants over three years, which were paid to the Kentucky Opry on its behalf, but the Kentucky Opry has only disbursed $30,000 of those grants
• The city transferred $2,500 to an account owned by the Kentucky Opry, with no documentation about its purpose
At a press conference held Wednesday afternoon, current Mayor Les Stapleton reiterated his pledges for transparency going forward.
“My administration is 100 percent accountable for anything we do. We’re also 100 percent transparent, we’re not trying to hide anything, we’re doing everything upfront,” Mayor Stapleton said.
In the city’s response to the findings, Stapleton confirmed that the allegations that spurred the investigation were brought forth by the city council, both in a 2013 complaint signed by six of the eight council members and again in June of this year, signed by all eight. Most of the weaknesses, he said, have been addressed, with a greater emphasis on oversight, segregation of duties, and ensuring any project or purchase more than $20,000 is opened for bidding.
Former mayor Jerry Fannin and former comptroller Yvette Latta could not be reached for comment at presstime Wednesday.
By Aaron K. Nelson
Floyd County Chronicle