Joe P. Asher
Due to discrepancies in the drug account of the 2011 financial statement of Harlan County Sheriff Marvin Lipfird, Kentucky Auditor of Public Accounts Adam Edelen has referred the audit to the Kentucky State Police.
According to the audit, the sheriff’s office cannot account for $37,668 in drug buy monies.
The audit states that the sheriff’s office maintains an official drug account that is used for drug enforcement purposes. This account is funded through seized funds which have been court ordered to be used for “direct law enforcement purposes.”
The report states, this money is used for drug buys in cases the sheriff’s office is working. Checks are cashed at a local bank and the cash is advanced to detectives to be used for drug buys. There is also some cash maintained in a safe and in a desk drawer in the sheriff’s office for the purpose of drug buys.
The audit states the auditor performed a “surprise cash count of drug monies” on July 3.
“The sheriff had a total of $2 in a bank bag locked in the safe for drug buys,” reads the audit. “The sheriff also had an advance receipt log with the bank bag that was signed by the detective when receiving cash for drug buys and specified the amount that the detective received.”
The audit states the total of all checks cashed from the drug account from Jan 1, 2007 through June 30, 2012 amount to total disbursements of $194,500 with total advancements being $156,830. Unaccounted for is a total of $37,668.
Lipfird’s response, included in the audit, states “When the auditor brought this to my attention, I went to the state police and requested they conduct an investigation.”
“I had just dismissed an employee for theft and this employee had access to the cash and had assumed a lot of debt she was paying off from what I had been told after her dismissal,” reads Lipfird’s response.
Lipfird said now that the audit has been released, he will get in contact with Kentucky State Police soon to discuss the case.
“We were in the hold process until the auditor got done because we didn’t have an actual figure,” said Lipfird.
The audit also states Lipfird should personally reimburse the 2011 official fee account $919, as well as $128 to the drug account for expenditures that did not meet the Funk v. Milliken test. This standard is a result of a 1958 legal decision in the case of Funk v. Milliken, which ruled “county fee expenditures of public funds will be allowed only if they are necessary, adequately documented, reasonable in amount, beneficial to the public and not primarily personal in nature.”
Lipfird’s response states “We have implemented an entire new system of accounting for receipts. I will pay what I am required to pay.”
The auditor’s office is referring the matter of the purchase of a 2004 Ford Explorer to the Harlan County Ethics Committee.
According to the audit, the sheriff paid $7,500 from the drug account for a 2004 Ford Explorer that was purchased from a former employee’s spouse. The Explorer was a rebuilt vehicle that had been purchased by the employee’s spouse from an insurance company and registered on Jan. 25, 2011 with a value of $2,700. On Jan. 12, 2012 the sheriff traded the vehicle to a dealership owned by two former sheriffs for a trade in value of $3,000. The sheriff paid an additional $8,500 from the drug account for a 2002 Ford Truck.
The auditor’s office stated they are referring the matter to the Harlan County Ethics Committee to determine if this is an ethics violation.
In his response, Lipfird said he consulted with the county attorney and was advised there should be no issue with the purchase, as long as it was of fair market value.
“I had also consulted with the county attorney before trading it in and was advised that if I received a fair trade in value there would be no issue. The $2,700 was a salvage value. The $7,500 was below the value after the repairs were made. The former employee disclosed in her ethical disclosure statement that her husband owned the business so this was an arm’s length transaction,” reads Lipfird’s response.
The audit states the sheriff’s office lacks adequate segregation of duties. The sheriff’s response states adequate segregation of duties is hard to accomplish with the number of personnel available, but controls have been implemented such as requiring dual signatures on checks, having another employee present when mail is opened and the sheriff opens and reviews all bank statement.
The audit also states the sheriff did not submit excess fees to fiscal court on time and did not submit all quarterly reports to the Department for Local Government as required by the state.
According to Lipfird’s response, these problems occurred because the bookkeeper was changed and the problem has been fixed.
Reach Joe P. Asher at 606-573-4510 or email@example.com