Audit finds more than $400,000 in city funds misappropriated by former CFO
By JIM BROOKS
Nelson County Gazette / WBRT Radio
Thursday, Dec. 26, 2019 — The amount of money allegedly misappropriated by Tracy Hudson, the city’s former chief financial officer, has topped more than $400,000, according to the ongoing audit of city finances.
That figure includes the $134,121 check the city received on Sept. 20, 2019, from Hudson’s attorney, Josh Schneider when he and Hudson met with Mayor Dick Heaton and several attorneys. The check represented the amount of cash Hudson gave Schneider after he was hired to represent her.
In an interview Thursday, Heaton said the ongoing audit of city records is seeking to identify additional misappropriated money from prior fiscal year budgets. The audit already uncovered additional missing funds, and the work continues to determine the total amount taken during Hudson’s tenure as the city’s chief financial officer.
Heaton also provided the media with a timeline of events, beginning with his discovery of financial irregularities on Sept. 18, 2019.
Though he has been criticized for a lack of a police agency participating in the investigation, Heaton provided a copy of a letter he wrote two days after he learned of the missing money seeking input from the Kentucky State Police Post 4 in Elizabethtown.
Heaton’s letter — dated Sept. 20, 2019 — to KSP Post 4 Commander Daniel White requested White’s input on the steps the city should take in the light of a potential KSP investigation into the financial irregularities.
On Oct. 17, 2019, Heaton was advised by KSP Sgt. Kevin Worrell that the city should continue to conduct its internal audit of city finances. Once that audit is complete, the city should contact KSP and they would determine if the case would be handled by KSP or another law enforcement division.
On Dec. 18, 2019, Sgt. Worrell advised Heaton that he will be the Trooper who will handle KSP’s investigation.
Early one, the city’s financial audit revealed that Hudson had used the city’s credit card to make an unauthorized purchase of a new, space gray, 512 GB Apple iPhone XS Max on July 31, 2019. A letter to Hudson from City Attorney Audrey Haydon requested Hudson to return the phone or reimburse the city for its purchase.
The phone was returned by Hudson’s attorney on Oct. 3, 2019.
AUDIT FIRST, THEN KSP INVESTIGATION. Heaton had no indication when the city’s audits will be completed, but said that he plans to have a meeting with Worrell and the city’s audit team and attorneys soon. Heaton said he didn’t know if KSP file criminal charges in the near future, or wait until the final amount of missing money is determined by the auditors.
Heaton would not speculate as to when the audit of city finances will be completed. It’s important that the auditors go back far enough to account for all missing funds, he explained.
Hudson was formerly the assistant to the city Chief Financial Officer Mike Abel. When Abel retired at the end of March 2015, then-Mayor John Royalty named her as the new CFO in April 2015.
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