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$511,000 to Be Returned to Dayton Schools by Former Superintendent, CPA Firm

Written by Michael Monks, editor & publisher of The River City News

Dayton Independent Schools will recoup $511,000 after a special examination by Kentucky Auditor Adam Edelen into the alleged fraud perpetrated by former Superintendent Gary Rye. 

That's nearly $300,000 more than the amount believed to have been illegally collected by Rye when the investigation was announced in March.

Rye, as part of a settlement with the school district that he led for fifteen years, agreed to return $473,000. The accounting firm Rankin & Ranking that regularly performed audits on the district also agreed to return $38,000 for failing to report the fraud.

Details were scant during a news conference Thursday on how Rankin & Rankin failed to disclose the fraud. Rye could still face criminal charges.

"I very much hope Gary Rye goes to jail," Edelen said at the Dayton Board of Education on Thursday.

Flanked by members of the Dayton Board of Education, Board Attorney Matt Demarcus, and Superintendent Jay Brewer, Edelen said that his office's investigation included a look at Rye's entire fifteen years of overseeing the small district of just around 1,000 students. The announcement of the examination in March that produced a figure of $224,000 only encompassed eight years.

That announcement happened in the same spot as Thursday's only this time the message was more celebratory.

"We stood up against something that was wrong and against someone who was a bully," Superintendent Brewer said of his predecessor. "When we talk to our kids, we tell them you'll see playground bullies, cyber bullies, bullies throughout your life and it was a powerful experience for me to see people stand up against this."

"(On March 7) we declared that we would recover every penny," Attorney Demarcus said. "Today, eight months later, the board has asked me to announce it has reach an agreement with the former superintendent and the board's former auditing firm in the recovery of every penny." The full room applauded the announcement.

"There is a consequence to stealing from children," Edelen said, "particularly ones that need a fighting chance like they do in this district. Good people have to be tough in order to hold those who violate the public trust accountable. This isn't just about Dayton, although we have a cause to celebrate. This is a message clearly to every corner of the Commonwealth that if you abuse the trust you are given we will get you. Good people won't tolerate that kind of monkey business."

"I'll be taking the Dayton message to every corner of the Commonwealth."

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Edelen was particularly complimentary of Brewer, someone he said was a profile in courage.

"Rather than dwell on the old Dayton School District, today is the birth of the new Dayton School District," Edelen said. "This was the most poignant investigation of my tenure as auditor. Today, as the result of a heartening partnership we have the professionals and the community, this has been my best day in office."

As for the $38,000 that Rankin & Rankin agreed to return, Edelen said that it was rare for accounting firms to do so. Demarcus said that the reason Rankin & Rankin agreed to settle is because the fraud committed by Rye "was not hidden" and should have been "abundantly clear".

School Board Chairperson Rosann Sharon said that the district has implemented new policies to fight any future fraud. A budget committee was created and all budget items are shared with the Board, including records of the superintendent's travel, credit card expenses, and days worked. The budget is better categorized and line items are explained and identified. An internal auditor was hired and will be rotated every few years. All business expenses requested for reimbursement by the superintendent must be approved by the Board.

The funds will be returned to the district in varying amounts over the next year. "It will be placed in the general fund and used for the education of children," Demarcus said.

Rye had been accused of padding his retirement without board approval, charging gas for his personal vehicle to his district credit card, being compensated improperly for sick leave days, and other misappropriations. Brewer discovered the questionable disbursements and approached Edelen's office in the fall of 2012.