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Mixed Calls for Action Following Betrayal at Covington City Hall

The emotions connected to firing a once-trusted advisor were still evident at Covington City Hall during a special meeting Tuesday night.

Finance Director Bob Due was fired by a unanimous 5-0 vote following his arrest on theft and other charges in a scheme that allegedly involved his illegal taking of roughly $300,000 and possibly more.

"I was shocked and confused and now I'm angry," said Assistant City Manager and City Solicitor Frank Warnock. "I feel betrayed, like a good friend hit me below the belt when I wasn't looking."

Tuesday's special meeting was called early last week, days before Due's arrest on Friday evening, so that the commission could vote to set the city's property tax rate for the next year. With the criminal charges against a man who was well-respected in the building emerging, the meeting's agenda grew to include Due's firing and the hiring of an interim replacement.

While the city commission was unified in the notion that Due should be fired, how to handle the aftermath was met with mixed reaction and plans.

Mayor Sherry Carran and City Manager Larry Klein assembled a plan for a task force to analyze the city's finance department, its structure, and how best to recover the missing funds.

That plan was approved 3-2 with Carran and City Commissioners Chuck Eilerman and Steve Frank voting in favor and Mildred Rains and Michelle Williams dissenting.

Williams said she was not made aware of the plans to assemble a task force until the meeting. She also took exception with the people selected to make up the task force.

"I was informed of the task force from the newspaper," Williams bemoaned. "Four of the seven (members) sitting up on this bench are on the task force."

"It's already shady for me."

The task force is to be chaired by former Kenton County Judge Douglas Stevens and will include Mayor Carran, Commissioner Frank, audit committee chair and internal auditor Shane Nenegard, Due's predecessor as Covington's finance director Greg Engleman, Florence finance director and former independent auditor in Covington Linda Chapman, and resident Russ Horsley.

Management Partners, which made recommendations last year on how to reorganize City Hall, will serve in a technical advisor capacity with a fund recovery specialist and a representative from the finance department.

Support staff for the task force will include City Manager Klein, Warnock, and Police Chief Spike Jones.

Commissioner Rains also expressed her disapproval for including any staff on the task force. "Bob (Due) must have been the smartest man in Covington or someone wasn't doing their job," she said. Rains called for Kentucky State Auditor Adam Edelen to launch an investigation before any task force is assembled.

"It's premature to put a task force together before the audit," Rains said.

Klein said that he was already in contact with Edelen's office and those in support of the task force concurred that the new group could perform work in conjunction and during any possible audit.

"The task force will address a number of matters, such as re-staffing and asset recovery which would be beyond the scope of (Edelen's) work in any event," Commissioner Eilerman said. "It's not an either-or situation."

Commissioner Frank, who campaigned and has governed as an expert on finances, tried to explain how a crime as significant as the one Due is accused of, could have happened.

"We passed every audit. We were given an unqualified passing whether internal or external," Frank said. He added that audit reports come with the caveat that they offer reasonable but not absolute assurance of their accuracy.

Frank also credited former City Commissioner Steve Casper whom Frank said was first to question Due's innocence. Casper was in attendance at the meeting.

Prior to the discovery of Due's alleged criminal activity by members of his own staff in the finance department, the City had taken steps to improve the outdated software and system used in the first floor offices inside City Hall. New computers and a $400,000 software were purchased at the end of 2012. The department was also reorganized.

But, "Even with a new system (someone) may be able to get away with theft," Frank warned.

City leaders are hoping that Due does not get away with theft, if he is convicted. The task force will focus on recovering much of the lost funds. Linda Chapman, the Florence finance director, has experience in helping that city in a similar but even larger theft when the finance director there was convicted of stealing more than $2 million a decade ago.

The three summarized focus of the group is to review, recover, and recommend.

"Edelen's office has a role, undoubtedly, in conjunction with this group," Eilerman said. He went on to credit the finance department staff for finally putting an end to the disappearing funds, that always seemed to be accounted for when reported by Due. 

"I don't want to keep giving credit," Williams shot back. "I want someone to take responsibility."

"The only person who is responsible is the one who did it," Mayor Carran said. "This task force is different than a state audit. It is to guide us through the next couple of months which are going to be rough."

Carran argued that Williams should not be trying to place blame on Klien "as you are trying to do".

"I want people to know again that (Warnock) did not learn of this till 5 p.m. Thursday and he told (Klein)," Carran continued. "They've been working since Thursday night, all weekend, Monday, and today."

Carran also started to get emotional when crediting Chief Jones and Police Captain Bryan Carter for being the ones to place Due under arrest. Warnock thanked Kenton County Commonwealth's Attorney Rob Sanders who quickly departed meetings in Lexington on Friday to help with the case.

Klein also offered praise to the finance department. "It was our finance department that discovered this and with their sense of loyalty (reported it)," he said. Within twenty-four hours, Klein said, the charges were confirmed, Due was isolated, and the public was informed.

Williams continued her call for someone to take responsibility. "The city manager doesn't have what it takes if we're getting ripped off to the tune of $300,000," she said, calling for a re-examination of the entire budget that was passed in June.

Carran closed her comments by calling for patience and telling the people that the city would emerge stronger after going through this.

"It's been rough. It's rough for us, our citizens," the mayor said. "We take very seriously these next steps as we proceed."

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

Photo: Covington City Commission meets Tuesday night to fire Bob Due, form a task force/RCN