Member Login

As Amount of Alleged Theft Rises, Covington Committed to Recovering All of It

UPDATE: The City of Covington has been granted a temporary restraining order, freezing the assets of former Finance Director Bob Due: Click Here For That Story

ORIGINAL POST:

The past seven days at Covington City Hall have amounted to possibly the toughest week in recent history.

Last Friday, longtime Finance Director Bob Due was arrested on charges that he stole roughly $300,000 from the city's coffers.

The news came after years of Due warning the City of Covington about its dire financial situation.

On Monday, the 63-year old was arraigned in Kenton Co. District Court and released on $10,000 bond. It was learned that day that the city believed that the alleged theft could be much higher than originally known.

That evening, the City issued an official statement saying that Due's alleged crimes would not be tolerated and that efforts would be laid out to recover the losses.

When the city commission convened for a special meeting on Tuesday, they unanimously voted to fire Due. The commission also voted to create a task force to analyze how best to restructure the finance department and to recover the missing funds.

Two city commissioners opposed the task force and instead called for a full audit by Kentucky Auditor Adam Edelen. On Wednesday, City Commissioners Mildred Rains and Michelle Williams pushed a petition that implicated the mayor, the other commissioners, and city administrators in possibly being involved in Due's alleged crimes while affirming their stance that a full audit by the state should be conducted.

It was made clear Tuesday night, in spite of the petition's language, that the City was in conversation with the auditor's office, a fact confirmed by Edelen's spokesperson.

A petition drive was held Wednesday night, organized by the two dissenting commissioners, but few people showed up.

On Thursday, the City of Covington audit committee held a special meeting to discuss how to hire the next auditing firm and whether two should come in with different duties. It was also confirmed that the amount allegedly stolen by Due was now at $600,000 and started in 2007.

Hours later, The River City News learned and reported that Due had attempted to kill himself at his Independence home by sitting in a running vehicle in a closed garage. He was taken to St. Elizabeth Hospital in Edgewood where he was being monitored in a psychiatric ward. It appears that when he is released from St. E, Due will be returned to the Kenton Co. Detention Center where he will be placed on suicide watch.

His next court appearance is scheduled for September 3 at 1:30 p.m.

The chain of events over the past seven days has been draining on city leaders and staff, but work to recover the stolen funds. City Manager Larry Klein said Thursday that regardless of the amount, the City would work to recover all of it.

During the special meeting of the audit committee, the question was raised about how many signatures were required on a City-issued check. The answer was, two: Due's and Klein's. Trouble was able to arise because Klein's signature is automated.

"Then you don't have two signatures," said City Commissioner Steve Frank, who attended the meeting along with City Commissioners Chuck Eilerman, Rains, and Williams. That practice would be halted immediately, it was decided.

The audit committee will also create a request for proposals by Tuesday evening that will call for two companies to perform audits. One will look at the books, performing a traditional audit while another will assist the newly created task force in piecing together the chain of events that led to Due's alleged theft. More safeguards will be put in place in an effort to prevent further theft in the future.

The audit committee will also define the position of internal auditor and seek to hire someone to fill it. That person would serve as a second set of independent eyes over the city's money. An assistant finance director may also be hired in the future.

Another order of business for City Hall will be to better define the policies and procedures within the finance department and the handling of money. It was discussed that there is no written guideline currently for the practice.

It was noted that the City is insured up to $150,000 for each alleged transgression by any criminal activity within City Hall, meaning that each time Due allegedly wrote a check to himself, the crime is insured.

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

Photo: Covington City Hall/RCN file