With lax oversight, Covington is 'lucky' former finance director didn't steal more than $793K, auditor says
02/13/2014 01:56 PM
COVINGTON – Former Covington finance director Robert Due had a clear path to steal the city’s money unnoticed, which he did to the tune of $793,000 between 2001 and last August, according to an audit released Thursday by State Auditor Adam Edelen.
Due, who was fired in August, had “unfettered access to millions of taxpayer dollars without a single person looking over his shoulder for well over a decade,” Edelen said.
Edelen conducted a five-month investigation at the request of Kenton County Commonwealth’s Attorney Rob Sanders, who is pursuing a criminal case against Due.
Due is currently being held on $500,000 bond in the Kenton County Jail.
Auditors reviewed more than 66,000 checks, and according to the report, discovered a scheme in which the former finance director wrote 68 checks to himself, his spouse, his aunt and a vendor under his control for a combined amount of $793,127.
Due allegedly created two fake vendor names in the city’s finance software. Because he had unchecked access to the payment system, he could enter payment information using one of the two fictitious vendors or one of three legitimate city vendors and change the vendor name in the system to himself, his wife, his aunt or a vendor he controlled. After hours, he would print the checks, delete the check history from the printer to avoid detection, change the name in the system back to the original vendor and deposit the checks into personal accounts, the report says.
“The scheme wasn’t particularly elaborate. But the city’s failure to establish checks and balances and provide oversight granted him the opportunity,” Edelen said.
Edelen warned what happened in Covington could happen in any other city if checks and balances are not in place.
“One of the positive attributes that I hope comes from my investigation is that it spurs a conversation in every municipal government in the commonwealth that we need to figure out how we prevent this kind of abuse from happening on the front end,” said Edelen.
Covington City Manager Larry Klein outlined what the city put in place after discovering the theft last summer to keep it from happening in the future.
“This is the end of a 13 year debacle,” he said. “We will make this right. It happened on our watch, it was discovered on our watch and we will fix it on our watch.”
Edelen praised Covington Mayor Sherry Carran, Klein and other city leaders for cooperating with auditors and taking steps to implement stronger financial controls.
Below the Fold
Auditor-elect Mike Harmon joins calls for KRS director's resignation; names early members of transition team
Subscribe and get the latest political intelligence delivered to your inbox.