Lexington, KY – Alleged malfeasance by previous administrators at the Bluegrass Area Development District (BGADD) has risen to the level that State Auditor Adam Edelen is referring the case to the state’s attorney general, Kentucky State Police and the FBI.
“For over a decade, the former administration of the Bluegrass ADD took advantage of the fact that the average citizen wasn’t paying close attention to its activities and may not even understand exactly what a development district does,” Edelen said at a press conference announcing the findings of a 51-page report complied after an exhaustive investigation by his office. “It strayed far from its mission and seemingly convinced itself that because it doesn’t receive direct payments from taxpayers, it doesn’t have to be accountable. But let me be clear, every penny this agency receives comes from taxpayers, and today is the day we begin holding it accountable.”
Edelen said the BGADD – one of 15 ADDs statewide with the aim at bringing regional growth, cooperation, economic development and workforce needs – strayed from its mission as its past executive director wreaked too much power and often circumvented its board, made up largely of elected officials and those close to them in community development roles.
The board, as currently constructed, lists 77 members according to the Bluegrass BGADD’s website. Edelen’s report found that former director Lenny Stoltz, II overstepped bounds in allocation of funds by seeking approval from one of the board’s committee rather than the executive board made up of half elected officials and half of what it calls “citizen members.”
One specific example was the hiring of an HVAC company to do work on a building the BGADD purchased a few years ago. The $600,000 building had $465,000 worth of work done without any bid process, nor was there written contract, documentation describing services to be performed or an estimate of the costs. The BGADD also had no invoices to support $63,000 worth of payments to the vendor. Auditors learned that the HVAC company was owned and operated by a member of the Workforce Investment Board, which is chaired by its bylaws by the executive director of the BGADD, and all members were also appointed by the BGADD’s director, creating a possible conflict of interest, according to the auditor.
The audit also found excessive and unnecessary expenditures by the BGADD and misuse of credit cards by the former executive director. Auditors questioned $513,770 worth of expenditures that either lacked supporting documentation or appeared unnecessary or excessive.
Examples of questioned spending include:
• Meals in or around Lexington
• Travel expenses for individuals who were not employees of the BGADD
• Travel expenses beyond what was required for conference attendance
• Hotel charges for stays in the same town as an employee’s workstation