FRANKFORT The Lawrence County Attorney paid out $126,500 in bonuses to his wife over a two-year period, a newly released government audit shows.
The findings by the Auditor of Public Accounts Mike Harmon have been forwarded to the FBI, the IRS, the Kentucky Attorney General, the Kentucky Department of Revenue and the Lawrence County Ethics Commission, per the report.
During a press briefing Thursday, Harmon said the finding was “rather unique.”
“We've come across bonuses before in county attorney offices, but this is the largest, most significant bonus we've found,” Harmon said. “It was shocking to find that large of an amount and it is certainly unfortunate.”
The finding was part of a 93-page report of audits conducted of nine county attorney offices across the commonwealth between fiscal years 2017 and 2019. Two other findings, Boyd and Gallatin, were also referred to federal and state authorities, according to Harmon.
Lawrence County Attorney Michael Hogan is accused of paying his wife, Joy Hogan, a $61,400 bonus in 2018 and a $65,100 bonus in 2019.
Hogan's wife is designated as a legal secretary — Harmon said Joy Hogan had a $40,000 annual salary.
Add in the bonuses, she made more than $100,000 each of those years.
The audit report states that a total of $134,500 in bonuses were paid out to employees at the office, with two assistant county attorneys receiving combined payments of $4,700 over the two-year period.
Those bonuses were paid under a 1099 designation, frequently used for subcontractors, Harmon said. That means they were tax-free payouts, per the report.
The county attorney handles legal matters for the fiscal court, delinquent taxes, child support and juvenile criminal cases in district court. County attorneys are paid through the state government, the county fiscal court, billing child support enforcement and through their own private practices.
The office is funded through traffic diversion program fees, cold check fees and delinquent real estate taxes.
The payment of bonuses from government funds is a violation of the constitution, the auditor's report notes. The report quotes section 3 of the Kentucky Constitution as stating:
“All men, when they form a social compact, are equal; and no grant of exclusive, separate public emoluments or privileges shall be made to any men or set of men, except in consideration of public services.”
The report goes on to so say the interpretation of that section has been that wages and salaries can only be paid for the work performed.
The auditor's office identified the bonuses as coming out of the delinquent tax fee, which cannot be used to pay the county attorney himself. The size of the bonuses paid to Hogan's wife calls into question if it benefited him personally, according to the report's findings.
The report notes “the magnitude of bonuses awarded to the County Attorney's spouse indicates a substantial personal benefit to the county attorney,” which could also be violation with the Lawrence County Code of Ethics.
In a written response dated May 15, Hogan stated that his wife has worked for him since he took office in January 2003. He wrote that while her title is a legal secretary, “she effectively operates as the office manager, chief administrative officer and human resources director for the office, in addition to handling scheduling, correspondence, interacting with the public and attending to a wide range of additional duties ...”
He went onto say that while Joy had been working at the office for 17 years, they've been married for the last 12 years. Hogan wrote that the Lawrence County Ethics Commission looked into the possible conflict of interest and found Joy Hogan to be the “best qualified” for the position.
Hogan further stated that while he will discontinue the payment of “supplemental salary payments” to employees out of the delinquent tax fund, they constitute “fair and just compensation for legitimate work benefitting the public that was performed by employees in the Office of Lawrence County Attorney.”
Currently, county attorneys are not required by state law to submit to an annual audit, unlike sheriffs, fiscal courts and county clerks. Harmon said his office will ask the Kentucky General Assembly to consider changing that.
“We have 120 counties in this commonwealth and most of those county attorneys try to do a good job,” he said. “But just like my father used to say 'good fences make good neighbors,' I believe that people need guardrails to do the right thing.”
In the case of Lawrence County, and other findings in the report, Harmon said his auditors did what they always do: follow the data.
“When I took office in 2016, I told my auditors to follow the data where ever it goes, because we truly want to shine the light on this,” he said.
Hogan was a Republican candidate for Attorney General of Kentucky in the 2015 election.
Lawrence County Judge-Executive Phillip L. Carter was contacted Thursday morning, but stated he hadn't seen the report yet.
Hogan's office was contacted and a message was left. As of Thursday afternoon, the phone call had not been returned.
Harmon said anyone with concerns about a how a public office is handling its finances may call the auditor's office tip line at 1-800-KYALERT.
(606) 326-2653 |