CLINTON COUNTY, Ind. (WLFI) — A new audit by a state agency raises concerns about Sheriff Rich Kelly and his use of the jail's commissary fund.
Upon completing its investigation last week, the Indiana State Board of Accounts is asking Kelly to repay hundreds of thousands of dollars.
The months-long audit looked into payments totaling more than $190,000 over the course of three years to a corporation for the Clinton County Jail's commissary management services.
The problem? Sheriff Richard Kelly and his wife formed the corporation, Leonne LLC, two months before he took office. The SBOA also found no evidence of a contract between the sheriff's office and the LLC.
"It got to this point because there was public misconduct being done by the sheriff and the sheriff's office," says Clinton County Commissioners Jordan Brewer.
The 35-page SBOA report ends with charges nearing $330,000 to repay the commissary fund and cover the costs of the audit.
The report also raises concerns about conflicts of interest and nepotism, pointing out that Kelly's wife is also the jail matron.
"This was all calculated in how it was done," Brewer says. "There was decisions made to profit from those positions."
As News 18 previously reported, Brewer and Clinton County Commissioners sued Kelly in March over the issue. The lawsuit is close to being dismissed but the new audit is revealing more details.
"There's just a right and a wrong way to do things, and this is the wrong way ... the elected sheriff is a person that upholds the law and we should look up to, and we see here that's not the case," Brewer says.
The report includes a letter from Kelly's attorney, who argues "there is nothing nefarious" about the LLC.
"The Sheriff or the Sheriff's designee, by statute, is authorized to disburse funds from the Commissary Fund without oversight by any other county official," Attorney Tonya Bond writes.
Bond also disagreed with allegations of nepotism, noting the previous sheriff's wife was also jail matron.
The county's nepotism policy "does not apply to this situation," Bond writes. "The policy does not address appointed positions or third-party contractors, which are the capacities in which Ms. Kelly served."
The results of the audit were forwarded to the Indiana Attorney General and a special prosecutor.
When contacted by News 18, Kelly provided the following statement:
“The SBOA recently released its report. For months, I have opened my office and made every document available for review and every employee available as requested by the SBOA. I appreciate their thorough review. The Sheriff’s Office official response is included in the SBOA’s report, which can be accessed via their website. In summary:
• The SBOA determined that all money was accounted for in each of the five Sheriff’s funds.
• The SBOA’s contentions with respect to the operation of the Sheriff’s Commissary Fund are the subject of pending litigation in Tippecanoe County. We are seeking a judicial determination on the interpretation of the commissary statute and any contract related to the Commissary Fund.
• Prior to taking office, I had many conversations with other office holders and the county attorney laying out how my administration would run commissary. These conversations included that my wife, Ashley, would serve as my matron and that Ashley would separately run commissary under the same terms as historically done by previous sheriffs. The county attorney and county officials promised a commissary contract and a conflict disclosure form, but they never provided them. Once I realized these documents had not been completed, we went to work to correct these issues.
• For more than 20 weeks now, as this process has drug on, my wife has continued to work as the commissary manager but has postponed being paid for this work until these issues are resolved so that the facility and staff have what they need moving forward. To entirely outsource commissary to a 3rd party vendor would be a deficit to the fund as other vendors charge more and deliver less.
We will work with the Attorney General’s Office to reconcile the findings in the report as quickly as possible."