Dayton, Ky. school district to recover $511,000 from former superintendent's fraud, auditor says

DAYTON, Ky. – The Dayton Independent School District, one of the poorest in the state, will recover $511,000 after a special state auditor's examination found fraud by the former superintendent, officials announced Thursday.

Former superintendent William Gary Rye agreed to return $473,000 to the small Northern Kentucky district and the CPA firm that conducted annual audits of the district but didn’t report the fraud to the board will return $38,000, state auditor Adam Edelen announced.

Rye's payment would be more than double the fraud that Edelen reported in the state's audit.

“This is a big win for taxpayers, not just in Dayton but the entire Commonwealth,” Edelen said.

RELATED: Read Edelen's announcement or go to the bottom of the story.

“The criminal part is still ongoing through the FBI,” said current superintendent Jay Brewer. “We’ve come to an agreement with (Rye).”

In the fall of 2012 Brewer approached Edelen with concerns over Rye's financial activities. Brewer took over the job after Rye retired that spring.

An audit revealed that Rye took $225,000 in improper payments and benefits over eight years, Edelen said.

That included:

> $146,276 in retirement related benefits without the board’s approval.

> $47,429 for sick and annual leave days. The board did not approve some of the leave; some leave was taken but not deducted from his leave balance.

> $21,464 in fuel purchases for his personal vehicle charged to a district credit card.

> Nearly $10,000 in false reimbursement claims.

The audit report indicated Rye intimidated and threatened staff responsible for issuing checks if they questioned him.

Almost 90 percent of the district's roughly 1,000 students qualify for free or reduced-cost lunch and were found by the Kentucky Department of Education to be struggling academically during the time of the fraud, Edelen said.

Brewer has implemented recommendations for safeguarding the district's money, Edelen said. The district has revised policies, hired a new internal auditor and beefed up training for school board members.

“Superintendent Brewer has done a fantastic job cleaning up a mess he inherited and restoring the community’s faith and pride in its schools,” Edelen said.



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