William Gary Rye: Former Dayton schools superintendent pleads guilty to embezzlement

DAYTON, Ky. – The former superintendent of Dayton Independent Schools pleaded guilty to embezzlement in federal court Monday morning and will go to prison for 18-24 months in a plea deal.

William Gary Rye admitted taking approximately $193,149.22 in benefits he wasn't entitled to, U.S. Attorney Kerry B. Harvey said.

Rye, 65, of Wilder, Ky., pleaded to one count of embezzlement and faced a maximum prison term of 10 years. Rye will be sentenced April 22.

The case was eligible for federal prosecution because the small Dayton school district, one of the poorest in the state, annually receives in excess of $10,000 in federal funds, Harvey said.

In a separate civil settlement, Rye agreed to return $473,000 to Dayton schools and the CPA firm that conducted annual audits of the district but didn’t report Rye's fraud to the board agreed to return $38,000, state auditor Adam Edelen announced in November.

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

A few months after Rye retired in 2012, his successor, Jay Brewer, approached Edelen with concerns over Rye's financial activities, Edelen said.

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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