Southeast Bullitt Fire Protection Board holds first meeting without embattled fire chief

By Chris Otts and Valerie Chinn

LOUISVILLE, Ky. (WDRB) -- The Southeast Bullitt Fire Protection District's lax financial controls have led to “questionable” practices including the fire chief and other employees getting Christmas bonuses and the chief's wife being paid $63,000 over four years despite no accounting of the hours she worked, according to an examination released Thursday by Kentucky Auditor Adam Edelen's office.

The 40-page document lists eight issues

with how the district and a related entity – the Southeast Bullitt Fire Department, Inc. – spend and account for taxpayer funds.

“Antagonistic personalities, consistently high property tax rates, a lack of transparency, confusion in state law and seeming conflicts of interest have led to valid concerns among taxpayers in Bullitt County,” Edelen said in a news release. “Although auditors did not find potential criminal activity based on the allegations we received and investigated, we share those concerns and call on officials there to straighten this mess out.”

The audit comes at a tumultuous time for the district. The Bullitt County Sheriff's Department is conducting a criminal investigation, and the FBI has looked into the department, as WDRB previously reported.

Julius Hatfield, the embattled fire chief, resigned as chairman of the district board last month but has since rescinded his resignation, saying he wants to stay in the role.

Earlier this week Milford Hatfield, the chairman of non-profit Southeast Bullitt Fire Department Inc., said he was giving up his seat on the boards of both the district and the department.

The district collects property taxes from residents and passes essentially all of the money to the department, which provides the fire service under a contract with the district.

The audit says the district and the department lack distinct “roles and responsibilities” and often act interchangeably, such as when one purchases land and conveys it to the other.

Edelen found that the department qualifies as “special purpose governmental entity” yet has failed to register with the state and disclose financial information as required by law.

"They can dispute they are a public entity all they want. But, if they really believe they are a private entity, they ought to give back the $4.4 million dollars in tax money that they've taken from the people over the last few years," Edelen said.

Until his resignation -- which is now in dispute -- Julius Hatfield served for years as chairman of the district and vice chairman of the department – a dual role that “reasonably appears" to be a "conflict of interest” according to Edelen's report.

"The real crime here may be it doesn't seem to be illegal under state law. That's why I've recommended and will be strongly making the case to the legislature that we need to clean up this to make it illegal," Edelen said.

Late last year, Hatfield told a WDRB reporter: “It's not taxpayer money once it gets to us” – an apparent reference to the department's status as a non-profit organization rather than a government entity.

Meanwhile, the district is levying the maximum property tax rate allowed by state law without having conducted any analysis of “the actual costs or future needs associated with providing fire protection,” according to Edelen's report.

"You have an obligation to do an analysis of whether you need those resources," said Edelen. "That kind of work was never done which is outrageous in my view which speaks to the culture that's been created here which is unprofessional personalities, one of antagonistic personalities, one that has been almost a total lack of transparency for the taxpayers."

"The people there deserve better leadership," he said. "They deserve a fire district that is more accountable to them. The fact that as the end of October of last year they were sitting on a balance of more than $2.5 million in cash reserves is beyond questionable."

"The fire district continues to operate without reporting who they are, how much of our resources they fee, tax or spend and the net result is they are operating as outlaws and we can't permit that," Edelen said.

 Other findings:

- In 2011, the district authorized Hatfield to spend $798,000 on land for a new fire station and office building even though the district did not have an independent appraisal of the land's fair market value. An appraisal, while not required by law, is “simply a sound financial practice.”

- Between November 2010 and November 2014, the department “awarded” $63,000 to Hatfield's wife, Joanne, in year-end payments as a gratuity for “volunteering” her secretarial and book-keeping services. These payments – reported to the IRS as 1099 miscellaneous income – came without documentation of the hours Joanne Hatfield worked. Julius Hatfield abstained from the votes to award the money to his wife except in 2012, when meeting minutes indicated all members including Hatfield voted for the payment. The department has since decided to hire Joanne Hatfield for a monthly salary of $1,200 beginning this month. That too presents an apparent conflict, Edelen's office said, since she will report to her husband.

- The department gave $5,200 in “Christmas bonus payments” to employees including the chief and volunteers from 2010 to 2013. Because the department's money primarily comes from taxpayers, bonus payments “are not allowable,” the audit says. 

David Blakeman, who was elected chairman on Dec. 15 following Hatfield's resignation, pledged in a formal response to the audit dated Monday to implement Edelen's suggested reforms. 

Copyright 2015 WDRB News. All rights reserved.

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Chris Otts reports for about business and economic topics, higher education and local / state government. He joined WDRB News in 2013 after seven years with The Courier-Journal. Got a tip? Chris is at 502-585-0822 and