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Clinton County sheriff ordered to repay $329,000 for misuse of commissary funds

FRANKFORT, Ind. (WISH) — Clinton County Sheriff Rich Kelly has been ordered to repay $329,000 for the misuse of commissary funds, according to the Indiana State Board of Accounts.

In a 30-page report, the board says Kelly and his wife misused more than $200,000 of the profits from the inmate commissary. 

The revelations from the report come as the sheriff said Sunday night that he plans to seek a second term. 

The board’s investigation began after the Clinton County commissioners noticed a large payment from the jail going to Leonne LLC.

Clinton County Commissioner Jordan Brewer told News 8 on Monday, “One of the first triggers was at the end of 2020. We had a request for a 1099 (Internal Revenue Service form) for a Leonne LLC and known of us really had an idea of who Leonne LLC was. It came from the jail and was in reference to commissary payments and it was a large amount; I believe, $113,000,” Brewer said. 

State investigators found the commissary, run by the sheriff’s wife, sold electronic cigarettes to inmates until the county banned their use on county property. 

As outlined in the report, the sheriff and his wife managed Leonne LLC but, according to Brewer, did not have a contract with the county. The county commissioner said, “They formed the LLC (limited liability corporation), which was managing the commissary up until the time the State Board of Accounts started their investigation and, at that point, they seized payment to Leonne and took a few months off from payments and started paying Ashley Kelly,” who is the sheriff’s wife.

The sheriff’s wife is also on the sheriff’s office’s payroll as jail matron, with a salary of $57,000 a year. The sheriff nor his wife had filed paperwork required by the the county to outline the arrangement.

The state’s review goes deep into the operation run by the sheriff and his wife.  

Brewer said, “It is the nepotism. They obviously highlighted the payments that were done illegally and the overall misconduct by an elected official.”

The past commissary manager was paid less than $40,000.

The sheriff’s lawyer countered in the report that no unauthorized payments were made from the commissary fund, and the payments were within the law. 

The State Board of Accounts turned its report over to a special prosecutor and the Indiana Attorney General’s Office. 

Sheriff Kelly provided a comment in response to a request from News 8, but it was received too late for the 6 p.m. Monday broadcast. Below is the 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.””

Sheriff Rich Kelly