Former Sheriff’s bookkeeper gets six months in jail for embezzling funds

Vicki Paul, center, is seen in May leaving court with family members, friends and her attorney.

A bookkeeper for disgraced former Whitley County Sheriff Lawrence Hodge will serve six months in jail, and six months on home incarceration for assisted the ex Sheriff in embezzling and laundering hundreds of thousands of dollars his office, some of which she kept for her own use.

Vicky Paul, 51, also paid back $25,000 in restitution to Whitley County Thursday during her formal sentencing hearing in U.S. District Court in London.

“I know I made a mistake. I know in my heart I have to pay for it. I know I deserve what you give me,” Paul told U.S. District Judge Gregory Van Tatenhove before receiving her sentence.

Paul pleaded guilty in May to embezzling at least $5,000 from a local governmental agency that received federal funds. She could have faced up to 10 years in prison and a $250,000 fine for the crime.

Paul reached an agreement with prosecutors in advance of being formally charged.

In her plea agreement, Paul admitted that from 2003 to 2008 she helped Hodge embezzle and/or launder a total of $222,914 from several different accounts belonging to the Whitley County Sheriff’s Department. Under Kentucky law, the sheriff’s department is responsible for collecting all state, county, county school district, and other property taxes within a given county.
Paul told Judge Gregory F. Van Tatenhove that certain funds within the department would come up short, and Hodge simply told her and fellow bookkeeper Kendra McKiddy to "fix it."

"At first, it was just a little bit. It went from being a little bit to snowballing," Paul said. "Pretty soon it was fix it, fix it, fix it."

Paul admitted that she altered records related to the payment of property taxes by the citizens of Whitley County in order to create a false surplus of money in the department’s tax account. Paul did this with the knowledge and consent of Hodge.

Essentially, when taxpayers would pay property taxes late, they would be assessed a fee for doing so, but Paul would enter it as being paid on time. The extra money would be used to supplement other fee accounts and the department’s drug and alcohol account, which Hodge has admitted to raiding for his personal use. At the end of a given reporting period, typically every month, both Hodge and Paul took a portion of the excess money. Paul also told the court the she and McKiddy would split excess funds between them.

McKiddy denies the accusations and claims she never took money from the department nor knowingly helped Hodge cover up misdeeds.

Paul said embezzlement from department funds began the very first year Hodge went in office. Hodge was elected Sheriff in 2001 and took office in Jan. 2002. He served two four-year terms.
According to court documents, in 2007, Hodge’s police cruiser burned in a fire at his residence. Paul admitted she and Hodge agreed to use the incident as an alibi for having records related to the tax account destroyed.

Paul also acknowledged she helped Hodge steal money from the department’s drug and alcohol fund. Money donated or forfeited to the department in connection with criminal cases was placed in this fund to be used to make controlled drug buys, pay informants, and to further other similar law enforcement objectives.

Instead, Hodge directed Paul to write checks from the fund for one of these legitimate purposes, when in reality he was cashing these checks and using the money to further his own drug habit and for other personal expenditures. Paul knew that Hodge was improperly taking these funds for his own personal use. 

All told, investigators think Paul helped Hodge shift $58,480 from tax fee accounts to the department drug and alcohol account to cover up deficits. The account was principally funded by the proceeds of drug and alcohol seizures awarded to the department by the courts. The money is supposed to be used for law enforcement efforts.

Hodge pleaded guilty to charges of extortion, drug distribution and money laundering earlier this year. He has yet to be formally sentenced. Prosecutors recommended a sentence of 15 and a half years in prison.

Van Tatenhove noted Paul’s lack of criminal history when handing down her sentenced.

Paul is expected to report to jail Oct. 4. She may be able to serve her time in a local jail since her period of incarceration is so short.