Former Whitley Sheriff pleads guilty to extortion, drug dealing and money laundering

Former Whitley County Sheriff Lawrence Hodge, flanked by his attorneys Jason Williams and Brent Caldwell, walks into U.S. District Court in London Thursday.

Read the complete text of the plea agreement in the case by clicking here.

Former Whitley County Sheriff Lawrence Hodge is in jail after pleading guilty Thursday to charges of extortion, drug trafficking and money laundering.

Hodge, 51, appeared in U.S. District Court in London to enter the guilty plea. In exchange for his plea, prosecutors are recommending a sentence of 15.5 years (186 months) with three years of supervised release to follow. He was also ordered to surrender $50,000 to federal authorities and must make restitution in the amount of $64,897 to Whitley County.

Hodge was never formally charged by federal authorities, but instead had been working a deal with prosecutors in advance of an expected indictment.

All told, Hodge pleaded guilty to three felony offenses: conspiracy to effect commerce by extortion under color of official right, conspiracy to distribute Oxycodone and conspiracy to commit money laundering.

Hodge admitted that on at least three separate occasions between 2004 and 2007, he conspired with Williamsburg defense attorney Ron Reynolds to extort money from individuals that the Whitley County Sheriff’s Department charged with felony drug trafficking offenses.

Specifically, Hodge referred criminal defendants to Reynolds for representation.

Reynolds, acting on behalf of Hodge, then encouraged these same clients to make forfeiture payments and/or cash donations to the Whitley County Sheriff’s Department. The department received more than $55,000 through this scheme.

Reynolds pleaded guilty to extortion in mid-March. He is scheduled to be sentenced June 29.

Each of the individuals Reynolds represented expected and understood that they would face reduced charges and/or they wouldn’t face any period of incarceration if they hired Reynolds based on the sheriff’s recommendation, according to Reynolds’ plea deal. In each instance, the felony drug charges were reduced to misdemeanors with the sheriff’s consent and approval. Reynolds has agreed to forfeit $199,500 to the government, which represents the net profit he made on the deal.

Hodge also admitted that he conspired with numerous drug dealers in Whitley County to distribute prescription pills, primarily Oxycodone and Hydrocodone, over a seven-year period. Hodge admitted that he was addicted to prescription pills throughout his tenure as Sheriff.

Dressed in worn blue jeans and a blue button up shirt, a dispirited Hodge told Judge Gregory F. Van Tatenhove Thursday that he used his position to obtain drugs from drug dealers.

"I went to a drug dealer and told him I knew what he was doing and if he didn’t give me some information that I would come back and get him," Hodge said. "I got drugs from him."

The plea agreement also says Hodge cultivated an atmosphere of tacit acceptance of drug dealing in Whitley County, as long as they cooperated with his demands.

"In exchange for providing the Defendant with drugs, these same individuals were permitted to run their drug trafficking operations unabated and without fear of investigation and/or interference by the Whitley SO, thereby allowing the continued distribution of controlled substances," the agreement reads. "Specifically, the Defendant, in his position as Sheriff of Whitley County, failed to investigate, arrest, or institute criminal proceedings against these drug traffickers in exchange for these traffickers providing him illegal drugs for his personal use."

Authorities say they could prove Hodge garnered about 1,500 Oxycodone 80mg pills through his illegal efforts.
On the final charge of money laundering, Hodge admitted that he conspired with a former bookkeeper for the Sheriff’s Department to embezzle near $65,000 in department funds.

According to court documents, money donated or forfeited to the department in connection with various court cases, was placed in the Whitley Sheriff Department’s Drug and Alcohol Fund.

The money in this fund was supposed to be used to make controlled drug buys, pay informants, and to further other similar law enforcement objectives. Instead, Hodge told the bookkeeper to write him checks from the fund for one of these legitimate purposes, when in reality he was using the money to fund his own drug habit and for other personal expenditures. The bookkeeper was aware that Hodge was improperly taking the funds for his own personal use.

In order to cover up for the missing funds, Hodge permitted the bookkeeper to alter the Sheriff Department’s accounting records and to falsify reports and other required paperwork.

Though the bookkeeper was not named in the plea agreement, an affidavit released earlier this year claimed that former bookkeepers Kendra McKiddy and Vicki Paul helped Hodge funnel money out of the account, as well as tax fee accounts, and then altered accounting records to cover up the misdeeds. Paul allegedly admitted to the misdeed, McKiddy did not.

Neither McKiddy nor Paul are facing any criminal charges to date.

Hodge spoke only in the briefest terms about his crimes, and said little at Thursday’s hearing other than to tell Van Tatenhove he understood the charges against him, and to answer other basic questions.

After the hearing, he was taking into custody by the U.S. Marshalls Service and will remain in jail until his formal sentencing hearing Aug. 25.

Following the hearing, Hodge’s attorney, Brent Caldwell, of Lexington, said his client was "very remorseful for what he has done" and felt pleading guilty in advance of an indictment was the right thing to do.

"He feels like he has not only let the community down, but has let his family down as well," Caldwell said. "He’s thankful to the support he received [when he was in office]. He feels badly that he has done these things and let the community down that supported him."

No one from Hodge’s family was in court Thursday to witness the proceedings. Caldwell said Hodge didn’t want any of his family present.

Though prosecutors are recommending a sentence of 186 months, Van Tatenhove could deviate from that if he chooses.

There is no parole in the federal prison system, but those sentenced can get as much as 15 percent shaved off their time for good behavior. Hodge would serve a little over 13 years at the very least if his plea agreement is approved.

Hodge’s plea agreement would allow him to withdraw his guilty plea in the event that Van Tatenhove decides not to accept the deal.

Hodge served as Whitley County Sheriff’s for eight years. He was soundly defeated by current Sheriff Colan Harrell in last May’s Republican Primary Election in an effort to win a third term.

Harrell said Thursday he is glad Hodge’s case is finally coming to some sort of resolution.

"The plea that he made was between he and the court system," Harrell said.

"Myself, I’m glad that it is going to be over with. It kind of relieves this cloud hanging over Whitley County, which is not a good thing. We need to get on with business as usual."

Harrell added that public confidence was so low in the former department that months prior to assuming office, he had people calling him asking whether they should go ahead and pay their property taxes or wait until he took office so they would know the money was going to the correct place.

"I feel comfortable that we are restoring confidence in the sheriff’s department. I feel like right now that a high percentage of people have confidence in the sheriff’s department, and that the problems they come to us with will be addressed," Harrell said.

Although Thursday’s plea may begin the closure of one investigation into Hodge’s terms as Sheriff, state charges are still pending. He was indicted by a Whitley County Grand Jury last November on 21 felony counts – 18 for violations of public trust and three for tampering with physical evidence. The charges stem from revelations that Hodge may have diverted as much as $350,000 from tax fee accounts and drug and alcohol seizure accounts for his own use. Also, he is accused of selling seized firearms for his own gain. He is scheduled to appear in court on those charges next week.

And, the fallout from his plea Thursday remains open ended. Assistant U.S. Attorney Jason Parmon, who represented the government at Thursday’s hearing, would not comment on whether Hodge intended to cooperate with federal authorities on other investigations and prosecutions.