Office of the Attorney General
Attorney General Stumbo’s Investigation Reveals Improprieties in “Unbridled Spirit” Contract
Finance Cabinet Audit Fails to Address Important Issues
Attorney General Greg Stumbo today announced that an audit, conducted by the Finance and Administration Cabinet, has documented the improprieties in the administration of the state’s “Unbridled Spirit” contract with New West, LLC, as outlined in the Attorney General’s July 10, 2006 investigatory report.
The Fletcher Administration provided New West with a state contract, beginning in 2004. New West created the “Unbridled Spirit” logo and advertising campaign, and has also been paid for services such as media placement, speech writing and event planning.
The Attorney General’s investigative report identified (1) illegal prepayments for services and expenses which have not been either rendered or incurred; (2) improper payment of fees to New West beyond the 10% resulting in overpayments in fiscal year 2004/05 totaling approximately $990,000; (3) use of “off-contract” services from New West to circumvent the 10% cap upon fees; (4) the submission and payment of bills as “expenses” which reflect “services” producing further overpayment of fees; and (5) misuse of federal funds. Each finding was affirmed and documented by the Finance and Administration Cabinet’s audit. In all, the Attorney General’s investigation uncovered overpayments to New West totaling more than $1.4 million.
“The Finance Cabinet has recognized some of the findings of my Office but more work must be done to stem the tide of tax dollars that are being abused in this branding effort,” said Attorney General Stumbo. “Savings in advertising costs should have been passed on to taxpayers, not New West.”
Attorney General Stumbo emphasized that numerous problems have not yet been adequately addressed, including: (1) awarding credits and savings to New West despite an absence of records to support the claim; (2) failing to remedy misuse of federal funds; and (3) giving the original audit report to New West to review and alter without first providing copies to the Office of the Attorney General.
“I want to see the audit report in its original form,” said Attorney General Stumbo. “It’s unfathomable that the Finance Cabinet would allow the target of an investigation to edit the report prior to giving a copy to the investigatory agency. This could endanger our ability to recover taxpayer dollars.”
The Office of the Attorney General initiated an investigation of the state’s branding contract with New West in September of 2005 in response to complaints received from state employees regarding New West “over billing” for its services. The eight month investigation by the Attorney General uncovered a host of improprieties requiring a formal audit of the entire contract.