Fort Thomas city leaders can't account for more than $713,000 spent over a four-year period, according to a draft forensic audit reviewed by council members this week. The report also flagged an $850,000 interest-free loan to a local restaurant group that had been left off the city's books entirely, though auditors say they found no evidence that any city worker or the finance director pocketed unauthorized payments.
The findings, laid out in a draft report presented at Fort Thomas City Council's regular meeting Monday at 7 p.m., build on a smaller discrepancy the city had already disclosed. According to local12.com, council commissioned the outside forensic audit after officials discovered $322,000 in spending that could not be traced, an amount the city said it needed to write off because it could not determine where the money had gone. The newly surfaced $713,000 figure represents a far larger gap than city leaders first acknowledged.
COVID Funds and Opioid Money at the Center
Most of the newly identified missing money traces back to federal COVID relief funds and opioid settlement dollars that were never properly logged in city accounts, per an account from fox19.com. Auditors linked the bulk of the unaccounted-for spending to those two funding streams rather than to any single missing transaction, the outlet's report notes. Even so, the report found no evidence that any city worker or the finance director received unauthorized payments, according to the same account.
The audit also turned up a separate accounting problem tied to $322,000 that officials had already flagged. City leaders had disclosed that the sum could not be accounted for and needed to be written off because staff could not determine where it had been spent, the draft audit reiterates. The city's request for the outside review came with a price tag: council approved spending $25,000 on the forensic audit itself, the report notes.
An $850,000 Restaurant Loan That Never Made the Books
Buried in the same draft audit is a detail with roots going back three years: Fort Thomas provided a local restaurant group with an interest-free $850,000 loan in 2023 that was never entered into the city's accounts. A later correction to the city's ledgers eventually brought the loan up to date on paper, but the draft audit could not determine whether the loan was ever repaid or whether any payments had been made at all.
City council had originally approved financial support for a restaurant project years earlier. A 2022 report from LINK nky shows council voted five to one to authorize then-Mayor Eric Haas to sign an agreement giving developer Quarter Group an $850,000 interest-free loan, structured to be repaid over 10 years through annual payments of $10,000 plus 2.75 percent of any sales above $1.3 million. Under that same agreement, any unpaid balance would simply dissolve once the 10-year period ended, LINK nky reported at the time. Quarter Group later sued the city and its Design Review Board after its application for a Certificate of Appropriateness was denied three times, according to a separate LINK nky report.
Payroll Errors and a Still-Incomplete Picture
Beyond the missing funds, the draft audit found an average of 77 errors made on workers' payroll checks per week across the four years it examined. Fort Thomas, Northern Kentucky's third-largest city, is led by Mayor Andy Ellison, who was appointed last year after the previous mayor fell ill, and City Manager Matt Kremer.
City officials have stressed that what council reviewed this week is only a draft, and that they are still waiting on the final report before drawing conclusions. Meetings are being scheduled in October to seek additional answers once that final audit is complete, according to the fox19.com account. Until then, the full relationship between the $713,000 figure and the earlier $322,000 write-off remains unresolved, and the status of the restaurant loan's repayment is still unclear.
