County Judge Marvin Day of Craighead County on Friday speculated that the county might get about $250,000 back from former county clerk Kade Holliday as a result of Holliday's federal bankruptcy proceedings.
"There have been some things that we were disappointed in, but we are working through the process," Day told the Legislative Joint Auditing Committee after the committee received a report about audits of Craighead County in 2019 and 2020.
In September 2020, Holliday agreed to repay the county more than $1.4 million that he is accused of stealing, according to court documents.
Circuit Judge Richard Lusby approved on Sept. 10, 2020, an agreed-upon consent agreement between Holliday and the county.
The agreement requires Holliday to pay $1.4 million in compensatory damages, about $35,000 in pre-judgment interest, about $21,000 in attorney fees and costs, and post-judgment interest in accordance with state law, said Jamie Franklin, staff auditor for Arkansas Legislative Audit.
As of June 10 of this year, the county had received $15,000 of that money, Franklin said.
That $15,000 is "a drop in the bucket," said state Rep. Stephen Meeks, R-Greenbrier.
State Rep. Nelda Speaks, R-Mountain Home, questioned whether Holliday was bonded and whether the county has been able to get money from the bond to help make up for what was taken from the county.
Day said, "I think we had to get through this point to then go before that commission [Arkansas Governmental Bonding Board] to ask for our bond.
"There were 14 incidents that had that amount of money," he said. "In our bond policy, it shows that we have a coverage of $300,000 per incident. We are going to contend that we have had 14 different incidents. They're probably going to contend there was one incident that happened 14 times.
"We believe we'll get our $300,000, less than the $2,500 deductible that we owe," Day said, "but we hope we might get a little more than that."
State Rep. Brandt Smith, R-Jonesboro, asked Day whether Holliday has shown any remorse for his actions.
Day replied, "Not in my opinion."
Afterward, attorney Dustin McDaniel, who represents Holliday, said in a written statement that "Mr. Holliday has fully cooperated with state and federal authorities and is very remorseful.
"He acknowledged in his bankruptcy that the county's judgment is not dischargeable, and he will likely be paying towards it for the rest of his life," said McDaniel, who is the state's former attorney general.
After being contacted by a financial institution regarding questionable account transfers, Franklin said Day, in conjunction with the audit staff, determined that there were 12 unauthorized transfers totaling $1.6 million from the county's payroll clearing account that were made to a personal account between Jan. 23 through June 24, 2020.
In addition, funds totaling more than $168,000 were transferred from a personal account back to the payroll clearing account during this period, leaving a shortage of $1.4 million, Franklin said.
After a deputy county clerk was terminated in October 2019, Holliday obtained exclusive authority over the payroll clearing account and created a lack of segregation of duties, Franklin said.
Then Holliday took sole responsibility for making payments from the payroll holding account to various vendors for payroll deductions, he said.
"This control deficiency was due to management's failure to maintain established controls and resulted in the county clerk being able to make unauthorized transfers noted in the 2019 audit finding which totaled $1.4 million," Franklin said.
In December 2020, Craighead County adopted an ordinance that established internal controls by enabling oversight between elected officials' offices, he said.
Day said the Craighead county judge, county clerk and the treasurer's offices "have read-only access to each other's accounts so that somebody is watching."
"We also made sure there was a differentiation of who received the statement and who wrote the check so you can have that opportunity to make sure that multiple eyes are looking at it and reduce that risk of someone stealing that money," he said.
Subsequent to an Arkansas State Police investigation, Holliday resigned from office and was arrested June 29, 2020, Franklin said.
Holliday has been charged in state court with 13 counts of felony theft of property and one count of abuse of office with a trial scheduled for August and September, Franklin said. He said Holliday also has been charged in federal court with 11 counts of wire fraud, and a trial has been scheduled for October.
McDaniel said Friday, "We expect the federal case to be continued into next year and the state case should succeed the federal case."
Holliday, a Republican, replaced Nancy Helms in 2012 as county clerk.
A few lawmakers praised Craighead County officials for their handling of this matter.
Smith said he wants to thank Day, along with Craighead County Clerk Lesli Penny and Craighead County Administrator Lisa Lawrence "for stepping up at a time when Craighead County and our constituents needed some real hardworking and honest, decent people to backfill what Kade did."
State Rep. Johnny Rye, R-Trumann, said, "You sure have been through a lot with this.
"I watched it from the time it started, sir, with you guys," said Rye, who is a former Poinsett County assessor. "I want to tell you that I really believe that you have done a great job handling this."
But Day said, "I want to tell these two ladies ... they deserve the credit.
"Miss Penny has stepped in as the clerk in Kade's absence and has brought that team together from such an emotional thing that they have gone through, and they have done a fabulous job," he said.
Lawrence is a certified public accountant, and "she works really hard to make me look smart," Day said.