Crestwood to pay combined $250,000 to former city administrator and his attorney to settle lawsuit

By BURKE WASSON

While the Crestwood Board of Aldermen has agreed to accept $170,000 to settle a lawsuit filed against its former auditing firm, former City Administrator Kent Leichliter and his attorney will be paid a combined $250,000 to drop the litigation.

The city of Crestwood will pay $100,000 to Leichliter and $150,000 to his attorney, Tim Kellett, in exchange for dropping all litigation, according to the terms of a settlement agreement approved during an April 25 closed session by the Board of Aldermen.

The city originally sued Leichliter in November 2003 for allegedly manipulating financial records, but he countersued in January 2004 on the grounds that the city breached an agreement to pay salary and benefits to him after his retirement.

Under the terms of that agreement approved by the Board of Aldermen in December 2002, Leichliter was to serve as an adviser to the board and receive his $91,056 salary and other benefits, including health insurance, through March 2004.

Leichliter now will receive $100,000 from the city of Crestwood in two installments — $12,570 by Jan. 5, 2007, and $87,250 by Jan. 5, 2008.

In a prepared statement, Mayor Roy Robinson said that the city’s delayed payment method was agreed upon because of Crestwood’s budget problems.

“Mr. Leichliter also notes that he is aware of the financial burdens that the city is currently under and has agreed to a deferral of the payments to him that will allow the bulk of the money owed to him to be paid in January 2008,” Robinson said in the release.

However, the city has until Monday to pay Kellett the entire $150,000 that the Board of Aldermen agreed to spend.

Under the city’s agreement with Hochschild, Bloom & Co., the auditing firm will pay the city of Crestwood $170,000 to resolve the litigation. The city had sued the firm nearly two and a half years ago, alleging professional negligence and breach of contract. At that time, the city was seeking in excess of $100,000 in damages from Hochschild, Bloom & Co. plus fees paid to the firm for negligently performed auditing work.

Agreements with both Leichliter and Hochschild Bloom stipulate that each side bears their own costs and expenses for litigation in the case since 2003.

The city has spent roughly a little more than $500,000 on litigation since the lawsuit was first filed in 2003, according to Robinson.

Settlements with both Leichliter and Hochschild, Bloom & Co. each were approved by a 6-2 vote during the Board of Aldermen’s April 25 closed session.

Ward 2 Alderman Jim Kelleher and former Ward 2 Alderman Tim Trueblood were the two “no” votes.

Trueblood has said that he could not in good conscience vote to approve either agreement because he believes both Leichliter and Hochschild, Bloom & Co. are responsible for serious financial errors in the city budget.

But Robinson said he does not believe the city had enough “good, solid evidence” to sue Leichliter for allegedly mispresenting financial records.

“I haven’t seen anything illegal,” Robinson said. “Maybe people didn’t like him. I don’t know about that. But I’ve seen nothing illegal or that should have generated that lawsuit in the first place.”

Robinson previously expressed support for Leichliter at an October 2005 town-hall meeting, where he was quoted as saying: “… I have the highest regards for him and I’m a retired federal agent and criminal investigator and if I didn’t have — if I thought he was a thief or a liar or anything, I would not, I would not be in his corner …”

But on Monday, Robinson denied ever making any statement “about being in his corner.”

“No, I never said I was in his corner,” Robinson said Monday. “The only thing I ever said publicly on anything is that . . .if I said anything, it was probably based on what I’ve been reviewing that I don’t see the same things that they sued him for. So no, I’ve never said anything about being in his corner. I’m not in anybody’s corner. I’m in the city’s corner.”

However, a tape recording of the town-hall meeting verified the accuracy of the quote — which Robinson now denies saying — in the Call’s Oct. 27, 2005, news article: “Robinson says Novus lawsuit against Crestwood now settled.”

The mayor said he believes the major reason the city sued Leichliter was because city officials were unhappy with the retirement agreement and pay that was approved to Leichliter through March 2004.

“This is my opinion,” Robinson said. “It was a ploy to cover the fact that they had given him all that money or paying him up through ’til I guess he was 62 or whatever it was. And I think it was a ploy to just take the heat off because a lot of people were unhappy at the fact that he was getting that money. So I don’t think it was in the best interests of the city to have been involved in that. But I wasn’t there. I don’t know all the reason and all that. But based on what I’ve seen, I’ve seen nothing. I don’t know how he performed in those latter years, but I haven’t seen anything other than maybe not performing as well as someone might like. There’s nothing illegal going on as far as I can tell. And when I read the depositions, it was nothing there except praise for him.”

As for Crestwood’s agreement to drop a lawsuit against the auditing firm, the settlement agreement and release states that Hochschild, Bloom & Co. “shall pay the city of Crestwood the sole amount of $170,000 to resolve their dispute and avoid further legal expenses. In no way does this payment reflect an admission of liability or wrongdoing by (Hochschild, Bloom & Co.) …”

In a statement prepared Monday, Robert Offerman, the firm’s managing partner, said that during five years of providing financial statement audits for Crestwood, “we feel our services were thorough, timely and included additional proactive comments and recommendation to the city regarding issues we noted.”

Offerman also pointed out that the firm had “a nationally recognized governmental auditing expert review our work” for Crestwood and that the expert concluded Hochschild, Bloom & Co. had properly done its work.

Both Robinson and Trueblood said they are under the impression that the agreements with Leichliter and the auditing firm essentially end the city’s differences with former Finance Director Robert Wuebbels. Wuebbels was sued in November 2003 along with Leichliter for alleged misuse of accounting practices.