City official paid for cable, funded 401K with money stolen from Kentucky town, feds say

After a Kentucky city official was caught embezzling $767,192, she “denied that the purpose of her long-running scheme was for personal gain,” according to federal authorities.

Rather, the former occupational tax administrator and chief financial officer said she stole from the City of Bardstown to pay the bills of “thousands” of customers who couldn’t afford their utility bills, authorities said.

But prosecutors said that wasn’t true.

Investigators checked into Tracy L. Hudson’s story and found that she only used $3,300 to pay customer bills — and about $1,600 of those payments were to pay for her own cable bill, according to court records. An additional $200 was put toward her friend’s account.

Hudson, 42, has now been sentenced on a charge of wire fraud, according to a March 22 news release from the U.S. Attorney’s Office for the Western District of Kentucky. She’s ordered to spend 35 months in prison and pay $629,972.39 in restitution.

The defense attorney representing Hudson, of Bloomfield, did not immediately respond to a request for comment from McClatchy News on March 23.

In the government’s sentencing memorandum, prosecutors said Hudson stole from the city between 2013 and September 2019.

She embezzled the funds by paying herself for fake expense reimbursements, diverting extra payments into her 401K pension plan, buying herself items with a city credit card and crediting payments to her personal accounts without actually paying, according to court records.

“The primary method by which Hudson stole from the City of Bardstown was by stealing cash, most often from cash payments made when individuals were paying for city services,” authorities said.

She was able to hide the fraud for many years due to her positions with the city and how an account was managed, officials said.

After she was caught, authorities said Hudson gave $134,121 back to the city.

The remaining funds are due to the city and its insurance company through the court-ordered restitution.

Bardstown is about 60 miles southwest of Lexington.

This story was originally published March 23, 2023 at 8:24 AM with the headline "City official paid for cable, funded 401K with money stolen from Kentucky town, feds say."