By Jim Hannah
The Cincinnati Enquirer

BURLINGTON - Ronald J. Epling was charged with an additional 17 counts of theft Monday as a state prosecutor described how an investigation has uncovered the theft of $1.24 million in Florence city money between January 2001 and August 2002.

Boone Commonwealth's Attorney Linda Tally Smith told a judge she has evidence that Mr. Epling, the city's finance director, had been subsidizing his estranged wife, two stepdaughters and a former Newport stripper with Florence taxpayer money he has been stealing since he was hired 15 years ago.

The investigation of years of city records has just begun and its complexities have had law enforcement officials working long hours.

"In a one-week period of time we (still) have no idea where all the money went ... or how much is missing," Ms. Smith told the judge.

"It is a lot of money - money going into accounts, and money going out of accounts just as quickly. Where it's all gone, we have no idea."

Irregularities about city funds were discovered during an annual audit by Rankin, Rankin and Co. of Fort Wright while Mr. Epling was on vacation two weeks ago.

The 51-year-old Delhi Township resident has been held in lieu of $1 million cash bond since Dec. 16 at the Boone County jail. He is now charged with a total of 18 counts of felony theft greater than $300.

No matter home many counts of a Class D felony one is convicted of in Kentucky, the maximum time one can serve in prison for those crimes is 20 years.

"It appears to be an unfortunate case where we have Mr. Epling's personal greed colliding with the public's trust," said Boone District Judge Charles Moore from the bench. "He got caught with his hand in the cookie jar."

The judge found enough evidence to bind over the first charge to a grand jury. Mr. Epling has pleaded not guilty to the first charge. The other 17 charges were filed late in the day Monday.

Mr. Epling, wearing Boone County Jail stripes, didn't say anything during the preliminary hearing. He sat quietly as defense attorney Burr J. Travis of Florence argued that the bond was unreasonably high.

"The amount in controversy here is $1 million, so it sounds like $1 million bond is appropriate to me," Judge Moore said. "The sophistication with which he was able to pull this thing off is fascinating. I can't be sure part of his sophistication, when he set this up, didn't include an exit strategy. If he posts bond, I'm not at all sure he will not skip town."

Ms. Smith called state police Detective Don Mullikin to the stand and he described how Mr. Epling confessed to the thefts.

"When I asked him how much money he embezzled from the city, Mr. Epling said, `Around $1 million but not more than $2 million,'" he testified.

Detective Mullikin said Mr. Epling opened a Fifth Third Bank account using his own Social Security number - calling it the City of Florence Capital Improvements Fund - for the exclusive purpose of embezzling money.

"He told me that every dime that ever went into that account came from the city of Florence," Detective Mullikin said.

"And that account was opened in 1988 ... shortly after he started in Florence."

Detective Mullikin told the judge that in a week's time investigators were able to get bank statements for the "capital improvements fund" under Mr. Epling's control only from January 2001 through August 2002.

The other months' statements are being located by the bank in archives. Mayor Diane Whalen arrived at the hearing carrying a box of records including Fifth Third bank statements.

Mr. Travis said his client's cooperation with officials ended Monday when the judge refused to lower the bond.

"He (Mr. Epling) might have talked to police before he got a lawyer and was held on a $1 million bond," Mr. Travis said, "but that's not going to happen now. All he wants to do is be home for Christmas with his family."

Ms. Smith said it wasn't fair to allow Mr. Epling to post bond using what could be stolen tax money or live in one of several residences she says were purchased using stolen money.

"Is it fair to the citizens of Florence that he continue to reside in homes purchased with their tax money?" Ms. Smith said. "There is nowhere he can go that wasn't purchased, in part, with city funds."

She then listed homes Mr. Epling allegedly paid for on a $69,000 per year salary from Florence. They include:

A $650,000 home his estranged wife recently purchased in the golf club community of Triple Crown in Boone County.

A condo in the same community for sale at more than $180,000.

The $200,000 Delhi Township home Mr. Epling lived in with his girlfriend.

An apartment in Florence.

Two homes in Lexington.

Ms. Smith said investigators from the state police and FBI are overwhelmed trying to follow a 15-year paper trail, field calls from anonymous tipsters and close all bank accounts under Mr. Epling's control.

One tip police were rushing to follow up Monday was an allegation that a computer had been destroyed, Ms. Smith said, but she did not elaborate.

Ms. Smith said state police are looking at Mr. Epling's Tristate assets, while the FBI is primarily focusing on possible offshore accounts, including one in the West Indies island of Antigua.

No federal charges have been filed in the case.

Authorities have uncovered six accounts, and have frozen or are in the process of freezing them, Ms. Smith said.

They are two accounts at Fifth Third Bank, including the "Capital Improvements" account, one at L&N Federal Credit Union, an account at Provident Bank, an account at Huntington National Bank and one in an unidentified Lexington bank.

In addition, authorities want to examine the finances of Mr. Epling's estranged wife, Billie Kay Epling; two stepdaughters; and his longtime girlfriend, former Newport dancer Cheryl J. Hatter.

Mr. and Mrs. Epling, through a corporation called E'Clips are the sole franchisees of Great Clips haircutting salons in Northern Kentucky. There are six locations of the business operating in the area.

Investigators will look at the accounts of E'Clips and another corporation called Cumberland Enterprises Inc. Cumberland Enterprises is a Kentucky corporation registered to Mr. Epling and operated through a post office box in Florence.

Mr. Epling is in the midst of a divorce that has lingered in Boone County Family Court for nearly three years, while Ms. Hatter has been embroiled in a lengthy custody battle with her ex-husband in Hamilton County.

In one Hamilton County custody hearing, Mr. Epling testified on Ms. Hatter's behalf, admitting on the stand he provided for her household, including purchasing her a home, car, furniture and private tutoring for her child.

Toward the end of the hearing Monday in Boone, Ms. Smith suggested the scandal could grow.

"We have evidence that checks coming into Florence, whether they be in the forms of water assessment or something else, appear to have just disappeared."

Mayor Whalen - and many of the city's council members - attended the preliminary hearing and glared at Mr. Epling.

"The man who walked into the courtroom isn't the man I knew," Ms. Whalen said, declining to speak about specifics of the case.

As auditors continue to pore over the Florence books, a retired Cincinnati director of finance has been brought on to get Florence's finances back in order.

Frank Dawson, who served as finance director for 21 years and as Cincinnati acting city manager in 1993, will be paid as an independent contractor. He will assist Acting Finance Director Valerie Bowman.

Ms. Bowman took on the responsibilities of managing the city's $18 million annual budget after Mr. Epling was suspended without pay Dec. 16.

E-mail jhannah@enquirer.com