Audit reveals misuse of $4.8 million

Abbi Overfelt Civitas Media

February 7, 2014

LAURINBURG — A state audit conducted into an Laurinburg-based agency that works to ready children for school has found nearly $5 million of state and federal money was used, among other things, to purchase luxury vehicles and gym memberships as well as pay for work that was never completed or inspected.

According to the report on Four-County Community Services released Thursday by the North Carolina State Auditor’s office, the agency, which administers Head Start programs in Scotland, Hoke, Robeson, Bladen, Columbus, Pender and Brunswick counties and helps low-income families become self-sufficient, spends $15-$21 million in state and federal money each year.

The audit found that $4,862,192 was spent in a questionable manner from 2009 to 2012. That total includes $215,000 in payments made to then-executive director Richard Greene, $641,000 in improper bonuses paid to his staff and the purchasing of “unnecessary” products and services, some of which were bought from friends and family members of the agency’s staff.

The Department of Health and Human Services in January requested that the state auditor’s office follow up on 10 allegations of fiscal mismanagement the department had found during its investigation into Four-County, which ultimately resulted in Greene’s termination and a restructuring of the agency.

During their investigation, state auditors received 60 additional allegations, 23 of which were found to be substantiated.

State auditor Beth Wood told the Laurinburg Exchange on Thursday that she could not recall an investigation in her career that revealed “this level of abuse in federal and state dollars.” She praised Four-County for terminating Greene after the state department’s initial audit, but also suspects much of the staff has been trained in improper practices.

“The concern of our office is that the abuse in spending that went on was a everyday practice,” she said, “so you have to step back and say do they even realize what’s prudent management of fiscal dollars? Do they even realize what’s right and wrong?”​

The audit found that Four-County spent $52,534 in transportation costs, including the purchase of a 2008 Ford Expedition and the lease of a 2012 Chevrolet Suburban, each with chrome wheels, leather and wood trim, heated and cooled front-row seats and a “convenience package” that included additional electronic amenities. The Suburban also had features added by the agency, including a third-row DVD screen, surround sound and a power sunroof. In an April board meeting, the audit says, board members discussed terminating the lease on the Suburban but the vehicle was still in use in July.

According to the audit, Greene also violated a nepotism policy by hiring his wife, Annie Rothwell, to serve as the agency’s fiscal manager, and then increased her pay by more than 14 percent from 2009 and 2010, or $10,123, to a total of $78,900, about $20,000 more than what comparable staff at other agencies make.

Greene’s salary increased during that same year by 16 percent, or $17,037. He was also paid $160,000 in employee benefits, including contributions to his retirement plan that totaled up to 39 percent of his annual income — during fiscal year 2010-2012, $40,000 more than what was approved by the board. In 2007 and 2009, the audit found, the contribution was paid directly to Greene as a bonus, without board approval.

“Here again is another example of how important a board of directors really is,” Wood said. “The board is really responsible to make sure that the objectives are being carried out and money is being spent in accordance to policy.”

According to the audit, the agency paid $2.7 million to T and L Complete Construction for weatherization work it did not complete, and granted the company access to a projects database and, in turn, the ability to customize work orders to maximize profits. The company employed two of interim executive director Kim Clark’s sons and provided gifts to employees, including a $300 massage and robes during a conference at an Asheville hotel.

“T and L’s relationship with Four-County employees was so close that the owner shared a room with a Four-County Assistant Weatherization Coordinator … .,” the audit states.

The audit also found that Greene:

— Used his agency-assigned vehicle for personal use, including to pull his boat to various lakes across the state.

— Was provided with two cell phones, one for phone calls and one for Internet and email use, at a $4,342 cost to the agency. Fifty-eight percent of minutes were used during non-work hours and only 2 percent were calls to or from other Four-County numbers.

— Was provided with home Internet, at a cost of $450 for fiscal year 2012.

— Approved five vending contracts without going through a proper bidding process after said vendors agreed to sponsor him in a fishing tournament.

According to the audit, the agency:

— Provided board members undue compensation for travel and payments to attend board meetings.

— Provided former board chairman Jimmy Cummings with a cell phone at a cost of $1,767 in fiscal year 2012, as well as a laptop computer, a desktop computer, a Kindle Fire tablet and service visits from Four-County’s information technology professional. The laptop and tablet were found by auditors to have no evidence of work associated with Four-County.

— Used grant money to reimburse a receptionist for $21,360 in education expenses not related to her work.

— Paid $14,400 to the owner of a Head Start location for “special projects,” including the installation of multimedia equipment at a facility not used for the program.

— Failed to provide services to 36 of the 96 participants enrolled in a grant-sponsored Four-County program that ran from July 2009 to September 2010.

— Used $640,800 to pay bonuses to employees in 2010 and 2011, $23,700 to pay for gym memberships from 2010-2013 and $1,550 to send Cummings to a Las Vegas conference unrelated to his Four-County duties.

— Failed to obtain bids for a copier contract and the purchase of vehicles, costs which totaled $645,724.

— Awarded cleaning contracts to the mother of Clark, with Greene alone approving the $13,800-per-year contract to clean the three-story, 11,300-square-foot Laurinburg office. Auditors found the 86-year-old woman had “apparent mobility issues,” and that Clark’s son, daughter-in-law and sister actually did the cleaning.

— Used $761,800 in excess funding accumulated for the More at Four/NC Pre-K program for undocumented uses. The audit said the funding could have been gained by misreporting the number of children enrolled in Four-County programs or overcharging for services.

— Hired two employees who were related to board members and not qualified for their positions.

In its response to the audit, Four-County administrators, including recently hired Executive Director Ericka Jones Whitaker, said the they would work with state and federal agencies to see if the misused money should be refunded. The agency denied accumulating excess funding by fraudulent means, but the audit pointed out that the agency cannot identify a cause for having the extra funding.

Wood said that if Four-County is not able to fulfill any requested refunds, granting agencies could then take legal action against Four-County leaders to recoup those funds. But noting some are no longer serving, Wood said that may prove easier said than done.

“It could get complicated,” she said.

The state audit is another mark in the agency’s troubled history, which has seen the firing of Greene, the resignation of Cummings and the unlawful appointment of Clark as it’s executive director.

The audit includes a recommendation to the Department of Health and Human Services and other grant agencies to “determine whether Four-County is the appropriate agency to deliver services on their behalf.”

Abbi Overfelt can be reached at 910-276-2311, ext. 12. Follow her on Twitter @aoinscotco.