Audit: Spring Lake officials misspent $458,000
Posted June 27
Spring Lake, N.C. — Dozens of officials and town employees in Spring Lake misspent nearly $460,000 over five years, racking up personal purchases on town credit cards, buying items without a purchase order and getting travel reimbursements without required paperwork, according to an audit released Monday.
The audit lists 66 current and former positions – no names are included – from the mayor, police and fire chiefs and finance director down to payroll clerks and meter readers who may have broken the law by using town credit cards for personal use. The State Auditor's Office has turned its findings over to the State Bureau of Investigation to determine if any criminal charges are warranted.
The $122,434 in questionable purchases made between July 1, 2010, and March 31, 2015, include the following:
- The interim recreation director bought $2,751 in Thirty-One bags from a friend. Thirty-One is a business that sells exclusive bags, accessories and jewelry directly through sales consultants. She told auditors that senior citizens had requested the bags, but the director of the senior center disputed that statement.
- A former town manager spent $2,165 on food from a range of vendors, from Krispy Kreme Doughnuts to Subway to Ruby Tuesday. He told auditors that he often conducted meetings at restaurants instead of Town Hall.
- A former Board of Aldermen member didn't reimburse the town for his wife's travel expenses to Boston and Seattle when she accompanied him to town-related conferences.
Town officials were aware of the excessive use of the credit cards, according to the audit, with the former town manager telling staff in 2013 that they "have to reel in our purchases" and a year later rolling out spending restrictions to reduce "impulsive" trips to Walmart. Yet, officials abandoned efforts to review credit card purchases after only two months, the audit states.
State auditors also cited Spring Lake officials for approving $335,756 in purchases in violation of town policies. Almost 75 percent of that was for purchases made without a purchase order, with purchases without receipts and travel expenses reimbursed without the proper paperwork accounting for the rest.
Again, auditors said, town officials knew of the problem but did nothing to fix it. The audit quotes a 2014 email from a former finance director about "clear violations and others that were more creative but nonetheless an attempt to ‘skirt’ the policy." Those attempts include breaking up orders or donating some items to the town to get below reporting thresholds, according to the audit.
Many town workers told auditors they weren't aware of the policies.
Finally, the town under-billed a real estate management company $90,930 for water and never bothered to collect the debt after discovering the error in December 2014, according to the audit.
Spring Lake Mayor Chris Rey said in his response to the audit that town officials are reviewing each questionable expense individually and are seeking reimbursement whenever appropriate. Officials also have billed the real estate management company for the amount owed and have tightened up the policies and procedures for all purchases.