Embezzlement case prompts lawmakers to demand audit of flex insurance program

Chakrapani Tademeti, 66, of 200 Tecumseh Court in Raleigh, is charged with larceny by employee in excess of $100,000 and obtaining property by false pretense in excess of $100,000.

Tademeti, who retired in March after 20 years with the Office of State Human Resources, managed the NCFlex program that allows state workers to make tax-free contributions to accounts that they can then use to pay medical and child care expenses during the year.

The indictment alleges that, between Aug. 31, 2012, and Feb. 28, 2015, Tademeti obtained reimbursement for $249,950 that he reported spending on conference sponsorships, program advertisements and other services but never actually spent. Instead, according to the indictment, he took that money for his own use.

OSHR Director Neal Alexander told members of the Joint Legislative Commission on Governmental Operations that the alleged theft came to light after Tademeti's retirement when someone noticed that checks had been made out to him.

Rep. Nelson Dollar, R-Wake, asked why the agency's financial controls were so deficient to allow someone to embezzle money, saying the alleged crime could still be going on if Tademeti hadn't retired.

Alexander responded that OSHR didn't consider the account, which vendors pay into to help advertise their services, to be state money. He said the agency has since changed its policies and practices regarding the account.

The State Auditor's Office has until June 1, 2016, to complete its review of the NCFlex program.

Sen. Ralph Hise, R-Mitchell, called for a separate audit on other "post-tax benefits" accounts for state workers, and the committee approved that as well.