Former Director Knew About Fraud Scheme, Witness Testifies

RALEIGH, N.C. — Testimony on Monday did not support former Wake County Public Schools System transportation director Vern Hatley's story about his involvement in a multimillion-dollar fraud scheme, to which he pleaded guilty last year, and now wants to withdraw his plea.

The scheme centers on thousands of orders for fake parts from Barnes, as well as personal purchases made by former employees from the transportation department and the automotive parts supplier

Prosecutors said Hatley signed thousands of invoices for fake motor parts, but he alleges he did not know about any fraud, but was focused on the transportation department's day-to-day operations.

Hatley now admits he accepted $23,000 worth of items -- including a TV, computer, carpet and $11,000 in gift cards -- from Wilson-based Barnes Motors & Parts, but insists he did not participate in any criminal activity with which he and six other people are charged.

In Day 2 of a hearing to determine whether Hatley's plea will be withdrawn, former regional vice president of Barnes, Bobby Browder, who also pleaded guilty, however, testified that Hatley knew more about the scheme than he wants people to believe and may have had some influence on the decision-making.

In the frenzy to spend leftover money in the budget at the end of a fiscal year, Browder testified that the transportation department would store remaining budget money with Barnes with a process called "pre-billing."

Browder said Hatley would approve fake orders that his office would provide -- all under $2,500 to circumvent the state bidding process.

When he referenced a meeting at the end of one fiscal year, Browder testified that Hatley agreed to former budget analyst Carol Finch's suggestion that pre-billing was the only thing to do with the remainder of the budget money

Browder also testified that he and Hatley drew up a false lease for a big-screen television so that the accounting would look better to auditors.

Another co-defendant, Angela Sanders, testified that Hatley told her not to mention thousands of dollars in gift cards purchased for the department.

And even though Hatley maintains that Browder gave him gifts for being a good customer, Browder indicated that Hatley asked for carpet at his house.

"Miss Sanders came in (when he was meeting with transportation employees) and she said Mr. Hatley needed carpet," Browder testified. "He called me a week -- maybe 10 days later -- he gave me a total and a number. He said to take the check to the Lowe's on Capital Boulevard."

Investigators have identified at least $3.8 million in fraud; about $2 million has been recovered from others charged in the case.

Hatley's hearing to withdraw his guilty plea is scheduled to continue Tuesday, with other co-defendants, including Finch and Connie Capps, another Barnes manager, testifying.