Local News

Former DOT Supervisor Under Investigation For Improper Use Of State Money

Posted March 8, 2006

— The State Bureau of Investigation is investigating a former Rail Division manager at the state Department of Transportation for a possible criminal conflict of interest.

Former supervisor John McFadden is accused of directing state business deals so he could profit, but his attorney sees absolutely no conflict.

From 1998 to earlier this year, McFadden served as operations manager for the Rail Division, and supervised purchasing parts for train cars as part of his job -- parts paid for by taxpayers.

Late last year, the SBI received an anonymous letter accusing McFadden of using state money to buy parts so that he could personally build control boards while on state time.

The letter alleges McFadden then profited by using Source One Technologies, a company he's affiliated with, to sell the components back to the state -- all while working the personal deals on a state computer.

The DOT took notice and McFadden eventually lost his job.

"We initiated an audit and made a determination that there had been potentially some misuse of state-owned computers and equipment for personal business and financial gain," said DOT spokesman Ernie Seneca.

It's unclear how much money was involved, but one invoice obtained by WRAL shows purchases of more than $76,000.

McFadden's attorney, Marty Miller, argues his client deserved some profits because he designed certain components before he joined the DOT, then licensed them with Source One.

"The DOT knew what they were getting into," Miller said. "These were his designs. Mr. McFadden did nothing wrong. This is more of a witch hunt."

The DOT says it's now up to the SBI to determine if there was an illegal conflict.

"We're not supposed to take advantage of the system for our own personal gain," Seneca said.

McFadden's attorney claims his client received verbal clearance from the state attorney general's office on his business dealings.

The problem, however, is that there is no written proof of any clearance.

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