Durham, N.C. — The former director of a North Carolina Central University program designed to help minority students used an unauthorized bank account to divert more than $1 million from the program over six years, according to a state audit.
The audit released Tuesday also criticized N.C. Central for its lack of oversight for the Historically Minority Colleges and Universities Consortium. Chancellor Charlie Nelms said in his formal response to the audit that he was "saddened and outraged by the findings of wrongdoing."
"I cannot allow the misguided actions of a few to overshadow the intrinsic benefits of the tutoring, mentoring and other valuable services received by hundreds of North Carolina children through the program," Nelms wrote, noting that he initiated an investigation into the program that uncovered the private bank account and eventually led to the state audit.
N.C. Central acted as the central office for the state-mandated consortium, a partnership between the Department of Public Instruction and North Carolina universities that have historically served minority students. The program devised strategies to boost academic achievement by minority students, and it received more than $13 million in state funding and grants over the past decade.
In April 2004, the program's former director, Nan Coleman, opened a private bank account and began diverting money from the program, according to the audit. Because there was no system at N.C. Central to track the payments from school districts statewide for services for at-risk students, the missing money wasn't noticed, the audit states.
More than $1 million was funneled into the private account between 2004 and 2009, including $287,000 for Coleman and $62,000 for former N.C. Central Provost Beverly Washington Jones, who served as executive director of the consortium, according to the audit.
Coleman was fired in August 2009, and Nelms removed Jones as provost in April 2008. Attorneys for both women declined to comment Tuesday, saying that they hadn't yet read the audit.
Coleman told auditors that she used the account for easy access to pay for program expenses, but auditors noted that payments were made for such non-program items as car repairs, clothing and hotel rooms.
The auditors also noted that almost $600,000 was deposited into the private account between December 2008 and August 2009, after N.C. Central officials responded to complaints by cracking down on how the consortium was handling its payroll.
Jones told auditors that she received travel reimbursements from the private account but maintained that other checks were forged using her name.
Other findings in the audit include unauthorized bonuses for staff members, salary advances that were never repaid, paying for services without any contracts, failure to file tax returns and mingling money between the consortium and an N.C. Central foundation.
N.C. Central officials identified the two administrative assistants who received unauthorized bonuses and advances as Barbara Fields and Vermal White. Neither is currently employed by the university.
"The whole scheme ... is pretty egregious, and it went on right in front of a lot of people's eyes that should have been aware of it," State Auditor Beth Wood said. "The dollar value is bad enough, but just the fact that this thing fell apart on so many levels is very disconcerting."
N.C. Central agrees with all of the findings and recommendations in the audit, and the university plans to work with Durham County prosecutors to get all of the misappropriated money back, Nelms said.
Local prosecutors and the State Bureau of Investigation are reviewing the case to determine whether any criminal charges are warranted.
The university also has discontinued the consortium and tightened up its financial practices to ensure greater oversight of other programs, Nelms said.
In a letter to N.C. Central faculty, he said, "As painful as these findings are, we cannot permit this episode to deter our efforts to provide outreach and service to the community.
"I believe in the inherent excellence of this century-old university, and I do not believe that the alleged malfeasance of a few can undo all the good that we have done, including in the service of closing the achievement gap," he said.
N.C. Central students said Tuesday that they are confident Nelms will fix any deficiencies.
"We are very confident, as students, that we are going to get all of our money back," senior Alicia Miles said.