WRAL Investigates

Wake schools still feeling financial sting of fraud scandal

Posted September 8, 2011

WRAL Investigates

— Cars, vacation cottages, golf carts and jet skis were just some of the kickbacks that a group from Wake County public schools and an auto parts company were enjoying in 2004.

The multi-million dollar scheme put seven people in jail, some of whom are now free, but not free of the close to $700,000 in debt they owe.

Wake County Public School System WRAL Investigates: Wake schools fraud

“It was an unfortunate chapter in the school system’s history and a very painful one,” said Wake schools’ chief business officer David Neter.

The school system estimates at least $4 million to $5 million was diverted from the Wake school system in an automotive parts scheme involving then-employees of the school system's transportation department and a Wilson-based automotive parts company, Barnes Motors & Parts.

A WRAL News investigation found that the total amount of fraud is still unclear.

Wake schools' budget records show the transportation department paid Barnes Motors & Parts $206,611 during the 2000-01 school year. That figure ballooned to more than $1 million in 2001-02, $4.5 million in 2002-03 and about $4.3 million in 2003-04 – totaling more than $9 million from 2001 to 2004.

Investigators said the suspects submitted fake orders for auto parts and bought gift cards, trucks, boats, trailers and other high-priced items for themselves.

Wake schools still feeling financial sting of fraud scandal Wake schools still feeling financial sting of fraud scandal

Seven people, including five former school system employees and two former Barnes' employees, were convicted and sentenced for their roles in the fraud scheme. Sentences ranged from 60 days to 15 years in prison.

The school system eventually recovered $4.9 million, most of which was a fine the courts imposed upon Barnes Motor & Parts. Wake schools is still trying to collect money from the individuals convicted in the case, but getting it back has proved tricky.

Carol Finch, a transportation department bookkeeper, was fined $100,000. She paid $16,215, which came from the sale of her house, and $115, through her attorney, for a total of $16,330. The State Bureau of Investigation also returned gift cards found in Finch’s home in the amount of $4,095.

Finch will be in prison until next year and doesn't have much money to her name, so getting all the cash back may be a lost cause, according to legal experts.

Connie Capps, who worked for Barnes, left prison in July. Her fine was turned into a civil judgment, meaning the state can take her property. She owes $500,000 jointly with her husband, Harold Estes. She doesn't own property, but he does.

Estes has $890,000 in property to his name. However, he is asking the court to allow him to serve 30 additional days in prison to avoid paying for his role in the crime. A judge will rule when he's released in 2018.

Without property, it can be tough to recover fines and judgments. The courts can’t garnish wages or take a person’s property if they co-own it with someone else.

“Once it gets into felony court, I think the larger the fine, the less likely it’s going to get paid,” said Orange County Superior Court Judge Carl Fox.

Fox says people with six-figure fines or judgments often can't pay. That may be the case for Carol Finch. She already sold her house before going to prison and handed over the $16,000 dollars she made from the sale to Wake schools. She doesn't own any other property.

“Unless a person has a job or assets that can be levied against them, it’s unlikely that a fine of that magnitude would ever be paid,” Fox said.

Two of the seven people convicted in the case have paid their debts. Bobby Browder, who worked for Barnes, paid $3,000 for his role. He left prison in July.

Vern Hatley, Wake schools former transportation director, paid $47,772. He was not ordered by the court to pay restitution. He will be released from prison next year.

Two former administrative assistants with Wake schools are paying a little at a time. Angela Malloy Sanders has paid $3,365 of her nearly $37,000 restitution and returned approximately $6,767 worth of equipment. Pam Stewart has paid $6,098 of her $39,000 restitution and returned $11,381 worth of equipment.

Seven years after the scandal began, it remains fresh for Wake school leaders who added more auditors to watch over the books and a fraud hotline.

“I think it’s very important that Wake schools remain open about it,” Neter said. “We have nothing to hide. It was a real issue, and it did take place.”


This story is closed for comments.

Oldest First
View all
  • superk Sep 9, 2011

    Gee, they can't pay back all the money and we are supporting them in jail. Wow! Such a deal, for them. How much does it cost us these days to keep someone locked up?

  • drh3102 Sep 9, 2011

    I was at the auction selling some of Fitch's items. My next door neighbor bought the boat. It cost about $40,000 and he paid $12,500. I bought 5 of her concrete pelicans that she had in the yard of her beach trailer. I call them “the embezzlement pelicans”. Bought all 5 for $75 new they cost about $750. Wanted to try to pick up one of the golf carts but they went for way too much. The trailer with about 45,000 worth of add on rooms on a permanent lot all set up with decks etc. went for $12,000. Their jail time provided some good deals for others.

  • thefiredog Sep 9, 2011

    The real question is how did Wake County Public Schools fail to notice a 500% increase in expenses two years in a row? Somebodies besides the crooks should of lost their job. An audit wasn't needed to detect this fraud. Anyone who compared the expenses for 2000-2001 & 2001-2002 or 2001-2002 & 2002-2003 should of caught this. The real story here isn't the fraud, it's the system which didn't notice millions missing over such a long period.
    We should change the law regarding marriage, property, and fraud. Especially when both parties of the marriage are involved in the fraud.
    Airbornemonty, I like your idea except it couldn't be undone when our justice system messes up. How about tatooing "Fraud" across their forhead and hands so everyone will know? If the justice system messes up the tatoos could be undone and a losy appolgy given, just like for people wrongly sentenced to prison.

  • Stormy13 Sep 9, 2011

    Glass Half Full: I agree with you 100%! Where's the Justice? I once worked with a private sector company where it was found out that the so called office manager was "helping herself to money off the books". When caught in 1997 the total was well over $60,000+! To this day she has not paid back one cent due to so called "hardship". There needs to be accountability in these type cases.

  • chrisannab84 Sep 9, 2011

    you kept givin them more money evry year why didnt you look into many years ago

  • davidbh61255 Sep 9, 2011

    Wait till 2018 to decide a half million $ issue?? Can we complicate this anymore??

  • airbornemonty Sep 9, 2011

    Of course the culprits can't pay all that they stole. An alternative would have been to chop off their hands and feet for stealing like they do in Middle Eastern countries...The bigger the theft, the higher the chop.

    I know that would never happen, but without a doubt, everyone would tow the line, especially when they begin losing toes. [My pun for the day].

  • Glass Half Full Sep 9, 2011

    They should be made to pay back every penny they stole if it takes them the rest of their lives. If they're married, their spouses are responsible as well. They knew where all those perks were coming from. The money should be paid back any way possible. Tired of crooks being let off the hook because re-paying what they stole is a hardship. Should have thought of that before they committed the crime. No sympathy at all.

  • barownerx2 Sep 8, 2011

    I need a new jetski

  • Rebelyell55 Sep 8, 2011

    Crooks watching the crooks. lol