SBI investigating spending by Princeville officials

"A person who sits in a position where they're supposed to be fiduciaries of citizens' monies of services for citizens and they gain personally from that, that could be criminal, State Auditor Beth Wood said.

Wood has turned over the audit's findings to Edgecombe County District Attorney Robert Evans, the State Bureau of Investigation and the Internal Revenue Service.

The SBI is already looking into some state-funded construction projects in Princeville at Evans' request, said Noelle Talley, a spokeswoman for the state Department of Justice.

State auditors began looking into Princeville's finances last summer after the state Local Government Commission took control of the town's books. At the time, Princeville was 9 percent over budget and was in danger of defaulting on a loan.

The audit found that Mayor Priscilla Everette-Oates charged $8,115 to a town credit card between August 2010 and last July without any receipts to back up the spending. Charges included $1,255 to Madison Steak and Seafood and $222 to Bed Bath & Beyond.

"It's unbelievable. I feel like the mayor used the taxpayer money to eat steak and shrimp or do whatever she had to do or wanted to do," said Gwendolyn Knight, a member of the Princeville Board of Commissioners.

Town officials told auditors that they believed "most of the charges had no legitimate business purpose," and Everette-Oates refused to speak with auditors. Her attorney said she had turned over the required documentation to town officials, who routinely approved her spending.

When the files with that documentation were reported missing, Everette-Oates provided hand-written notes to back up the expenses, but the audit notes that those explanations were too vague to be useful.

Everette-Oates couldn't be reached Monday for comment, but her attorney, Malvern King, issued a statement Tuesday blasting the audit.

"The State Auditor's Office is attempting to indict and convict the administration of Priscilla Everette-Oates through contrived accusations," King wrote. "Mayor Oates fully complied with the auditor's instruction to respond to criticisms in the March 13 draft investigative report, but that response has been suppressed.

"There is clear evidence of collusion between officials of the Local Government Commission (LGC), the State Auditor's Office and some members of the Princeville Town Commission to prevent Mayor Oates' side from being heard," he wrote.

Princeville's former finance officer also ran up $2,290 in credit card charges without any receipts between October 2010 and last July, according to the audit. Her credit card also was assessed $184 in late fees and finance charges.

"Princeville is being put in the news so much now that it make you feel like you don't want to be a Princevilian sometimes," said Emma Wilkins, a lifelong resident of the first U.S. town incorporated by blacks.

Separately, the audit determined that Everette-Oates received $3,289 for travel expenses that weren't documented, such as $1,693 for a May 2010 workshop in Washington, D.C., when there was no evidence that she even attended.

A town commissioner also received $619 and the interim town manager received $204 in travel reimbursements without submitting documents to support the expenses, according to the audit.

Finally, the auditors determined that Everette-Oates hired a lawyer and a consultant for Princeville without the approval of town commissioners. The consultant used to work for a company in which Everette-Oates has an ownership stake, the audit notes.

The attorney's fees more than doubled the $36,000 Princeville budgeted for legal services in fiscal 2011, and the town paid for the lawyer to travel from Durham for monthly town board meetings, to draft letters to the local newspaper and to help set up Wi-Fi service in Town Hall, according to the audit.

In addition to seeking criminal prosecutions, the audit recommends that Princeville tighten up its expense policies and seek reimbursement of the questionable expenses from the various officials.

"I'm hoping, at the end, there will be some returns from our losses," said Ann Howell, a member of the Board of Commissioners.

Princeville is not new to state investigations. Former Town Manager Sam Knight pleaded guilty in 2009 to fraud charges following an SBI probe into the town's handling of Federal Emergency Management Agency disaster funds after Hurricane Floyd a decade earlier.

The town also has the dubious distinction of being the only North Carolina municipality whose finances were twice overtaken by the Local Government Commission. The first time occurred in 1997.