Audit: Manager at NC mental health agency took kickbacks
Posted June 2, 2015 2:28 p.m. EDT
Updated June 2, 2015 3:03 p.m. EDT
RALEIGH, N.C. — A high-ranking manager at a regional mental health agency in eastern North Carolina took more than a half million dollars in illegal kickbacks and used taxpayer money for personal expenses, including repairs to his fishing boat, a state audit issued Tuesday says.
State Auditor Beth Wood issued the findings following her office's lengthy investigation of Eastpointe Human Services, a government-funded managed care organization serving a dozen counties, from Edgecombe to Robeson. The agency has an annual budget of $310 million, most of it paid by the state and federal governments through the Medicaid program.
The audit's findings have been referred to the Internal Revenue Service, the State Bureau of Investigation and a state prosecutor. No criminal charges have been filed.
The audit primarily focuses on the actions of Eastpointe's former chief financial officer, Bob Canupp, who reportedly approved more than $1 million in payments to two part-time contractors – one of whom was unlicensed – for renovations at the agency's offices. According to the audit, those contractors then wrote personal checks back to Canupp totaling $547,595.
The audit also determined that Canupp used agency credit cards to rack up $117,549 in questionable charges, including a $4,500 down payment for repair work on his fishing boat and $935 for fish finder software. He also bought gift cards totaling $933 at Dick's Sporting Goods and $2,950 at Walmart.
The audit also found he used agency funds to buy a $15,900 tractor and a $2,700 trenching machine, both of which were kept at his home. Another $143,041 in state funds was spent on two luxury pickup trucks and a Buick Enclave driven by Canupp, the agency's chief executive officer, Ken Jones, and a maintenance supervisor.
The audit also questioned actions by Eastpointe's accounting manager to underreport payments the agency made to her husband, ex-husband and father-in-law, in violation of state and federal tax regulations.
A phone number listed for Canupp rang Tuesday with no answer.
Jones said the agency will "pursue legal action to the fullest extent of the law" in an attempt to recover the money, but no actions have been taken in the two years since Eastpointe fired Canupp amid an internal investigation into agency spending.
"I personally regret not managing the former CFO more closely," Jones said in a conference call Tuesday afternoon to respond to the audit. "I can assure you this won't happen again."
Eastpointe board Chairman James Simmons said he and his fellow directors remain confident in Jones' leadership, despite the lapses under his watch and his use of an agency vehicle on nights and weekends and $19,322 in expenses he charged on an agency credit card.
"He couldn't see every moving part of the organization," Simmons told reporters.
According to the audit, Jones spent $2,850 on gift cards and $5,850 for a staff luncheon .Jones told the auditors the gift cards were provided to agency employees as Christmas presents, along with $1,045 for duffel bags and $575 spent on candy.
Jonathan Charleston, an attorney for Eastpointe, said Canupp simply overrode the internal financial controls so he was able to approve spending without oversight. He and Simmons said Eastpointe has since revised its financial policies and procedures.
"We've taken aggressive actions to deal with the issue laid on the table before us," Simmons said.