Local News

Ex-Director In Wake Schools Fraud Scheme Loses Appeal

Posted August 7, 2007 10:18 a.m. EDT
Updated August 7, 2007 1:00 p.m. EDT

— A former Wake County school system administrator cannot withdraw his guilty plea in connection with a multimillion-dollar fraud scheme, the North Carolina Court of Appeals has ruled.

The appellate court upheld a ruling by Superior Court Judge Donald Stephens, who denied a request by former school district transportation director Vern Hatley to pull out of his plea agreement and have a jury trial. Stephens sentenced Hatley to seven to 10 years in prison.

Hatley pleaded guilty on Oct. 11, 2005, to charges of conspiracy and obtaining property by false pretense for his role in a scheme involving fake orders to Wilson-based automotive-parts supplier Barnes Motors & Parts. Employees in the district's transportation department received kickbacks in the scheme.

Hatley later filed a motion to withdraw his guilty plea after it appeared that his plea deal, which would have put him in prison for five to six years, would fall through.

Wake County District Attorney Colon Willoughby said Hatley didn't cooperate with the investigation, which was required to get the lighter prison sentence.

In February 2006, Hatley testified that he accepted the plea deal to spare his family and the Wake County school system further embarrassment.

He had admitted to accepting nearly $23,000 worth of items, including $11,000 in gift cards, from Barnes Motors & Parts. But he contended that his former budget analyst, Carol Finch, controlled and benefited from the criminal scheme without his knowledge.

Finch is serving a six- to eight- year prison sentence and must pay back more than $100,000 to the school system. Other former transportation department employees and former Barnes employees also received sentences ranging from 60 days to six years for their involvement.

A seventh defendant, Harold Estes, who is the husband of a Barnes employee, was found guilty and sentenced to 11 to 15 years in prison. He was the only suspect not to plead guilty.

It might never be known how much money the school system lost, but the Wake County school system has recovered at least an estimated $5 million.