CHERRYVILLE The rumors about shady doings at City Hall surfaced last year.

Suspicion of credit-card misuse led to the resignation or retirement of two long-time employees.

From there, the city’s troubles multiplied: the shutdown of the rescue squad; the city manager fired; the FBI lodging criminal charges against three police officers; the police chief and a captain suspended.

As investigations sort out which is poor management or criminal conduct, there’s a general expectation around town that more arrests are coming.

Cherryville’s run of bad luck has gained national attention. Like many others in this small Gaston County town 40 miles northwest of Charlotte, Acting City Manager Jeff Cash grieves for a community where his connections run deep. The people involved in the scandal aren’t strangers; they’re neighbors, friends, people you meet at the grocery store or church.

As uncertainty hangs in the air, Cash is getting on with the daily business of garbage pickups, water and sewer line repairs and a multitude of other municipal details.

“It’s overwhelming,” said Cash, 52, who has worked for the city nearly his entire adult life. “Words can’t describe how crazy it is.”

Scott Huffmon, political science professor at Winthrop University, said small towns have more limited oversight than larger cities.

“Nobody’s watching over what they’re doing,” he said. “It’s not that people are more likely to be inherently bad in a big town or a small town. It’s because small towns don’t have the time for self-policing. Something can pop up and go on and on for a long time.”

The lack of resources in a small community “is a recipe for disaster once corruption starts,” Huffmon said.

Jeff Cash replaced longtime city manager David Hodgkins, who was fired in June. Cash is only temporarily in the job; he’s not a candidate for the full-time position.

Although Cash retains the title of fire chief and checks in with the department daily, he named Jason Wofford acting fire chief in June. Last week, Cash promoted 31-year-old Cam Jenks from sergeant to acting police chief. The Gaston County Police Department is helping fill the gaps, and there’s been talk of asking the county to take over full-time operation.

Jenks hired on with the local department when he was a teen, and has been a full-time employee for 10 years. He’s “shocked” by what’s happened in his hometown.

Folks in Cherryville are showing support for police, and officers are “holding their heads up,” Jenks said. The department has resumed normal operations, providing “public safety and building public trust back.”

For Cash, the long hours, including weekend duties, are beginning to take a toll.

“I’m swamped,” he said. “The work-load is phenomenal. I’m trying to make it day to day. But I feel obligated to Cherryville. It’s been so good to me.”

Hard times

Cherryville sits in the far northwest corner of Gaston County.

There’s only one four-lane highway – about five miles of N.C. 150 running west to Crouse in Lincoln County.

Despite its lack of access to an interstate, the town was home to a major trucking firm for decades. In its heyday, back in the 1970s and ’80s, Carolina Freight Corp. employed around 2,400 people. The company looked after Cherryville, providing money for schools, ball fields, libraries and underprivileged children.

In 1996, the trucking operation closed following a takeover by Arkansas Best. The textile industry also went away in the 1990s. Overall, the town lost about 4,300 industrial jobs.

Cherryville’s struggle to recover has continued ever since. Money is tight, and there were other challenges before the police shakeup. This summer, budget cuts resulted in the layoff of six employees.

Meanwhile, nearly half of the town’s budget goes to Raleigh-based ElectriCities of North Carolina, which provides wholesale power to Cherryville and 18 other municipalities in the state. In 1983, Cherryville bought into the consortium which owns part of a unit at the Catawba Nuclear Station.

Five-term Mayor Bob Austell said the city has 7 ½ years left in the arrangement, with electrical charges projected to go up 27.65 percent or about $9.2 million. He’s concerned about Cherryville residents being able to pay for the increased electric bills and thinks “it’s imperative this city look for money streams that can help support that additional cost.”

Despite the challenges, five-term Austell said the city has never eased up on efforts to bring in new industry and businesses. There have been some successes along the way.

The most recent include expansions at three local health care facilities. One project will cost about $10.5 million and bring in approximately 53 new jobs. Also, Cherryville has been designated an N.C. Small Town Main Street by the N.C. Department of Commerce. Planning staff will help the city organize a program to encourage downtown development.

‘Betraying trust’

In October 2011, after an audit, Austell said he and City Council members looked into the possible misuse of city credit cards.

Austell said officials met with Gaston County District Attorney Locke Bell in December and then agreed to ask the State Bureau of Investigation to check into the questionable credit-card purchases.

Meanwhile, City Clerk Kelly Sellers resigned, and Finance Officer Bonny Alexander retired on the same day in December.

In June, Hodgkins was fired from the job he’d held for 10 years, Austell said. A month later, former utilities supervisor Jennifer Neal Hoyle was charged with multiple counts of embezzlement totaling around $99,000, Bell said.

Hodgkins recently became manager of Farmville, a Pitt County town about the same size as Cherryville.

He said he had “no inkling of anything unlawful going on at the police department” and was “shocked and surprised” by what happened at City Hall.

The credit card purchases totaled about $3,600 and the money was repaid, Hodgkins said.

In his opinion, the misuse of credit cards “could have been poor judgment instead of an intentional criminal act,” Hodgkins said.

At any rate, he said “it was a shock.”

“When multiple people are involved in questionable acts, it can be hard to detect,” said Hodgkins, 51. “They were in a position of trust. When somebody betrays that trust, it’s hurtful to the town, hurtful to the people who put them there, and hurtful to the public.”

Hodgkins said Cherryville officials didn’t give a reason for why they were firing him, “but I assumed it had something to do with the events of that year. They didn’t have to give a reason. It’s the nature of the business. I have no ill will.”

Hodgkins, who grew up in Kinston, said things turned out for the best because he was already looking for a change and is glad to be back in eastern North Carolina.

The Cherryville City Council had turned over twice since he’d come on board and “…leaders wanted to go in a different direction,” he said.

Looking back, Hodgkins doesn’t know what he would do differently.

“Cherryville had 80 employees. You can’t keep an eye on every person,” he said. “You have to place trust and delegate things. I feel I was as hands-on as anybody could have been.”

Rescue squad troubles

At the same time as the trouble at city hall was surfacing, the Cherryville Rescue Squad was also being investigated by the SBI. The county shut down the squad in February after squad leadership said the organization had about $40,000 in unpaid bills to vendors and employees.

Gaston County Emergency Medical Services Director Mark Lamphiear said county officials felt closing the squad was necessary to prevent it from going deeper in the hole. Also, they felt an investigation was needed to determine whether the problem was mismanagement or misappropriation.

Results of the probe were turned over to District Attorney Locke Bell, who said “there appeared to be poor bookkeeping and no budget, but nothing criminal.”

The squad still hasn’t reopened pending approval of a workable business plan by the county.

Embarrassment, hurt

And then this month, indictments against police officers came down. When the mayor heard the FBI was making arrests, he thought City Hall was the target – not the police department.

“I was surprised,” Austell said. The investigation of financial irregularities at City Hall is ongoing. When it’s all over, Austell said he’ll have plenty to tell the public. For now, his only comment about how Cherryville got in the mess is: “The wrong people were hired, and there’s been poor management.”

When officials called for an investigation, “we knew going in it was necessary for the city to be embarrassed and hurt,” Austell said. “But that was the only way it could be done and regain public trust.

“This investigation is going to show all our city’s warts. After it’s over, our citizens are going to know without a doubt we got it all. Once again, we’ll be the city we should be.”

Austell said the city has complied with the state’s mandatory audits, but “obviously, something fell through the cracks.”

Taking new steps

To protect against more financial irregularities, there is a new whistle-blower program to encourage employees to report wrongdoing and also a new six-member Audit Committee that includes two City Council members.

“Their job is to make sure all the caps are closed that would afford someone the opportunity to embezzle,” Austell said. “They’ll visit anything and everything we can imagine.”

Austell, 73, who doesn’t intend to run for re-election next year, said he isn’t making excuses for what happened and “if people are looking for someone to blame, let them blame me.”

“The buck stops here,” he said. “Why didn’t we do all this in the past? We didn’t know we needed to. We complied with state audits. Now, we’re going beyond.”

Austell doesn’t know what problems might have come to light at City Hall if safeguards like the audit committee and whistle-blower policy been in place earlier, “but I think they dang sure could have helped.”

City Council member Malcolm Parker, elected in January, said he ran for office because of rumors about what was going on at City Hall and the police department.

“There were rumors on top of rumors,” said Parker, 62, a lifelong resident. “I’ve never seen anything like this. I felt the town was going in a bad direction. I felt we had bad leadership and management.”

With ongoing investigations and safeguards in place, “people are happy all this has been taken care of,” Parker said. “It seems like everybody has a brighter and better attitude toward things. We’re going to be a better town and community.”

Sticking together

Gaston County Commissioner Allen Fraley, who represents Cherryville Township, has “a lot of concern about what’s going on there.”

“I don’t think there’s anything inherently wrong with Cherryville,” he said. “A lot of other places face the same kind of issues. But it hits hard in a small community. Hopefully, we’ll start getting this behind us and start to heal.”

Most churches in Cherryville have held special prayer services following the scandals.

Dr. Bill Lowe, senior pastor of Cherryville’s First Presbyterian Church, said he and other ministers in town are looking at ways to continue counseling members and non-members “in the community after a crisis like this has struck.”

People caught up in the events were well-known in the community.

“No one had any idea at all from their public images they were involved in anything unlawful,” Lowe said. “Once there’s a break in trust, it takes a lot of healing to overcome.”

Rumors about misdeeds at City Hall were bad enough, but the arrest of law enforcement officers “caught people off guard,” Lowe said. “Some of those hurt the most…are the families of people involved. Children are involved. Everybody’s hurt.”

While the scandal has been a major blow “folks here are strong,” said Lowe. “This is a setback. But it won’t destroy our sense of who we are. Overall, Cherryville is a wonderful place to live.”

Lifelong Cherryville resident Mark Upchurch agreed. A local businessman and chairman of the Gaston County Board of Education, Upchurch’s father, Bill, was mayor of Cherryville for 12 years.

“The city’s had its ups and downs,” Mark Upchurch said. “This is a low point…a lot has happened all at once. But it doesn’t represent all of Cherryville. We’ll get through it. And move on.”