Dana Cope, the former director of the State Employees Association of North Carolina, racked up nearly a half-million dollars in unjustified spending and credit card transactions, according to a summary of an audit released Saturday.
Cope repeatedly and willfully turned SEANC’s money to his own use, according to a letter from executive director Mitch Leonard, who took over in February. Cope resigned two days after The News & Observer reported on questionable credit card transactions and SEANC payments to a landscaping company that was performing extensive work at Cope’s house.
According to the audit, only $14,500 of the $109,000 paid to the landscaping company was for work at SEANC. The remaining payments of $94,500, in the cautious language of accountants, “appear excessive.”
The audit was unequivocal about one detail: Cope fabricated the phony invoice to a defunct Washington, D.C., computer company that sought to justify one of the checks cashed by the landscaping company.
“Our former Executive Director, Mr. Dana Cope, grossly misused SEANC credit cards and misappropriated SEANC funds for personal gain,” Leonard wrote. “These findings stem from a culture of submissiveness, deliberately built over time by Mr. Cope, and maintained for his own financial benefit. As a result, established financial controls were compromised, transparency thwarted and the truth denied.”
In the wake of the audit, SEANC has reformed its financial systems and strengthened checks and balances ignored during Cope’s 15-year tenure. The organization published a summary of the audit on its website Saturday afternoon and promised a new era of openness and transparency.
The audit found $494,043 in misspending from October 2012 to February 2015.
“We were shocked at the amount,” said Joseph Qubain, a SEANC board member who works at the state Department of Transportation in Raleigh. “Remember, this is only 28 months’ worth.”
The audit noted that it was not a complete look at Cope’s spending, because some documents had been shredded and a computer hard drive had been removed from the organization’s offices.
A family trip
At his direction, SEANC spent $109,000 with a landscaping firm that also had done extensive work at Cope’s Raleigh home. One check, for nearly $19,000, was made out to a defunct computer company – with a name similar to the landscaping company – and justified by a phony invoice. The landscaping firm cashed the check.
The News & Observer later obtained additional records of Cope’s spending that showed he used a SEANC credit card last fall for purchases from a luxury tour company, a North Hills art gallery, a Texas purveyor of upscale Western wear and a London clothier.
The audit was conducted by Bond & Beebe, a Washington-area firm hired by Service Employees International, SEANC’s parent union. The audit examined records from October 2012, soon after Cope renegotiated a contract that gave him sweeping powers to run the organization as he saw fit. It found that:
▪ Cope fabricated the phony invoice to the landscaping company and made $94,508 in excessive payments to the firm, Prospective Landscape Concepts.
▪ Cope spent $14,708 in SEANC funds to take his wife and sons on a trip to China.
▪ Cope directed $31,345 of SEANC money to private flight lessons.
▪ Cope used SEANC credit cards for $404,948 in purchases that were undocumented or had no SEANC purpose.
Some of those purchases may have been related to Cope’s home on Sturbridge Court in Raleigh, which has seen extensive renovation and landscaping in the past two years. The audit noted $9,200 spent at a Garner appliance company, $8,600 to a Raleigh interior design firm, $6,400 to an outdoor and patio furniture store, $3,000 to a fencing company and $5,200 to Best Buy, the electronics and consumer goods store.
The audit’s findings stood in sharp contrast to SEANC’s public statements in February. In response to questions from The N&O, SEANC’s 11-person executive committee said it conducted a thorough review and found no misappropriation of funds or improprieties by Cope.
The executive committee asked The N&O to refrain from printing a story on Cope. After the story was published, SEANC President Wayne Fish said the story was “not true” but did not point to any errors.
In the past weeks, SEANC has forced the resignations of Tom Harris, counsel and chief of staff, and Toni Davis, communications director. Financial director Rex Foster has been demoted and member services director Lynn Cote was put on probation at SEANC for one year, said Qubain, the board member.
Qubain said that Cope has now repaid $148,000 in severance he was given by the executive committee when he resigned.
The auditors cautioned that their findings were not necessarily complete because of missing and misfiled paperwork.
“We understand that many documents were removed from the SEANC office, others were shredded and at least one hard drive was removed from the SEANC office,” the audit said.
After The N&O report in February, Wake County District Attorney Lorrin Freeman requested a criminal investigation from the State Bureau of Investigation. It is ongoing. Freeman said the investigators were looking into whether any evidence had been destroyed, among other things.
“It is hard to imagine how some of these expenditures benefited state employees or fit into the mission of the organization,” Freeman said. “Certainly we will be doing everything that we can to make sure Mr. Cope is held accountable and that justice is done in this case, including seeking restitution if that becomes appropriate.”
Since his resignation, Cope signed up as a SEANC member. On Saturday the board voted to revoke that membership.
Cope said Saturday that he was aware of the audit and its findings but could not comment. He referred questions to his lawyers, Roger Smith Sr. and Roger Smith Jr.
“They’re in control now,” he said.