A former money manager with a regional mental health agency took nearly $550,000 in apparent kickbacks from two contractors who were paid about $1 million to renovate agency buildings, according to a state audit released Tuesday.
The audit says the former chief financial officer at Eastpointe Human Services failed to report the money received from contractors on his income taxes. The apparent kickbacks were from an LP-gas serviceman and a firefighter who each do contracting work on the side, according to the audit.
The audit describes a pattern of payments from Eastpointe for agency work followed by a check from the contractor back to the CFO.
The audit says “the former CFO may have violated several state laws including fraud, misrepresentation and obtaining property by false pretenses.”
The audit findings were referred to the state Bureau of Investigation, the Internal Revenue Service and the N.C Department of Revenue to determine if criminal charges are warranted.
The audit does not name the CFO, but it said he also purchased $18,600 of equipment, including a tractor and a trencher, for use at his home. Agency documents identify Bob Canupp as the CFO during the time period the audit examined.
Eastpointe is one of nine regional agencies in the state that use federal, state and county money to pay for mental health services for area residents on Medicaid and for poor people who do not qualify for the government health insurance. These regional mental health offices work under contracts with the state.
Eastpointe covers a dozen counties, including Lenior, Nash, Robeson, Sampson, Scotland, Wayne, Wilson, Bladen, Columbus, Duplin, Edgecombe and Greene. Eastpointe received about $179.5 million in federal, state, and county money in 2013, according to the audit, with nearly 75 percent coming from the federal government.
Representatives from the regional agency paid for their own investigation and contacted the local District Attorney and the SBI about the matter last year.
The Eastpointe CEO and its board failed to provide proper oversight of operations that led to nearly $2.8 million in building renovations that did not follow bidding procedures, $143,000 in unnecessary vehicle purchases and upgraded accessories, and more than $157,000 in questionable credit card purchases, the audit said.
In a letter to State Auditor Beth Wood, the Eastpointe Board Chairman James Simmons said its compliance department found the “irregular activities” and reported them to the CEO in early 2013, which resulted in the former CFO’s termination.
The board hired a tax accounting firm to investigate, according to Simmons' letter. That investigation started in January 2014 and concluded in July 2014. Eastpointe then met with state auditors about the allegations in April 2014. In May, Easpointe met with District Attorney Ernie Lee. The board gave him a copy of its report in July. Eastpointe met with the SBI Financial Crimes Unit in July.