The allegations of embezzlement by Dana Cope, former executive director of the State Employees Association of North Carolina, will soon be presented to a grand jury, Wake District Attorney Lorrin Freeman said Wednesday.
Freeman said she anticipates the State Bureau of Investigation will deliver its investigative report to her this week. The next step will be taking the case to the grand jury, which could result in criminal charges against Cope.
“Mr. Cope has been cooperative in our investigation, and we have been in communication with his lawyers,” Freeman said.
On Monday in Wake County Superior Court, the SBI filed search warrants that revealed the investigation was stretching back as far as 2010. That indicates that the SBI inquiry is looking back earlier than an audit of SEANC, which only went back to 2012.
Freeman requested the SBI’s involvement in February after a News & Observer investigation into questionable spending on landscaping, flight lessons, entertainment and eyebrow waxing, among other items. At Cope’s direction, SEANC spent $109,000 with a landscaping firm that also had done extensive work at his 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.
Cope resigned one day after Freeman requested the investigation, saying he had “blurred the line between my personal life and my professional life.” That was a rapid fall from power for Cope, a pugnacious and controversial leader of the 55,000 state employees and retirees who make up SEANC.
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 SEANC audit, released in April, found that Cope racked up nearly a half-million dollars in unjustified spending and credit card transactions. Mitch Leonard, who took over Cope’s job after the resignation, said Cope repeatedly and willfully turned SEANC’s money to his own use.
The search warrant applications made public Monday cited SEANC credit card charges by Cope of $25,273.45 from “various hotels,” $9,435.77 from BJ’s Wholesale Club and $55,756.44 from American Airlines. Several transactions at Renaissance Hotel North Hills dated to March and April of 2010.
“During the SBI investigation, it was determined the SEANC credit cards assigned to Mr. Cope were used to purchase jewelry and pay for various home improvement projects for Mr. Cope’s personal residence, including the purchase of appliances and landscaping services,” Special Agent T.H. Forsythe wrote.“One of those SEANC credit cards was used to pay some of the travel expenses incurred by Mr. Cope’s family on a trip to China.”
If the allegations are true, that would call into question the legitimacy of Cope’s bankruptcy proceedings. Cope filed for personal bankruptcy in 2011, blaming his financial problems on maintaining multiple residences while trying to establish his sons in a sought-after school district.
The bankruptcy proceeding, which ended in 2014, wiped out $109,000 in Cope’s personal credit card debt. As in every bankruptcy case, Cope periodically filed sworn statements about his income, debts and expenses.
“If you do not truthfully answer questions of material fact about your finances in sworn bankruptcy proceedings, that is by definition bankruptcy fraud,” said Richard Leonard, dean of Campbell University Law School and a retired federal bankruptcy judge. “That is a false oath.”
Cope’s lawyers, Roger Smith Sr. and Roger Smith Jr., did not return telephone calls Wednesday.
Freeman, the district attorney, said one piece of the investigation is continuing. A local accounting firm is auditing SEANC’s political action committee, known as EMPAC.
Cope used EMPAC to target political opponents such as state Sen. Ralph Hise, who prevailed in his 2014 Republican primary despite EMPAC expenditures of $200,000 in the race.
Freeman said she is not waiting for that audit’s completion to take the case to the grand jury.
“At this point in time, we don’t have reason to believe he was skimming off any EMPAC money,” Freeman said.