North Carolina

Audit: NC officials bought steak dinners, expensive clothes with tax dollars

Robbinsville Town Hall in downtown Robbinsville, N.C.
Robbinsville Town Hall in downtown Robbinsville, N.C. Google Earth

Town officials from Robbinsville spent more than $30,000 of taxpayer money without submitting required receipts, including a $429 purchase at a high-end fashion store and hundreds of dollars more at a steakhouse and buffet, according to an audit released this week.

Now, North Carolina State Auditor Beth Wood says public employees and elected officials, including some who are no longer on the job or in office, should repay the town’s government if they cannot prove the expenses had a legitimate business purpose.

“You’ve got leaders in a local government who are spending money in this manner ... And what’s the business purpose,” Wood says. “Obviously these expenses were paid and there was no supporting documentation. You would expect that all of them would have documentation.”

The state auditors’ findings from Robbinsville have been sent to both the Internal Revenue Service and the Office of North Carolina’s Attorney General for further investigation. Officials in the small town of less than 1,000 people in western North Carolina, near the Tennessee state line, say they’ve already taken steps to fix problems uncovered by the audit.

Town officials say they’re attempting to have employees who made questionable purchases repay the local government. But the state audit says this tracking would be difficult, “due to the lack of documentation.” The town’s response also says its elected board of aldermen has all new members in place who were not in office in 2016 and 2017, years covered by the audit.

The Observer left messages with Robbinsville Mayor Steve Hooper and town council member Debbie Beasley on Wednesday. Another council member, Shaun Adams, could not be reached by phone. Council member Brian Johnson said he had not seen the final audit report and could not comment.

In April, the three council members wrote a letter to Wood’s office explaining the town hired a new financial director last year, canceled all but two of the town’s credit cards used by employees, and have made several other changes to improve accountability.

But Wood says the town remains “high risk,” in terms of auditing standards. Her office dove into the town’s finances after a tipster called the state’s hotline, alleging misuse of taxpayer funds.

The questionable transactions and lack of required documentation to justify spending taxpayer money on travel and food seem to have been overlooked by the town’s past finance director and an outside accounting firm hired to audit annual financial statements, Wood said.

“You have to wonder where the auditor was who audits the town of Robbinsville each year,” Wood said.

Steak dinner, ‘Foxy Lady’ clothes

Some of the spending and other issues flagged by the state auditor’s office included:

More than $20,000 in travel costs, reimbursed or paid even though officials did not provide itemized receipts or proof the expenses related to government work. The audit found $4,084 was spent on questionable meal costs, including a $403 bill at a Myrtle Beach steakhouse and $282 tab at a locally-owned restaurant in Robbinsville.

Questionable costs deemed “miscellaneous “ expenses included eight Sam’s Club memberships in 2016 and another seven in 2017, for a total of $675. The audit also questions why $429 was spent in March 2017 on the town’s credit card at Foxy Lady, a fashion boutique in Myrtle Beach, S.C.

Nearly $8,000 in gift cards given to employees and elected town board members, from July 2016 to December 2017. While bonuses in the form of gift cards are permitted, both federal tax laws and the town’s own policy, according to the audit, requires such gifts be reported as taxable income, which was not done.

The town’s mayor and a past member of Robbinsville’s town board made personal use of vehicles owned by the town. The recent audit found these elected officials did not report the benefit of using a town-owned car on their personal income tax forms, which is required.

An employee who drives less than one mile daily for government work was allowed to spend nearly $100 every month of taxpayer money to buy gas for her own car. Auditors also found some employees and elected officials used town-paid fuel cards to fill up cars but did not follow rules to track their mileage or provide proof the vehicle was being used exclusively for work purposes.

In the town’s response to Wood in April, council members wrote that they’ve discontinued the use of gift cards to employees and will now report benefits as taxable income, as required. The council members also wrote that receipts will be required for all expenses and that elected officials are no longer allowed to use town-owned cars.

Wood says her office frequently finds local governments in North Carolina with poor oversight and management of reimbursements, fuel purchases and other finance-related issues.

State law and regulations are in place to ensure public money is used only for public purposes. But strong enforcement is the only way to ensure rules are followed, Wood said.

“All the necessary laws are there — I’m just not sure everybody is following them ... Holding people more accountable would be the key.”

The top 25 salaries for North Carolina State employees. The list does not include Public School employees, General Assembly employees, University System employees or UNC Hospitals employees.

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