RALEIGH — The office of the N.C. State Auditor has published a report showing more than $430,000 in taxpayer funds were spent for personal use in the town of Spring Lake.
Spring Lake is a community in Cumberland County of just under 12,000 residents. The town is located close to Fort Bragg and sits northwest of Fayetteville.
The State Auditor’s response portion of the report was highly critical of Spring Lake’s response to the audit, noting that the town agreed with the findings but did not provide the “required details” for corrective actions. The auditor’s response also accused Spring Lake’s response of making “several statements that tend to obscure an issue, mislead the reader, and minimize the importance of OSA’s findings and recommendations.”
State Auditor Beth Wood’s office has sent the findings of the audit to the Federal Bureau of Investigations as well as the State Bureau of Investigation for potential criminal investigation.
The main findings of the Mar. 17 audit include:
- The former accounting technician used at least $430,112 of Town funds for personal use.
- There was at least $36,400 in cash missing from the Revenue Department and the Recreation Department daily deposits.
- Town employees spent $102,877 of Town funds on questionable credit card purchases.
- Town overpaid the former economic development director $9,900.
The accounting technician in the report is referred to as “she” and also served as finance director for a period of time, according to the audit. Town records indicate that the accounting technician cited in the report is likely a woman named Gay Tucker who held that position from mid-summer 2014 through March 2020. Tucker’s employment with the town ended in July 2021.
According to the audit, during the time period spanning July 1, 2018, through June 30, 2021, the former accounting technician “used at least $430,112 of Town funds for personal use.”
Tucker allegedly wrote 72 checks for personal use, including 32 checks totaling $166,082 payable to Bragg Mutual Federal Credit Union (Bragg Mutual), and those checks were deposited into her personal bank account at that credit union.
There were also 27 checks totaling $151,015 made payable to Tucker directly, 24 of which were deposited into her personal bank account at Bragg Mutual and one was deposited into her husband’s personal account at the same credit union.
Additionally, Tucker wrote 13 checks totaling $113,015 payable to “Heritage Place Senior Living” to pay her husband’s monthly resident bills.
“Town employees used Town credit cards to make 602 questionable purchases totaling $102,877. This amount represents 45% of all credit card purchases for that time period, which totaled $228,871,” the audit says.
The audit also found the town failed to safeguard its vehicle fleet and a lack of overall monitoring of vehicles that could lead to misuse and theft. The audit cites town records show Spring Lake has 80 vehicles; however, DMV records show 138 vehicles and the financial auditor’s records show 92 vehicles.
Other findings include the former economic development director overpaying by $9,900 for his monthly cell phone stipend. That overpayment included the payroll technician incorrectly entering the stipend as $10,000 instead of $100 while processing the Town’s payroll.
“The Director did not inform the Town of the overpayment and claimed he did not realize he had received the extra funds in his pay,” according to the audit report. The director apparently said he “was expecting a tax return, so I really didn’t look into it.”
Spring Lake has been on the radar of multiple state offices since spring 2021, in particular the N.C. Local Government Commission (LGC) headed up by State Treasurer Dale Folwell. In June 2021, Folwell warned of Spring Lake’s impending fiscal issues, including an investigation into missing money.
On Oct. 5, 2021, the LGC unanimously voted to take over the finances of Spring Lake. At the time of the vote, the town was close to defaulting on debt-service payments totaling $221,385.
As a result of the vote, LGC Secretary Sharon Edmundson was instructed to “impound the books and records of the Town, assume control of the finances of the Town and oversee and direct all its financial affairs as set out in N.C.G.S. Chapter 159 and the rules of the Commission.”
“There’s no logistical reason this town should be in the shape that it’s in,” Edmundson said in a June 2021 press release from Folwell’s office. “It has the highest municipal tax rate in Cumberland County at 70 cents per $100 valuation. This town cannot afford to continue spending the way they have been spending.”
State Auditor Beth Wood, who is also a member of the LGC, was cited in the June 2021 press release as defending the new town manager and pointing to lack of leadership from the board of aldermen. The current audit findings state a similar lack of oversight by the aldermen.
At that time, Wood urged the LGC to take control of the town’s finances and indicated her office was “investigating and looking for missing money.”