A man walks along a railroad just beyond the East Laurinburg town line, towards the more affluent town of Laurinburg. Mark Darrough / Wmforo

Two state lawmakers appear ready to endorse legislation to revoke the town charter for East Laurinburg following a state investigation’s findings of misuse of town funds and multiple failures to submit legally required audits for more than half a decade.

Rep. Garland Pierce, D-Cumberland, changed his stance months after signaling opposition to the Local Government Commission’s first recommendation to the General Assembly this spring to decharter the old textile town in Scotland County, near the South Carolina border. Pierce said Senate Majority Whip Tom McInnis, R-Richmond, has also indicated he would back revoking the charter.

The LGC is part of the Department of State Treasurer, with nine appointed members who oversee the financial accountability of more than 1,300 local government units across the state.

State Auditor Beth Wood, one of nine voting members on the LGC, released the report last month.

The 15-page document revealed that the town last submitted an annual audit in February 2018, for the fiscal year ending June 2016, and that a former finance officer spent more than $11,000 for personal utility bills as well as “miscellaneous questionable expenses.”

Such expenses included 14 purchases totaling $4,100 with a gas card, $900 in petty cash and nearly $600 for additional time worked.

The finance officer was employed by the town from December 2016 through March 2018, according to the report, which does not name the individual. Although Wood did not confirm the identity of the former officer, citing office protocols, a woman named Jennifer Lett served as the town’s finance officer during this period.

The cited officer used 13 checks to pay a total of $2,674 toward utility bills at her personal residence in East Laurinburg, according to the report.

A town commissioner provided second signatures on 11 of those checks and signed off on 22 of 28 checks used for what the report described as questionable expenses.

The commissioner was also unidentified by Wood, but Lett’s mother, Tyresa Haywood, served on the town’s board during this time. She was one of three commissioners serving in East Laurinburg in 2017 – when the bulk of the reported checks were signed, and she was the only female member.

Although Haywood was the only candidate to file for the Nov. 2 municipal elections for East Laurinburg, she lost her seat to write-in candidate Glenda Locklear, who won with only 10 votes, according to the Board of Elections. Haywood came in fourth, with three votes.

When asked about her review process when signing checks, the auditor's report said the town commissioner told investigators from Wood’s office, “I can’t tell you if she had receipts or not. I just made a butt of myself and assumed that she had a receipt. I did not ask for one. … (The finance officer) was in charge of that, and I just took it for granted that that’s what it was.”

The finance officer provided no documentation for 42 transactions from the town’s bank account, totaling $8,542, that Wood labeled as questionable expenses.

The report states that because of the $11,215 used for utilities and questionable expenses, “funds were not available for town operations.” For a town with few resources — its budget for the fiscal year ending June 2020 was about $75,000 — the funds in question from February 2017 through February 2018 were significant.

“In fact, the Town’s bank account was over-drafted in August 2017 and February 2018, demonstrating the impact of the Finance Officer’s personal use of Town funds,” according to the report.

Upon completion of the state auditor’s investigation, which required roughly $20,700 to carry out, Wood referred the report’s findings to Scotland County District Attorney Reece Saunders to determine whether sufficient evidence exists “to pursue criminal charges related to misappropriation of public funds.”

Saunders said he would provide no comment when Wmforo asked whether he planned to pursue criminal charges against Lett.

Additionally, Wood recommended the town commissioners consider pursuing legal action against the former finance officer. Although the town provided no formal response to the investigation, then-Mayor Marshall Stevens told Wood’s office that the commissioners, which include Haywood, have decided to pursue charges.

However, Stevens died May 16 following a brief illness.

The treasurer’s report cited a state law outlining consequences for the personal use of public funds by local government employees, which states “the person is guilty of a Class F felony” if the value misappropriated is less than $100,000. Such felonies carry a maximum punishment of 59 months' incarceration.

Wood said she has in the past seen other local government bodies mismanaging funds at the same high level of East Laurinburg’s mismanagement, but such cases have been rare.

Wood was part of a unanimous vote by the LGC in mid-April to repeal the town’s charter. She said that while State Treasurer Dale Folwell’s second recommendation to the General Assembly “is the right decision, given East Laurinburg’s performance and lack of cooperation with the Local Government Commission over the last 10 years, the decision was not made lightly nor without much discussion.”

Legislation to decharter on the horizon

Rep. Pierce said Wood’s report was the final straw in deciding to finally support legislation to decharter East Laurinburg.

“There’s nothing you can do,” Pierce said. “When the damning evidence came out about malfeasance, it’s kind of hard to work with them anymore. I can’t. I tried everything I could. ... As a legislator I have a responsibility. I’m just sad that it has come to this, but it’s really out of my hands.”

Pierce and McInnis plan to include an item to revoke the town charter in an omnibus bill that includes other local measures, according to Pierce.

McInnis could not be reached for comment. Folwell said both legislators “have indicated to me that they’re on board for getting this done as soon as possible.”

No legislation concerning East Laurinburg’s charter status has been filed yet, according to the N.C. General Assembly site.

Folwell is calling for an urgent conclusion to the matter because “there is no tool in (his) toolbox that can fix East Laurinburg.”

“There's no governance (in East Laurinburg); there's no competency; there's no reconciling of where the money is, as evidenced by the state auditor, who's now referred her findings to the law enforcement authorities,” Folwell said.

The offices of the state auditor and state treasurer have done what is needed to decharter the town, according to Folwell, “and now it’s time for the state legislature to do their job.”

Ultimately, Pierce said, he was disappointed by the report’s findings after months of working with town officials and Folwell to get East Laurinburg’s “financial house in order.”

Pierce now thinks that if the LGC were to assume control of the town’s finances, as it has done with financially troubled local government bodies in the past, it would only delay the inevitable, he said.

“Everybody’s innocent until proven guilty, and the evidence was damning.” Pierce said. “The state treasurer can take over the town, but it would just be a slow death. The same thing would’ve happened: They would’ve eventually closed it down. Legislation is quicker; it’s painless, in some ways.”

Pierce said concerns remain about what will happen to the “sizable” amount of funds in the town’s bank account. According to treasurer spokesman Dan Way, if the LGC votes to assume control of the finances, it would “manage the funds to the benefit of the residents of East Laurinburg, including making payroll, paying bills and approving appropriate expenditures as needed.”

Wood, Folwell and Pierce said they didn’t know the amount currently sitting in the town’s bank account.

Wmforo attempted to contact Haywood and Lett but received no response prior to publication.

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