The effects of Public Corruption
Russell Peck hired to lead NC GOP To Victory
The N.C. Republican Party on Tuesday hired Russell Peck to be its new executive director.
Peck was heavily involved in the victory of Republican Chris Christie in New Jersey's governor's race earlier this month, Rob Christensen reports. Christie defeated Democratic Gov. Jon Corzine. Peck had worked last year as North Carolina victory director.
"I am pleased to announce that Russell has accepted our offer and will begin work on December 1," state party chairman Tom Fetzer said in an e-mail sent to members of the state GOP Executive Committee this morning. "He will joining us less than a month after helping to engineer a thrilling victory for Republicans in New Jersey's gubernatorial race this year."
"Many of you will remember Russell from his work last year as North Carolina's Victory Director, during which he built a statewide organization that did a fantastic job in a less than ideal political environment," Fetzer wrote.
The hiring was made in a conference call meeting of the GOP Central Committee Tuesday night.
Expressing some reservations was former state GOP Chairman Frank Rouse, who said the $75,000 salary and the fact that Peck was not from North Carolina gave him some pause. Fetzer, as a full-time party chair, is being paid $125,000.
The party also named former Raleigh City Councilman Kieran Shanahan to be its finance director and political consultant Mark Stephens, Fetzer's former political consulting partner, to handle direct mail for the party.
Public Corruption in North Carolina
North Carolina voters don't have much trust in their politicians, regardless of party.
45% think that the Democrats in state government are corrupt to 27% who think they are not. The Republicans aren't a whole lot better with 37% thinking they're corrupt to just 28% who believe they are not. There are a lot more undecideds about the Republicans probably due to their out of power status.
It's predictable that Democratic voters think Republicans are corrupt and vice versa, but there's actually a decent number of folks who think their own parties are as well. 26% of Democrats think their own party is corrupt and 25% of Republicans say the same of theirs.
These numbers are a good indication of why corruption hasn't been a particularly effective electoral issue for Republicans in 2006 and 2008 despite the number of Democratic scandals. The voters don't really trust them any more than they do the Democrats.
North Carolinians also think that corruption in the state is on the rise. 55% believe there is more of it going on in state government than there was 25 years ago with only 8% feeling it's on the decline. Even compared to just five years ago 43% think it's becoming more common to 9% who believe it's become less so.
We've talked frequently about how North Carolina gives its politicians some of the lowest approval ratings of any state in the country- these findings may at least be a start to explaining some of that- elected officials just haven't earned a whole lot of trust from their constituents.
Fire Harry Jones, Tomorrow
Over the years I’ve defended County Manager Harry Jones in public and private as a competent manager who seems to have the right goals and standards in place for Mecklenburg County. But his handling of the DSS mess is a firing offense, specifically his move to quiet a critic of DSS by calling the man’s employer to silence him.
Jones has not said why he contacted Bank of America after a local BAC employee complained that he felt “duped” by giving money to DSS’ charitable efforts for kids. That is no doubt because the tone of the email exchange is unmistakable — and chilling.
“There seems to be a need for a wholesale cleanup of many county agencies, and I think that starts from the top down,” BofA employee Harry Lomax wrote to county officials. A week later, Jones sent the email on to a BofA VP with an ominous “Do you know Harry Lomax” addition.
The response was immediate from BofA government liaison Betty Turner. Lomax’s email was deemed “embarassing” and Jones was assured that BofA execs were on to Lomax: “I am tracking it down. I don’t know him – I have alerted charles. Will be back to you.” Question: Who the hell is “charles?” The Uptown paper of record account leaves this out.
Anyone with even a glancing understanding of Charlotte’s history is probably flashing back to the time when uppity mill hands who questioned local leaders were met with, “What’s your name again? I know your pastor.” The threat was clear — shut up and know your place.
Harry Jones clearly has no problem pulling the same power levers as boss men of years past. And no doubt Jones has done this sort of thing before to be so comfortable as to put such a smoking gun in email form, and on such a high profile matter as DSS’s continued money and management woes. For that reason, the “isolated incident” defense we are sure to get this week does not wash.
Harry Jones has proven he does not have the temperament required of highly compensated public employees, particularly at a time when revenues are tight and citizens are concerned about spending. Criticism from engaged citizens — Harry Lomax was concerned that a county Christmas charity was misusing funds — must be welcomed and encouraged, not kick off corporate retaliation efforts among the lock-step Uptown crowd.
A unanimous vote by the Mecklenburg County commission to remove Jones from his position is the only thing which can restore confidence in the notion that local government works for local citizens rather than actively conspires against them.
Update: Betty Turner is a registered lobbyist for BAC in both North Carolina and Virginia.
The Charlotte-Mecklenburg DSS Fraud mystery: Where did money go?
Internal e-mails reveal new allegations of misspending at the Charlotte-Mecklenburg County Department of Social Services, raising more unanswered questions about what happened to money intended to help needy children.
Some of the more than 1,000 e-mails the Charlotte Observer obtained through a Public Records Request provide the most detailed account to date about the agency's accounting fiasco.
E-mails show:
Officials suspected an employee wrote $80,000 in checks to herself from donations.
An administrator questioned why other donations were used to buy $340 diamond earrings, leather coats and a $300 DVD player.
A top executive complained that a senior fiscal administrator frustrated co-workers with her "inability to explain the simplest concepts of revenue and expenses."
After nearly a year, officials have never said who was at fault for $162,000 that disappeared or whether anyone was disciplined.
No one has been charged in an ongoing police investigation and a county report says officials cannot be certain where the money went.
Meanwhile, donors are left to wonder whether their generosity ever helped buy Christmas gifts for those in need.
In one e-mail, a woman describes calling the county in 2007 to give $900 for single mothers at Christmas. The person who answered the phone told her to make a check payable to the worker's sister.
The donor said she grew suspicious and made the check out to the county, but the idea that it may still have been misused is "like a kick in the stomach."
In another e-mail, a founder of Second String Santa said he was concerned whether kids received the more than 50,000 toys his group had donated since 1989.
Will Miller said he believes some of the toys reached children, but he's not sure about the rest.
"Will we ever know? Probably not," he said.
Two Charlotte-Mecklenburg County Commissioners said they have asked County Administrators for a full accounting of what went wrong at DSS but have yet to receive answers. County officials have never explained who was responsible, they said.
"To fix it, you have to admit all the stuff that is messed up," Commissioner Bill James said. "They don't want to do too much digging."
County administrators declined interview requests. Instead, a county spokesman released a prepared statement saying appropriate fiscal controls have been installed in response to an outside audit and an internal investigation.
"Our review of the e-mails we provided and your follow up questions did not reveal any new information that would suggest any change in the audit findings or in management's response to those findings," the statement said.
Some commissioners said they have been told that the employees involved have either left county government or been placed in new positions.
Unusual spending patterns
DSS spends $176 million annually and employs 1,200 workers to assist Mecklenburg's poor and neglected. The agency administers everything from food stamps to foster care and child protection services.
Last spring, DSS Director Mary Wilson ordered financial audits following reports of suspicious spending.
Auditors looked at multiple spending programs and financial practices in the agency. They found a $10,000 check made out to an employee, missing and altered receipts and money for kids spent on office supplies.
County leaders responded by suspending the programs, putting DSS finance under direct county control, training workers on accounting procedures and ordering a review of financial procedures in each county agency.
The Observer reviewed e-mails dating from December 2008 to July 2009 for seven current and former county administrators, including Wilson, County Manager Harry Jones, County Finance Director Dena Diorio and Internal Auditor Cornita Spears.
E-mails show county officials noticed unusual spending patterns as early as last December but did not disclose problems to the public until March.
On New Year's Eve, Wilson told staff she had suspended a voucher program the agency used to purchase clothes and other items for clients at local stores. She wrote that officials were worried about a lack of oversight and a spike in spending.
One monthly retail bill leapt from between $5,000 and $6,000 to more than $20,000 in October 2008, the e-mail says. Employees turned in receipts only 30 to 35 percent of the time, she wrote.
At one time or another, workers possessed or had access to numerous credit cards and gift cards, including some to Bath & Body Works, Bass Pro Shops, Macy's, the Cheesecake Factory and Outback Steakhouse.
Outside auditors verified for county administrators that DSS workers possessed county-issued credit cards, including 10 credit cards for Sam's Club, three for Harris Teeter and an online charge account with Amazon.com
In February, county officials asked internal auditors to look into questionable spending, including purchases of diamond earrings, leather coats and a DVD player.
An e-mail to one of the auditors from a human resources consultant said the purchases raise "many questions and concerns."
According to the county's statement, most gifts were typical children's items such as toys, clothes and books. More expensive items such as diamond earrings and leather coats were approved purchases for foster children who reached special milestones like high school graduation, the statement says.
"Receiving a gift of some significant value was viewed as an incentive for other children who were in foster care to set goals and accomplish them," the statement said.
Commissioner Harold Cogdell said he spent part of his early childhood in foster care and believes the gifts are a good idea.
"It makes sense to me to show the kids some love," Cogdell said.
A new Accountant
DSS has endured multiple management shakeups in recent years. The latest came when Wilson reorganized the agency after she was hired in July 2008.
She laid out the reasons to hire a new finance director in a February e-mail.
Wilson wrote that the senior fiscal administrator who managed DSS finances failed to provide reports about oversight, alienated staff and lacked the ability to conduct productive discussions with senior county executives. The e-mail does not name the senior fiscal administrator.
DSS later hired accountant Angela Hurlburt to oversee its finances.
James, the commissioner, said he has asked for the names and background information on Hurlburt's predecessors. He wants them to answer questions from the Board of Commissioners' Audit Review Committee, which investigated accounting lapses at DSS.
He said administrators have failed to respond to his requests and complained that officials "keep us in the dark."
Other Charlotte-Mecklenburg Commissioners disagreed.
Chairman Jennifer Roberts and Commissioner Dumont Clarke said county leaders have already put in place reforms that will protect taxpayer and donor money.
"The highest priority" is implementing new financial controls, Clarke said.
Shifting the Finances
Auditors from Cherry, Bekaert & Holland reviewed DSS and found that Mecklenburg officials responded appropriately. The county's Audit Review Committee came to the same conclusion.
But DSS Director Wilson bristled at one of the major reforms.
Leaders put DSS finance under the direct control of the county's main finance department after allegations of misspending surfaced.
In April, Wilson sent an e-mail to County General Manager Michelle Lancaster to complain. Calling the decision "premature" and "shortsighted," Wilson said there are emergencies when DSS workers must write checks immediately, including occasions when the agency takes children in custody who need clothes, toiletries and school supplies.
"I understand the urgency at the time, but there was a reason DSS had check writing capability and I think we threw the baby out with the bathwater instead of fixing the underlying issue, which is documentation and accountability," Wilson wrote.
Donors left with questions
Past supporters of the DSS Christmas charity include Young Lawyers, employees of Wachovia and Bank of America, and Project Joy, the holiday fund drive initiated by Observer columnist Tommy Tomlinson. The Christmas charity, known as the Giving Tree, is now run by the Salvation Army.
The donor who gave $900 e-mailed the county in July after learning about accounting failures from news accounts. She attached a picture of the check copy she made around Christmas in 2007.
She wrote that she did not remember the name of the woman she spoke with on the phone.
The donor said she and her family all pitched in to raise the money so she could assist women like her who had struggled as single mothers.
When she heard there were allegations of misspending in a DSS charity program, "It's like your stomach just drops."
$33,000 repaid to Charlotte-Mecklenburg DSS but overlooked
Mecklenburg County's investigation into alleged misspending at a Christmas charity for children took a surprising twist Tuesday: Officials said a county employee returned more than $33,000 months ago, but auditors didn't account for it.
The finding raised new questions about the months-long probe, including why it took so long for administrators to learn about the money and why so much had been advanced to a county employee. Auditors said the worker had spent some of it on personal items.
County Manager Harry Jones said he was "damned embarrassed" by the latest information.
Commissioners, stunned by the revelations, said scrutiny of the Department of Social Services has eroded public confidence. They ordered a study of how to improve ethics throughout county government.
"I can't help but be baffled," Commissioner Dan Murrey said. "What we have done is confuse the public more."
The county's internal auditor told commissioners it was not until the past week that officials realized the returned money helped explain some of the $162,000 spent on the Giving Tree program that had not been fully accounted for.
But the auditor stood by her earlier report that said officials can't be certain where the bulk of the money went.
"I'm disappointed that we did not catch this earlier," Jones told county commissioners.
The county frequently advanced money to employees to help buy gifts for needy children, with receipts expected to document how the money was spent.
It wasn't immediately clear how much the employee who returned money had been given in the past, but it included at least two $10,000 checks made out in December and January, according to an internal memo released to commissioners Tuesday.
The money returned by the employee in February and March helped cover those checks, the memo stated, as well as other unspent money or funds meant to account for "personal purchases that were inadvertently included amongst receipts."
The employee also returned earrings and a DVD player whose costs drew concerns from management, and reimbursed the cost for the items.
The county did not identify who returned the money, only saying it was a former employee who had worked with the Giving Tree program for about 10 years.
A police investigation into the Giving Tree program is ongoing.
Murrey said an accounting error has unnecessarily harmed public perceptions about county government.
Commissioner Karen Bentley and other commissioners said they had received numerous complaints from citizens about DSS in recent months. Bentley reassured residents that she would look into concerns and seek answers to questions about accountability.
Commissioners Bill James said Tuesday's news only raises more questions.
James suggested that the employee only returned the money to escape punishment. He alluded to widespread problems with missing and altered receipts and said the county should investigate whether wrongdoing occurred in previous years.
Worker raised questions
The Giving Tree probe started earlier this year after a DSS employee raised questions about "large dollar" checks that had been written to a worker who managed the program, the county has said.
Two workers connected to the Giving Tree effort were suspended with pay. One was reinstated this summer, while the other had been put on medical leave.
Cindy Brady, a former DSS supervisor who collected donations for the Giving Tree program retired in August. But county officials have never said whether she was one of the two suspended employees.
Reached Tuesday, Brady said she had been advised by an attorney not to comment about the DSS issue.
In June, county auditors said they'd collected about $138,978 in receipts related to the Giving Tree.
But the county said they couldn't provide complete assurance that the money was spent properly because more than 99 percent of the receipts had problems, including information that had been altered or whited out.
That left about $23,310 that officials said they could not account for.
On Tuesday, Internal Audit Director Cornita Spears told commissioners that she received "clarifications" about how much money the employee had returned to the county.
Spears said the county had previously recorded some money the unnamed employee had returned to reimburse money used for personal items.
However, Spears said she learned last week that more money had been returned, but determined it had not been properly recorded in the earlier Giving Tree review.
Spears said the new information didn't change the overall findings of the June report.
Jones said that while he believed the county had made an "unacceptable error," he said county management had called for the various DSS audits, recommended changes and had not hidden information about the probes.
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Sources: McClatchy Newspapers, Under The Dome, Public Policy Polling, The Meck Deck Blog, John Locke Foundation, NC Republican Party, Charmeck.org, Amazon.com, Youtube, Google Maps
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