Three N.C. Central University employees involved with an education agency based at the campus improperly took tens of thousands of dollars, an internal university audit alleges.
The chancellor of the school called the draft report sloppy and said some of its harshest accusations might not be true.
Once of the agency's leaders, Nan Coleman, was fired last fall for poor performance, Chancellor Charlie Nelms said Thursday. After that, he ordered the internal audit of her Historically Minority Colleges and University Consortium.
Once the audit was completed, Nelms also fired the unnamed auditor who produced it. Now Nelms has ordered his staff to gather more information before he releases a final version to the public. He said the draft audit was so poor that he doesn't trust it, and he does not want to damage the reputations of people who might not have done anything wrong.
"I want to see the source documents, and I want to see the field notes from the audit, because I want it to be accurate," Nelms said. "I don't want it to be hearsay, because some of the allegations are just mind-boggling."
The consortium represents a dozen public and private institutions across the state that have traditionally had heavy minority enrollment. Based at NCCU in Durham, the consortium received millions of dollars in state, federal and private grants to help minority children close the achievement gap with white kids. More than a dozen programs operate under its umbrella.
Nelms said that he feared the draft audit might hurt the efforts of programs that are doing good work to help a population of children who badly need it.
Coleman didn't return phone calls to her home Thursday, nor did one of the other women who the audit alleges had received improper payments, Vermal White. She is listed in the NCCU directory as an administrative assistant in the Division of Extended Studies. She wasn't at work Thursday, according to a woman who answered the phone there.
The other woman named in the audit, Barbara Fields, is listed as a clerical assistant in the Division of Extended Studies. Reached there by telephone, she declined to discuss the audit or her connection with one of the programs cited in the audit, Learn and Serve. Fields said she had not done anything wrong.
"I don't understand why you're asking these questions," she said. "I refuse to answer these questions."
Fictitious payments?
According to the draft audit obtained by The News & Observer, Coleman received $186,000 from federal Learn and Serve grants the consortium had received to support faith-based groups teaching youth about community service. That program's coordinator told the auditor that some of that money - the auditor couldn't determine how much - was paid to a company that Coleman registered with the N.C Secretary of State.
"On the last day of audit fieldwork, Internal Audit questioned the Program Coordinator about the nature of these payments and she admitted that they were fictitious payments to increase the compensation of Ms. Coleman," the audit says.
Coleman was at the center of another education controversy 11 years ago. In 1999 the Durham school system declined to renew her contract as its director of vocational education just weeks after she was named by her peers across the state as the best in North Carolina. She petitioned a judge to force the system to restore her contract, which she said had been improperly terminated. The school system later paid her $12,500 to end the legal fight.
According to the audit, White said that she had been paid $70,000 to be Learn and Serve coordinator. She also was to use some of the money to get insurance, but she said she did not buy any. Also, some of the $70,000 went to two companies White had registered with the state, the audit said.
White also "had received a fictitious vendor payment in order to increase her compensation," the audit alleges.
Hard to reach
The audit said White told the auditor that Fields received $88,000 for providing administrative services and some type of insurance related to the program. But Fields didn't even work on Learn and Serve, and did not buy the insurance, the audit quotes the coordinator as saying.
The auditor got a list of groups or people that received sub-grants from the program from 2004 through 2009 and tried to contact them to determine whether they actually existed. The auditor could not reach any of them, according to the audit. The auditor then asked the program coordinator whether these recipients were legitimate.
"The Program Coordinator stated that the sub-recipients were legitimate, but that she hoped that the Learn and Serve Grant did not get audited by the [federal agency paying for the program] because of what they might find," the audit said.
The audit also alleges that another of the consortium's programs misspent $6,560 on iPods, and that another apparently spent money mostly on social events rather than the intended mix of social and educational events.
Final audit coming soon
Nelms said he thinks there's a strong chance that some of the harshest allegations aren't true. He pointed out problems that led him to question the audit.
An early version, he said, scrutinized programs that weren't connected to the consortium, which he had clearly requested as the sole target. A cover sheet on the version of the audit that The News & Observer obtained, which was addressed to Nelms, appears to confirm that: "To accommodate your request from last week, I have deleted items that were part of our review but were determined to be unrelated to HMCUC," it says.
Nelms, who didn't name the fired auditor, said he will have a final version of the audit in a week to 10 days and will release it. He said no one implicated in the draft audit had been fired except Coleman, who lost her job before the audit was commissioned.
Nelms said that he hadn't informed UNC system President Erskine Bowles about the problems yet, but that he had told the system's top financial and auditing officials.
"We have a team of people working to ensure the accuracy and completeness of the document, including staff from our internal audit office, finance and administration, my chief of staff and university legal counsel," he wrote in an e-mail message to The News & Observer late Thursday. "I am confident that we will succeed in producing an accurate and complete report, and that the actions we have taken and will take, will ensure transparency, accountability and responsiveness."
