SBI investigating questionable spending in Princeville

jfrank@newsobserver.comApril 8, 2013 

The troubles plaguing the historic town of Princeville escalated Monday as the State Bureau of Investigation began examining thousands of dollars in questionable spending revealed in a state audit.

Princeville’s mayor and the town’s former finance officer charged more than $11,000 on government credit cards without proper documentation, according to the investigative audit. The bulk of the expenses appeared unrelated to town business, including $1,255 for 22 visits to the same local seafood restaurant, $222 at Bed Bath and Beyond and $572 in late fees, which the audit called “an unnecessary and imprudent use of town funds.”

The mayor, a town commissioner and another official also received $4,000 in suspect travel expenses, the report found.

“They are reimbursing themselves for things when they are the check writer and check signer,” said State Auditor Beth Wood in an interview. “I don’t think I’ve ever seen something this egregious.”

Robert Evans, the Edgecombe County district attorney, said in an interview that he asked the SBI to probe the spending to determine whether criminal charges are warranted. The SBI already is examining the town’s state-funded construction projects. The audit also referred the findings to additional state and federal authorities.

The report came months after the state seized financial control in Princeville, the first town in America chartered by African-Americans, as the town neared default on a $310,000 loan in July. A little-known state agency called the Local Government Commission is now managing the town’s finances.

The report exposed deeper-rooted problems than previously known, posing the most significant challenges to Princeville’s future since flooding from Hurricane Floyd in 1999 swelled the Tar River and nearly wiped the town from the map.

“I’m stunned that that much money was misappropriated,” said Gwendolyn Knight, a commissioner in the town, population 2,100. “I’m overwhelmed.”

Mayor Priscilla Everette-Oates recently said all her credit card charges and reimbursements were legitimate town business and provided explanations to the auditor’s office, which called them insufficient.

Her attorney, Malvern King of Durham, said in a statement Monday that the auditor’s office “is attempting to indict and convict” the mayor’s administration through “contrived accusations.”

Beyond the questionable charges, auditors discovered that the town entered into contracts with an attorney and consultant without following state law.

The attorney, Chuck Watts Jr. of Durham, a former state transportation board member, received $79,215 in 2011 even though the town budgeted just $36,000. The typical legal fees for a similar-sized town total $12,125, the audit reported. Watts also billed $150 an hour for legal work and unrelated matters, such as writing letters to the editor of the local newspaper, The Daily Southerner.

The consultant, Reginald Smith, who worked previously at a company in which the mayor had an ownership interest, received $24,078 from July 2010 to March 2012 to provide economic development planning and grant writing without approval of the town board.

Auditors recommended that the state retain control of the town’s finances until the issues are resolved. Knight and two other town commissioners not named in the audit said they would work to correct the problems.

“I’m sure we are going to recover,” Knight said. “We did after the flood, and we can do it again.”

Frank: 919-829-4698

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