The former director of the Carteret County Humane Society and Animal Shelter misappropriated thousands of dollars at the Newport nonprofit, according to a report from State Auditor Beth Wood.
The auditor’s office received a complaint through its hotline that the shelter director had allegedly embezzled money and misused the organization’s credit cards. The auditor’s report did not name the former director. State Auditor spokesman Bill Holmes said he did not know the name of the former director. Calls to the Carteret County district attorney’s office were not immediately returned Thursday.
The auditor’s office found that between January 2014 and July 2016, the director spent more than $67,000 on 2,243 questionable purchases and never deposited more than $44,000 in cash the agency received.
The director resigned in September 2016.
The misuse of the funds could represent a violation of several state laws, including embezzlement and obtaining property by false pretenses, according to the audit. The auditor’s office referred its findings to the Carteret County District Attorney, who will determine whether there is sufficient evidence to pursue criminal charges.
The auditor’s office recommended that the shelter’s board of directors improve oversight of shelter operations and attempt to recover the missing cash.
The shelter accepts stray animals and those dropped off by county residents.
Carteret County gave the shelter $210,000 in funding in 2016. The county received the auditor’s report in February and said in a letter that it would require the shelter to submit monthly financial statements, an annual audit report and minutes from its meetings to continue receiving money.
Among questionable purchases identified by the audit:
▪ $15,617 at a convenience store on personal purchases such as gas, cigarettes, cigars, energy drinks, alcoholic beverages, sodas, candy, snacks and dairy products. A shelter employee told auditors the former director also purchased gas for a friend using the agency’s credit card.
▪ $8,496 in clothing, groceries and baby supplies at Walmart. Purchases included New York strip steaks, baby back ribs, Visa gift cards, diapers, an Easy Bake Oven, clothes, over-the-counter medications and toiletries.
▪ $4,318 at restaurants and on fast food, with 156 charges for meals over 30 months.
▪ $11,343 on phone purchases and other cell phone services through Verizon and other carriers.
▪ $6,529 for local car rentals.
▪ $5,995 for utilities, a storage rental unit and temporary living arrangements including at a Holiday Inn Express.
▪ $3,200 for the former director’s children’s day care.
▪ $3,000 for a down payment on a Chevrolet Traverse for personal use.
▪ $950 on sporting goods, Xbox Live, Redbox, Netflix, online dating, movie tickets and a WWE pay-per-view event.
▪ $558 in deposits to a correctional facility inmate.
The former director was the only employee authorized to use the society’s credit cards, the audit says. She was unable to produce receipts or other documents to support a business purpose for the purchases.
“The $67,000 of misspent funds could have been used for legitimate Shelter expenditures including the care of stray, abandoned, and surrendered pets; increased adoption efforts; and Shelter improvements,” the audit report said.
There was also $44,364 in cash missing from the society’s bank deposits. The former director was responsible for that cash, according to the audit.
A shelter employee said the cash was kept in a locked drawer in the former director’s office. The employee said on one day there would be cash in the drawer and the next day it would be replaced with a “sticky note” from the former director indicating that she owed the shelter money, according to the report. Another employee told auditors the former director separated cash from sales receipts and put the cash in her back pocket.
The ex-director was unable to provide an explanation to auditors for the missing cash.
The failure of the former director to deposit the cash resulted in less funding for the care of animals, the report said, and during the same time period the shelter requested additional funds from the county to maintain its facility.
Lack of oversight
The shelter’s treasurer failed to maintain adequate oversight of purchases made using the credit cards and cash deposits, according to the audit, including failing to review monthly statements.
“The lack of review allowed the former Shelter Director to misuse the credit cards over an extended period for personal gain,” the audit report said.
When investigators asked the treasurer if she had reviewed the credit card statements, she said, “I just don’t have time to do that,” according to the report. The treasurer also said she just tore off the bottom portion of the statement so she could pay the outstanding balance.
State audit investigators told shelter officials about their findings Sept. 13, but the former director continued charging questionable expenses until her Sept. 23 resignation and after.
The board has since canceled four of the five credit cards, “but failed to act in a timely manner to make any changes to safeguard cash at the shelter,” the report said.
On March 7, board president Walter Westbrook said in a letter that the board voted to cancel all credit cards and put in place several safeguards for cash, including a surveillance system.