Set up in 2000 to nurture small businesses in Southeast Raleigh, the Raleigh Business and Technology Center has received more than $3 million in support from the city of Raleigh, local universities, Wake County and the federal government to run a minority small-business incubator.
Its leaders, however, strayed from their mission, a News & Observer review of financial records and interviews with people involved show. Findings include:
• Incubator director Bob Robinson founded a separate organization called the National Youth Chamber of Commerce, giving it at least $290,000 from the incubator’s budget. City auditors can’t figure out where the money went, and the youth chamber is struggling, too.
• Several incubator tenants were primarily doing work, such as marketing or accounting, for the incubator. Other tenants included nonprofits or out-of-town firms enjoying cheap rent.
• The incubator’s first director, retired UNC system vice president E. Walton Jones, received annual payments of more than $66,000 after he stepped down.
• Family members of Lawrence Wray, a retired Raleigh assistant city manager who helped found the incubator, also did paid work there.
The incubator has bled money for years and is fighting for its life after a scathing city audit released last month. The audit reported more than $65,000 in cash is missing and found other irregularities.
Raleigh police officials have launched an investigation, and city leaders have ordered the incubator out of its city-owned building, though the eviction is being contested in court. A judge continued the case Friday and allowed the incubator to stay until the matter is settled.
“It was shocking and disturbing,” Councilwoman Mary-Ann Baldwin said of the audit findings. “I felt somewhat ill when I read it.”
The city’s four-month audit process reviewed check registers, payments and contracts from 2010 to 2012. Robinson, the incubator’s longtime director, resigned after auditors found he’d drawn $65,000 in teller checks from the incubator.
Raleigh police are still investigating possible fraud; they seized computers and files from Robinson and three other incubator staffers. Reached last week, Robinson declined to comment, citing advice from a lawyer.
Funding temp work?
City auditors were particularly concerned by $290,000 in payments over two years to a group called the National Youth Chamber of Commerce. Robinson founded the organization in 2010, initially running it out of the business incubator.
The incubator had a federal grant to employ 40 disadvantaged workers doing weatherization work on Raleigh homes. That work fell through, Robinson told auditors, and he instead forged a partnership with Chapel Hill-based Strata Solar to provide solar panel installers.
Robinson says the project was outsourced to the Youth Chamber of Commerce, with related money transferred to the other group. Youth chamber leaders say they’ve employed up to 500 workers at a time for Strata at job sites across the state. But auditors found no documentation to support the $290,000 payment from the incubator to the youth chamber.
Taking care of tenants
Michieka was one of several tenants who did extensive work for the incubator. Kimberly McClain’s Community Connect LLC was paid about $25,000 in 2011 and 2012. Another tenant, Genuine Accounting Services, was paid nearly double McClain’s contracted amount, netting more than $43,000 in a two-year period, according to the audit.
Another incubator insider still received payments long after he left the agency. Dr. E. Walton Jones served as director from 2000 to 2003 and pushed for the organization’s creation for more than a decade. Jones, who died in 2010, was also a former UNC system vice president and adviser to Gov. Jim Hunt.
Jones’ pay didn’t stop when he left the incubator. Wray said that Jones received annual checks from his 2003 retirement until 2010, the year he died. Audit records show the payments ranged from $66,000 to $74,000.
“(Jones) worked for us when we were creating this building ... and we didn’t have the money to pay him all his money for the services provided,” Wray said.
Wray, the nonprofit’s current chairman, had family members working for the incubator on multiple occasions. His former wife, Shelia Noble Wray, was one of two incubator employees in 2004.
“She was working at the incubator but not for any connection that I had,” Lawrence Wray said. “I suggested they not hire her.”
More recently, Wray’s singing sisters were paid $200 to perform at the incubator’s awards banquet last fall. His brother, Donald, got $600 to trim the incubator’s trees in November and December. And his son, Lawrence Wray III, received $150 for landscaping work, according to city audit records.
Despite the critical audit, Wray thinks his organization should get another chance. He’s fighting Raleigh’s eviction order in court, arguing that an unsigned lease runs through December. He has also developed a restructuring plan to address city concerns. But Baldwin, the councilwoman, says she’d rather the city set up a new program to provide incubator services. “There is in my mind a trust issue now,” she said. “I really feel like it’s time to look for some new options and really re-envision the incubator.”