Wake County

Amid register of deeds scandal, some Wake leaders unhappy with county manager’s response

How did $895,000 go missing from the Wake Register of Deeds Office and what is the county doing to ensure it doesn’t happen again?

Some Wake County commissioners say County Manager Jim Hartmann hasn’t acted quickly enough to answer those questions and other inquiries they’ve had into the ongoing review of the deeds office.

In February, Hartmann launched an audit of the deeds office to investigate reports of missing funds. Laura Riddick, a Republican elected six times to run the office, resigned on April 1, citing health issues. Last month, county audits revealed $895,000 has gone missing since 2014.

A former employee, Troy Ellis III, admitted to taking $50,000 in cash. But it remains unclear where the rest of the money went and how it was removed from the office, located inside the Wake County Justice Center on Salisbury Street in downtown Raleigh.

A county-led audit and a criminal investigation led by Lorrin Freeman, the district attorney, are ongoing. Meanwhile, email records and interviews with county commissioners reveal mounting tensions between commissioners and county staff.

Commissioner Greg Ford says he’s repeatedly asked Hartmann to explain the loss of cash and move quickly to impose a fresh system of checks and balances – only to be disappointed by Hartmann’s response.

“We are a large county with many departments and functions, but several commissioners – myself included – have not been satisfied with County management’s response to our repeated requests for information and deliverables within a reasonable timeframe (and) certainly not with the sense of urgency I believe this matter warrants,” Ford said in a statement Thursday. “Current internal controls for handling cash are not tight, or consistent, and this is accentuated by the fact that County management has taken half a year to report on its response since the whistle was first blown in the Register of Deeds Office last winter.”

Commissioners Erv Portman and Jessica Holmes also expressed frustration with a lack of progress and transparency.

“When someone commits fraud, you have to take swift and decisive action. That’s what we’ve been asking for,” Portman said. “Staff says they’re working on it and I appreciate their efforts, but this is taking way too long.”

Hartmann, who previously managed Seminole County, Fla., was hired as county manager in 2014, when Republicans controlled the Board of Commissioners. Democrats now hold every seat on the seven-member board.

Hartmann said Thursday that he’s aware Ford and Portman disagree with him on the pace of implementing change but said he finds it “remarkable” that they’re airing their grievances publicly.

Hartmann pointed out that the deeds office largely operates independently of his office. He said that his staff reacted as quickly as it could upon hearing that cash was missing and that he plans to email a report to commissioners by the end of the week.

Hartmann said he’s in no rush to implement sweeping changes because it’s unlikely the county will be able to identify which, if any, of the county’s accounting practices failed until Freeman’s criminal investigation is complete. Other departments that handle cash are operating normally and haven’t reported any problems, he added.

“Those people are doing perfectly appropriate work in an honest manner,” Hartmann said.

Hutchinson’s support

Board chairman Sig Hutchinson said he’s comfortable with the pace of Hartmann’s work but understands other commissioners’ frustrations.

“I know that some commissioners would like it to go faster, and I understand their impatience,” Hutchinson said. “That said, there’s an ongoing investigation and there’s a long way to go back from an audit perspective. We’re going to solve this.”

Commissioner John Burns said he’s also comfortable with Hartmann’s performance.

“I feel like I’m being kept informed. I don’t feel like I need to know all the details,” he said. “I know things aren’t necessarily maintained in a way that makes them easy to reveal.”

Commissioners Matt Calabria and James West weren’t immediately available for comment Thursday.

‘Please reconsider your response’

Emails show that Ford’s annoyance with Hartmann reached new heights earlier this week.

Ford emailed Hartmann on Tuesday to see whether Hartmann required all deeds office employees to sign a form attesting that they understand the county’s accounting policies – something Ford said he asked Hartmann to do weeks prior. Portman asked for an update, too.

Hartmann replied Wednesday, saying the finance staff is working on a report “that covers what has been done and what will be done to improve practices. I will be sending that to the board when it’s complete and reviewed by this office.”

Ford wasn’t happy with that response.

“I’m sorry, but ‘wait for the report whenever it’s distributed to everyone’ is not an acceptable response especially when Commissioner Portman and I have engaged you and staff on this very topic for several weeks now through multiple formats,” Ford wrote. “Jim, I have great respect for you and your work. Please reconsider your response.”

Holmes said she, too, has been frustrated with the pace of change and lack of transparency provided by Hartmann and his staff. “It’s taken too long. Taxpayers deserve a response and reaction sooner rather than later.”

She added that she wasn’t aware that the amount of missing money had grown from $600,000 to $895,000 until the day The News & Observer reported on it last week.

The first news story about the deeds office, in June, startled Portman, too. He emailed Hartmann and County Attorney Scott Warren on July 1 and suggested the deeds office “was not treated in the same way anyone else would be on such a circumstance.”

Warren, in an email to Portman, wrote that he and Hartmann “always put our fiduciary duty to the County first, and to suggest otherwise is an affront to my integrity. Please recall too that the BOC was advised of this situation several times in closed session.”

Portman responded: “Please don’t be offended, non intended. But the story is very different from what I recall about the closed session briefing. That’s the concern.”

Out of touch?

Portman said Johnna Rogers, the deputy county manager, once told him that the missing money “is not a material issue.”

“I flatly reject that,” Portman said. “That is an out-of-touch comment. We need to ensure that the cash is in place and in the drawer daily. Walgreens, Krispy Kreme, Walmart and Harris Teeter know how to do it. We need to know how to do it too.”

Rogers said she takes the missing money “very, very seriously” and that Portman might have misunderstood what she meant. “The amount of cash the county handles (about $10 million a year), in response to our total $1.4 billion budget, is not material,” Rogers said.

“It is most certainly a material issue, which is why we’ve been working diligently since we learned of this issue to correct things in the Register of Deeds Office,” she said. “We’ve pretty much had staff working nonstop for several months now.”

Paul A. Specht: 919-829-4870, @AndySpecht

Commissioner Greg Ford’s statement on improving the Wake Register of Deeds Office

Beyond the district attorney’s investigation, the public deserves assurances that County management is responding with short- and long-term improvements to internal controls wherever cash is handled in county business. I believe those assurances to the public are long overdue.

We are a large county with many departments and functions, but several commissioners – myself included – have not been satisfied with County management’s response to our repeated requests for information and deliverables within a reasonable timeframe – certainly not with the sense of urgency I believe this matter warrants.

Current internal controls for handling cash are not tight, or consistent, and this is accentuated by the fact that County management has taken half a year to report on its response since the whistle was first blown in the Register of Deeds Office last winter.

I expect Mr. Hartmann’s report to provide much-needed transparency and reliability to the county’s practices for handling cash, while also outlining plans for improving all related internal controls in this matter moving forward.

One improvement I would like to see is a move to a more reliable practice of auditing departments on a regular and rolling basis rather than Wake’s current practice of initiating audits only at the request of a department’s own manager. That’s just common sense to me.

The Register of Deeds Office is semiautonomous from county government, with a separately elected official in charge of its operations.

Obviously there are serious problems with how that office has been managed in the past. But these are county taxpayer dollars that have gone missing, and oversight is one of our responsibilities as elected county officials. Our board inherited a mess apparently long in the making since before we took office – but we still share a responsibility and obligation to uphold the public trust in the county’s response to this matter. This is why I have consistently pushed for responsiveness and transparency from County management on this issue but remain frustrated with the response to date.

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