Chocowinity Fraud | Eastern NC Now

Chocowinity Fraud

BY: HOOD RICHARDSON

Getting information about the Joy McRoy fraud cases has been difficult. For one thing it appears that several different accounting systems are involved. For another thing, the timelines are extraordinary, covering seven years or even more. I have asked questions during the past--almost three years—in fact and have obtained very little information from several sources. The court files are very bare, although discovery began more than one year ago.

Now we are finally beginning to learn some of the facts.

Last week the N. C. Local Government Commission (LGC) heard a report dealing with several local governments that have not filed timely audit reports. Turns out Chocowinity’s was one of the most complex and involved an unusually large amount of money. It was also reported that the cost of uncovering the truth about what went on in the Town of Chocowinity, including the Fire Department and possibly other entities that Town Clerk Joy McRoy was reported to be involved with, would cost over $45,000 and counting.

You can read more about this LGC meeting here:  Sales tax revenue withheld from 11 towns and cities - NewsBreak.

The case has been set for trial in early November of 2025. There is a rumor that a plea bargain may be made before the court date. With the court files so bare it is possible that a plea bargain could be made, and the court files remain void of publicly available evidence because of either the conditions of a negotiated settlement or intentional or accidental failure to file. If this were to become the case, the public interest would be ill served. The public interest (this is public money) will best be served if all discovery and other documents are properly processed in the court system and filed in the public court record.

The external auditor who is working on unraveling all this is former State Auditor Beth Wood. She was reported to have advised the LGC that: “The bigger event was the substandard audits that were performed in prior years.” Ponder that statement for what it means and does not mean here in Beaufort County.

That sounds to me like the audit firm Chocowinity used is perhaps being set up to take the blame for the debacle. That brings me back to my original statement that I have been seeking for many months now to learn what was actually going on. When you chase that rabbit to hole it opens up an entirely new and different set of questions.

At least part of the mishandling of funds in Chocowinity was with money that came from Beaufort County. What I was told over and over was that even if Beaufort County sent money to Chocowinity (Fire Department) that it is “none of the county’s business to know what they did with those county funds…” Frankly, that in and of itself may be the real mishandling that the Beaufort County Board of Commissioners should be concerned about. Ask yourself, “how can the County Administration and Board of Commissioners send county taxpayer money to any entity and not have accountability requirements to discover something like what it is being reported happened with some of these funds?!” How is that not the business of the County?

The Local Government Commission, a part of the State Treasurer’s Office, oversees public finance in North Carolina. The Commission met during early September and received a report from Beth Wood, CPA, the former NC State Auditor, who is now a partner in the audit firm hired by the Town of Chocowinity to straighten out the Town’s books.

Her report is troubling considering the lack of interest in how Beaufort County money may be involved and the lack of interest displayed by Beaufort County Government. At least one fire department and EMS unit and the Town of Chocowinity have been involved in these fraud charges. Two other fire departments in Beaufort County have had problems related to fraud recently. Beaufort County government does not require audits for any of the entities we pay tax money to. Audits are waived by vote of the Board of Commissioners for some entities. However, audits are performed by some entities, but Beaufort County Government does not formally require our examination of these audits.

Most of the information in this article about statements made by Beth Wood, CPA at the Local Government Commission meeting is taken from an article posted by The Wake Weekly, a paper covering Northern Wake County.

There may be as many as three audits each costing as much as $45,000. As nearly as I can tell, McRoy was handling three pots of government money. In order to reconstruct the financial history auditors had to go through seven years of books to get to the year 2022 when the fraud was discovered. Auditors dealt with incomplete information. That is, cleared checks with no check numbers, cash deposits that were not reconciled, items that were not reported at all or incorrectly reported and bank statements with no copy of the cancelled checks. The amount of money missing is believed to be more than $600,000 and the cost of audits could be more than $135,000. A question has been raised about the effectiveness of past audits. But this is a much bigger issue than the audits. In my mind the greater issue is the idea that the accountability of county taxpayer monies was insufficient to know how those monies were actually used by the recipients. That lack of effective accountability management is not the exclusive fault of the auditors.

Questions having to do with any legal settlement involve who was responsible, how much of the more than $700,000 will be paid back, how complete will the court record become, how much money was taken from the different bank accounts, and how much of a prison sentence will Joy McRoy and conceivably others receive?

Now, let me be very careful about how I say this: Something is wrong in Denmark, as Shakespeare said in Hamlet! And I personally do not think “the problem” here is just with accountants. Rather, I think the larger issue is a question of management and electoral accountability. Those questions rest at the feet of the County Administration and Board of Commissioners. I personally have no information that any of those individuals misused any taxpayer money, per se. But I do suggest that the system of accountability for how taxpayers’ funds were doled out and accounted for was, at best, inadequate. The People have a right to know that the problems that allowed this fiasco to happen have been stopped and will never happen again. The accountants are not to blame. The Management System is to blame, and it is right for The People to hold those responsible for the Management System to account to the People about how their money was used. Just how could this happen?