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Monday, August 27, 2007

Audit finds fraud at NC A&T; $1 million misspent

A state audit released this week documents more than $1 million in fraud, mismanagement of federal grants and misuse of money at N.C. A&T State University in Greensboro, including $380,000 in vending receipts that were diverted to a spending account of former Chancellor James Renick.
By UNC system policy, the vending money was supposed to be spent on scholarships, student financial aid, campus debt and student activities. Instead, it was spent on commissions for artwork, travel by Renick's wife, alumni events and a $150,000 annuity for an unnamed faculty member, the audit said.

Renick, who stepped down last year, is now a senior vice president at the American Council on Education in Washington. He could not be reached for comment Friday. A building under construction on campus was originally to bear Renick's name, but a university spokeswoman said it would be named the School of Education Building instead.

The audit caps months of investigation at the university, where several employees have been fired and charged with criminal offenses. More charges could be forthcoming. A spokesman for the auditor's office said Friday the report had been forwarded to federal prosecutors, the Federal Bureau of Investigation, the State Bureau of Investigation and the Guilford County District Attorney's Office. Copies also went to Gov. Mike Easley and the state Attorney General's Office.

Among the findings of the state audit and internal university reviews:

* $500,000 in questionable expenses in the university's HBCU Future Engineering Faculty Fellowship Program, funded by the federal Office of Naval Research. A program manager made improper payments, including more than $66,000 in stipends in one year to her husband, who was in the program. The highest yearly stipend had previously been $23,000. The manager spent 41 nights in hotels during 2005-06 at the program's expense, at an average cost of $328 a night. The manager also hired her daughter and paid for her travel to conferences in Jamaica, California, Nevada and Pennsylvania. The manager and her husband ran up a $369 restaurant and room service tab during a two-day symposium.

* $101,000 in misuse of funds by an administrative assistant in the Natural Resources and Environmental Design Department.

* $87,000 in misappropriated funds by a former vice chancellor for information technology and telecommunications. Rebates from computer purchases were channeled into a discretionary account, and the money was spent on lunches, dinners, holiday parties, tickets to athletic events and a beach cottage rental.

* $380,000 in inappropriate transfers of Pepsi vending receipts to the former chancellor's discretionary fund. The audit concluded that 87 percent of the purchases it examined were for "unallowable purposes." The largest expense was for a $150,000 annuity for a faculty member -- nonsalary compensation that apparently had not been approved through campus policy or by the board of trustees.

'Serious allegations'

"These are serious allegations," said Chris Mears, director of public affairs for the Office of the State Auditor. "Any time you have fraud allegations, it rises to another level."

The audit triggers a 90-day warning period for the campus, which could lose budget flexibility powers if UNC system leaders aren't satisfied with progress at the university.

A new chancellor, Stanley Battle, arrived July 1 at N.C. A&T from Coppin State University in Maryland. Battle was out of town Friday and could not be reached for comment.

Mark Kiel, vice chancellor for development and university relations, said much of the audit's information came from work ordered by former Interim Chancellor Vic Hackley, who began to uncover problems last year and asked UNC President Erskine Bowles for help.

Bowles then sent in what he termed "SWAT teams" of auditors and administrators to comb through A&T's books. Jeff Davies, Bowles' chief of staff, said Friday the university had been working for months to straighten things out.
"My sense is that Chancellor Battle is very much on top of the issues there," Davies said, adding that Battle had begun to hire new administrators. "He feels very good about the leadership team in place on the campus. I think this is all about leadership."


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