Local/State

Audit: $1 million skimmed at NCCU

Tuesday, June 28, 2011

The North Carolina Office of The State Auditor released a report Tuesday that says the former executive director of a minority program headquartered at NC Central University diverted $1 million to a checking account for payments to herself and others.

Click here to read the audit (.pdf)

The program called the University Consortium was created in 1999 as a partnership between the North Carolina Department of Public Instruction and 12 North Carolina historically minority institutions of higher education. It was intended to work on strategies to close the minority achievement gap in North Carolina with an emphasis on students from kindergarten through twelfth grade.

The auditor's report says the General Assembly began funding in fiscal year 2001 and the Consortium received $3,586,400 in state appropriations through fiscal year 2010. It also got grants from private organizations, federal agencies, and state agencies.

In a news release in April, 2010, NC Central Chancellor Charlie Nelms said the program had taken in a total of about $13 million and he was asking for an outside investigation of alleged embezzlement by a former employee.

While the auditor's report does not name the former executive director of the Consortium, ABC11 has learned she is Nan Coleman. The report says she and former NCCU Provost Dr. Beverly Washington Jones set up the Consortium as a separate entity from the school.

"As a result, the former Provost and former Executive Director did not receive proper oversight from the University, the Foundation, or the Advisory Board," says the audit.

"In April 2004, the former Executive Director opened an unauthorized, undisclosed bank account in the University Consortium’s name," says the report.

"The former Executive Director had sole control over the undisclosed bank account and diverted over $1,000,000 to the undisclosed bank account in a skimming scheme over a six year period," says the report. "From 2004 through 2009, the former Executive Director made payments to herself and other University Consortium staff and contractors directly from the diverted funds. The former Executive Director received over $287,000 and the former Provost received nearly $62,000 from the diverted funds."

In a statement after the audit was made public Tuesday, Chancellor Nelms said he agrees with its findings and says he has "already taken decisive action to implement the necessary changes."

Nelms said the Consortium has been discontinued, the leaders responsible no longer work for NCCU, the suspect checking account has been frozen, and new policies have been put in place.

"A review of all NCCU accounts is under way to ensure their placement is consistent with the mission to serve the university," said Nelms in part.

Neither Coleman or Washington Jones have been charged criminally, but Nelms said "we will work with the Attorney General’s Office and the Durham County District Attorney to use all means available to recover any inappropriately expended funds."

"Personally and professionally, I am disappointed and dismayed regarding the alleged behavior of a few to the detriment of the university as a whole. However, I am confident that North Carolina Central University will emerge from this situation stronger and even more committed to excellence," said Nelms.

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