Audit: No apparent criminal acts in Chowan Co.

By Jeff Hampton & Connie Sage

CHOWAN COUNTY

A state audit of Chowan County, made public late Friday, included nine findings of bad fiscal management but reported no illegal activity.

Chowan County commissioners decided to release the audit Friday afternoon though it was not required by law, county attorney John Morrison said. He planned to discuss the findings in a closed session on July 30.

"They wanted the public to know what was going on," Morrison said.

The inquiry began Aug. 5 after new County Manager Peter Rascoe discovered that Chowan County could not pay its bills and that millions in cash reserves had been spent.

The audit blames commissioners for not properly monitoring county finances and former County Manager Cliff Copeland for mismanagement of public money, but it does not report illegal activity.

Criminal charges are unlikely, District Attorney Frank Parrish said Friday. He plans to make a statement soon, he said.

Among the audit's findings:

• In violation of county ordinances, Copeland drained about $29 million in cash reserves over 10 years that was set up after a 1998 advance lease payment from Pitt County Memorial Hospital to operate out of Chowan Hospital.n
• Commissioners and the former county manager borrowed from the health reserve funds to build an agriculture center with an agreement to repay it - but never set up a repayment program.
• Copeland submitted a 2008 budget that over estimated revenues by $3.8 million.
• Copeland did not submit a complete report of the county's finances from 1998 through 2008.
• Copeland made unauthorized payments from the county budget to the Edenton Chowan Economic Development Commission, a joint agency intended to help attract industry.
• Copeland spent the group's money without authorization from the group 's board, including $10,000 to the Piece Dye Acquisition Corporation in 2001 and $200,000 to its successor, Edenton Dyeing and Finishing Corporation, in 2002 and 2003.
• A software company in Edenton was paid $30,000 from 2003 to 2008 for software that never was used.
• From 2004 to 2008, Copeland hired and paid $259,493 in county money to a lobbying firm called Capstrat Inc. without authorization from the county board or the economic development commission. Capstrat claimed to have helped obtain a $10 million loan for a new 911 center and a $1.5 million grant for a new instrument landing system at the airport. But local officials obtained the grant and the loan, not Capstrat.

Jeff Hampton, (252) 338-0159, jeff.hampton@pilotonline.com