State audit: Former CFCC president used funds without board approval

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Ted Spring. File photo.
Ted Spring. File photo.

An investigative audit into spending at Cape Fear Community College has found that former president Dr. Ted Spring misappropriated funds during his tenure.

The Office of the State Auditor released the results of the monthslong probe, launched earlier this year in response to complaints about improper travel reimbursements paid to Spring.

Spring resigned abruptly in January, and has since sued the college’s board of trustees, claiming he was forced to step down, resulting in a breach of contract and deprivation of civil rights.

Weeks into the investigative audit, District Attorney Ben David requested that the scope of the investigation be broadened to “include new allegations that came to light” regarding Spring, although he would not disclose the nature of those allegations.

According to the results of the audit–which reviewed personnel documents, employee testimony and Spring’s electronic devices– the former president gave raises and promotions to employees without board approval, used discretionary money for personal expenditures and was reimbursed more for mileage than he actually spent out-of-pocket.

While president, Spring, who was hired in 2012, gave out approximately $48,000 in raises to high-ranking administrative staff without the board’s knowledge or consent. He also hired a vice president for informational technology services in 2013.

“[Spring’s] unapproved hiring, promotions and salary adjustments of individuals to senior administrator roles undermined the ultimate authority of the board of trustees, hindering the board’s ability to control and monitor expenditures,” State Auditor Beth Wood wrote in her report.

Wood also noted that Spring spent nearly $36,000 in vending funds–intended to supplement areas of the college where state or local county funds are not appropriated. Included in that total were $7,500 Spring used to hire a public relations firm in response to negative media coverage about him and $1,461 to pay for his wife’s travel expenses. A large chunk–$21,549–was spent on leasing vehicles for himself and CFCC’s athletic department.

“The expenditure of funds reduced the amount of money available to benefit students,” Wood wrote, noting the college’s lack of a vending fund policy likely meant Spring’s spending went beyond the $35,993 identified.

And the audit found that Spring claimed–and was paid–$2,900 more for mileage than he actually spent between 2012 and December 2014.

“Based on calculations of gas usage for the leased vehicle, the former president personally spent approximately $900 on gas during his use of the vehicle, yet received $3,863 in mileage reimbursements…,” the report states.

According to a written response from CFCC Board of Trustees chairman William Turner, the board is in agreement with the state auditor’s findings and is working to correct policy and guideline gaps or loopholes uncovered through the audit.

Turner said board members have also asked their legal counsel to review next steps for misappropriated funds.

District Attorney David, who filed his request to broaden the probe through the N.C. State Bureau of Investigation in February, also asked for assistance from the Conference of District Attorneys’ Financial Crimes Initiative in an effort to “maintain absolute impartiality.”

“They routinely work with the very auditors and SBI agents who have been conducting this investigation,” he wrote in a public statement earlier this year. “…I am confident that these professionals will be guided only by the facts and the law in seeking justice for all concerned.”

The Financial Crimes Unit, which has statewide jurisdiction, was established to handle financial cases in the event that a district attorney’s office is not resourced to handle the prosecution of complicated financial crimes or there is a particular conflict of interest that would make it inappropriate for a district attorney to be involved.

David’s office has worked with the community college in endeavors–such as the Defensive Driving School and Basic Law Enforcement Training–and with Spring on initiatives like the Summit on School Safety.

The findings of the audit will now be handed over to the financial crimes unit to help determine if criminal charges should be filed.

But Spring “steadfastly” maintains he did nothing wrong, attorney Gary Shipman argued in a release Tuesday. Instead, Shipman said the results of the audit show the lack of oversight in policies and procedures on the part of trustees.

“What this report reflects is the incredible lack of candor either from those at CFCC, including the Board of Trustees, who adopted or failed to adopt policies that they, and not Dr. Spring, administered both before and during his tenure as president, including any financial policies…,” Shipman wrote.

Further, Shipman suggests that the state auditor’s office did not follow mandates in its handling of the report’s release, which Shipman said should have only come after Spring was notified of “underlying facts” and given the opportunity to provide a written response.

“This report reads more like a rebuttal to the lawsuit filed by Dr. Spring against the board of trustees or something from TMZ than an ‘independent’ report performed in accordance with ‘generally accepted auditing standards,” Shipman said. “We look forward to a process aimed at the truth in which Dr. Spring gets to participate instead of one that excluded him and selectively chose others.  At the end of the day, this report represents a fundamental misunderstanding about how the office of the president of Cape Fear Community College, and other community college presidents, operated long before Dr. Spring arrived.  If that process was/is broken, it was broken before he got there.”

Hilary Snow is a reporter at Port City Daily. Reach her at (910) 772-6341 or hilary.s@portcitydaily.com.