Auditor: Mount Olive lost over $210,000 to fraud

After receiving numerous allegations on its tipline, the North Carolina Office of the State Auditor (NCOSA) conducted an investigation into the Town of Mount Olive, Wayne County, its water department, and its municipal airport, among other things, according to a report released by State Auditor Dave Boliek’s office.

Among the findings, the town’s water department lost $210,837 in revenue due to fraudulent activity, negligent data entry, and a lack of oversight.

NCOSA received an allegation that a sitting town commissioner received water service despite failing to pay for it, and that the town’s water department employees committed fraud by failing to pay their water bills and voiding late charges for themselves and others.

Auditors found that the town lacked formal policies and procedures for utility billing; data entry was performed negligently; and oversight during the implementation of utility rate increases was inadequate. These deficiencies increase the risk of billing errors, reduce accountability, and hinder the town’s ability to ensure accurate utility revenue tracking.

They reviewed the mayor’s and current town commissioners’ utility payment history for 2024. This investigation revealed that one commissioner had his $100 cutoff fee voided nine times throughout the year. Further, he did not make a single payment on his utility bill until August 2024 – when OSA received the allegation – at which point his outstanding balance was $942.

The commissioner paid the utility bill in full after receiving the allegation in August 2024. But auditors say his payment history remained inconsistent through March 2025.

During the investigation, the same commissioner was found to have had another utility account for a different address, which was closed in January 2024; however, the account had an unpaid balance of $342 as of March 2025.

While reviewing this allegation, auditors discovered that the town’s water department voided hundreds of cutoff fees each month. In 2024, the department’s supervisor voided 1,838 (86%) cutoff fees and charged only 291 (14%) cutoff fees. The reason was not documented.

Also, in 2024, the supervisor fraudulently voided cutoff fees for 11 months for her own utility account and for 9 months for the water department’s billing clerk.

The supervisor didn’t make a payment on her utilities account until August 2024, when she paid $100, despite her account balance exceeding $1,000. By the end of 2024, her balance had increased to $1,381. The town suspended her in January and terminated her in March. She paid her utility bill in full in February.

The town also suspended the billing clerk in January and terminated her in March after her balance had grown to $920. She paid her utility bill in full in February.

NCOSA also found that due to negligent data entry and lack of oversight, the town grossly undercharged customers for water and sewer usage and lost revenue. This negligence and lack of oversight continued in March, when an attempt to correct the data entry errors resulted in some customers being grossly overcharged.

In October 2023, the town’s board increased utility rates, including water and sewer rates for residential and commercial accounts. The minimum and maximum water charges were set at the same rate, meaning that commercial accounts were billed the minimum base charge amount regardless of their actual water usage.

The same issue continued in August 2024 when the town approved another rate increase.

There were other utility issues as well, which are documented in the report.

RECOMMENDATIONS

Auditors recommend that the town develop and implement policies and procedures regarding voided cutoff fees and proper segregation of duties. They should also develop and implement proper controls to ensure that rate information is correctly entered in the town’s utility system.

Other findings include:

• Verification of Wi-Fi and telephone services at the airport could not be made due to the town’s records being so severely mismanaged and in conflict with documentation from service providers.
• The town bears the financial burden of providing fuel at the airport, even though the airport operator is contractually obligated to purchase and sell the fuel.
• The town’s airport operator extends credit on the town’s behalf for fuel purchases.
• The town’s finance director lacks a process to verify monthly fuel commission invoices from the Airport Operator, creating a risk of overpayment.
• They also did not include all checks in the town’s accounting system.
• The town lacks policies and procedures governing the authorization of timesheets for hourly employees.

Two of the allegations proved to be untrue.

First, the town misdirected tourism tax revenue intended for the Wayne County Chamber of Commerce, which proved untrue because the town does not have direct access to the revenue.

Second, a town hall employee did not accurately record the hours she worked on her timesheet. Because there are no policies and procedures governing hourly employee timesheets, NCOSA was unable to substantiate this allegation because supervisors do not consistently sign timesheets for hourly employees.

“Proper management at the local level is incredibly important to ensuring resources are not abused and protocol is followed,” said Boliek. “Our Investigative Division took a deep dive into Mount Olive’s finances and uncovered several concerning issues. Local officials agreed with the findings in our report. Now, it’s time for our recommendations to be put into action.”

In response to the investigation, Interim Town Manager Glenn Holland wrote that the Town of Mount Olive “takes these allegations seriously,” and accepts all findings and recommendations made in the report.

The post Auditor: Mount Olive lost over $210,000 to fraud first appeared on Carolina Journal.

The post Auditor: Mount Olive lost over $210,000 to fraud appeared first on First In Freedom Daily.