By Catharin Shepard • Editor • The Hoke County Board of Education is facing a possible embezzlement probe, according to documents from the Hoke County District Attorney’s office and statements school board Chair Angela Southerland made last week.

Southerland said “we’re facing embezzlement charges, which is a felony,” and later said the situation is in “not just regular court, but Superior Court.”

Earlier this month Hoke and Moore County District Attorney Mike Hardin obtained a court order compelling the district and the county to provide records related to school board member stipends, travel checks and bonuses. The document is a state’s motion and order to compel records, signed by Hardin August 17 and signed by a judge August 18, and designated “State of North Carolina V. In the matter of payments to the Hoke County school board members.” The school district provided the News-Journal a copy of the court order at the newspaper’s request.

It did not appear any criminal charges had been filed as of this week, and it wasn’t clear whether the district attorney had referred the matter to an investigating agency for further scrutiny.

The court order compelled both the Hoke County Board of Education, and the Hoke County Board of Commissioners “to provide any and all records and/or minutes for open or closed meetings, discussions, emails, texts, or any other information regarding payments made to the Hoke County School Board members since 2017, and any minutes or records of approval of these funds by the Hoke County Board of Commissioners.”

The document said, “In support of this motion the State shows the following:

1.              That the District Attorney’s Office received a complaint regarding the possible misuse of public funds in the form of payments made to the Hoke County School Board in the form of bonuses paid to the School Board Members.

2.              That the District Attorney’s Office contacted the law firm of Tharrington Smith whom represents the Hoke County School Board and requested information in regards to payments made to the Hoke County School Board Members.

3.              That on August 10, 2023 the District Attorney’s Office sent a letter to Rod Malone at Tharrington Smith and requested specific information regarding payments made to the Hoke County School Board Members (Attached 1).

4.              That Rod Malone forwarded a copy of a press release issued on August 4, 2023, where the Interim Superintendent announced the issuance of stipends and bonuses to the Hoke County School Board and attached payments to the Board Members for the past six years, including Covid and retention bonuses (Attached 2)

5.              That the District Attorney also received an excel file showing payments made to the Hoke County School Board Members in the form of travel stipends and retention bonuses.

6.              That the North Carolina General Statutes require any funding to School Board Members to be approved by the Hoke County Board of Commissioners”

The document went on to cite North Carolina State General Statute 115C-38, compensation of school board members.

The two attachments included a letter from Hardin, sent to the school board attorney August 10, 2023.

The letter from Hardin said, “Mr. Rod Malone, My office has received a complaint regarding the Hoke County School Board improperly compensating themselves. I initially understood that they may have used Federal Covid Funds to compensate school employees and included themselves in this compensation. I understand now that they may have paid some staff members with these funds but did not pay themselves with Federal Funds.

This leaves the question that if the Hoke County School Board did compensate themselves, did that compensation comply with requirements for approval by the Hoke County Board of Commissioners pursuant to N.C.G.S. 115C-38. Please provide any and all information regarding this compensation and whether this compensation complies under the North Carolina General Statutes.

As you are aware as the District Attorney for Hoke County I am responsible for inquiring as to misuse of public funds and this may require referral of this matter to an investigatory agency. I also would ask that if this compensation did not comply with North Carolina law, if you are in possession of any information regarding the awareness of one or more of the school board members or others to intentionally violate the law. Thank you in advance for your response.”

The second attachment, an email from Malone to Hardin sent August 11, included a brief statement from the attorney. The email included a press release sent to the News-Journal earlier this month, which was previously published in the newspaper.

“Mr. Hardin: While not responsive to all the questions in your letter, I am forwarding you the following and attached press release issued by the Hoke County Schools on August 4, 2023. I will get back to you shortly on the questions raised in your letter. Please let me know if I can be of additional assistance,” Malone wrote in the email.

Southerland speaks out

Southerland brought up the topic during an open meeting last Thursday night at the Board of Education office on Wooley Street. The school board held the meeting to interview two law firms and select one to serve as the board’s new legal counsel.

Southerland raised the matter of the possible probe while speaking in favor of hiring Fayetteville-based law firm the Charleston Group, which does not have experience representing school boards, over law firm Poyner Spruill out of Southern Pines, which currently represents multiple other school boards in North Carolina.

“Everybody talked about experience, experience, experience, and this is where experience got us, that specialize in law. And whether you all take this seriously or not, this affects all of us and I don’t know if you have read it closely, but we’re facing embezzlement charges, which is a felony,” Southerland said, seeming to refer to a document she had at the meeting room table. “It’s on number seven. That’s what experience in education law got us.”

The ”number seven” she referenced appeared to correlate with number seven under the state General Statute 115C-38, cited in the court order, which said “That under N.C.G.S. 14-92 it is a felony to embezzle funds by public officers or trustees.”

“So, everybody’s talking about experience, experience, specializing in educational law, this is where that got us. Going to court. Not just regular court, either, Superior Court. Nobody fought for us, nobody, and this is what we’re doing,” Southerland went on to say.

Southerland appeared to refer to Tharrington Smith, which notified the district in May that the firm would “no longer be able to serve as general counsel for Hoke County Schools” after the end of the 90-day notice required by its contract.

Tharrington Smith’s contract with the district was up on August 12, but the firm continued working with the school board on some matters. Tharrington Smith attorney Rod Malone was still present at school board meetings as of last week.

Southerland went on to say that Malone didn’t respond quickly when the District Attorney’s office requested information from the school system.

“This man sat here and he waited, and he would rather jump up and send the newspaper what they want because they said FOIA request, but when the district attorney says ‘this is what I need,’ he waited. And then he (Hardin) turned around and sent in an order. Do y’all understand what that is?” Southerland said.

After a few minutes of further discussion about selecting a law firm, and a back-and-forth between Southerland and board member Keisha Gill, Southerland said to the board members “Do y’all understand this that came from (District Attorney) Mike Hardin?”

Gill responded, “I read that, I understand that, I read that. But how can he get us on embezzlement when we don’t go in, we don’t authorize the checks and write the checks? We don’t do that. If they’re going to get somebody for embezzlement, they’re going to get the HR, the finance people, because we don’t go in and write checks. We get what is due to us and we, it’s distributed to us. So how can they get us on embezzlement? It’s not like we went in and wrote checks and we took money.”
“So he’s just making this up?” Southerland said.

“He’s got to be making it up, because I never came over here and asked for no money. This is what was put in place when I came on the school board. This is the stipend that we get. I never went in and offered no checks, or wrote checks for nobody,” Gill said.

“You spent the money, that’s what they’re saying,” Southerland said.

“I spent the money because it was given to me, I didn’t come over here and request it. I’ve got a full-time job,” Gill said. “If they never give me a dime, I’m fine with it.”

Bonuses questioned

Current board members Southerland, Vice Chair Catherine Blue, Ruben Castellon, Gill and McAllister-McRae all received two “retention bonus” checks, one on January 13, 2023 and one on June 2, 2023. The bonus in January paid $1,200 to the incumbent board members Gill and McAllister-McRae, and $600 to the newly elected board members Blue, Castellon and Southerland. All five board members received the $4,000 “retention bonus” in June.

At one point, Malone apparently advised the school board members to pay back the $4,000 bonuses, McAllister-McRae said, but Blue spoke up to say she recalled the attorney hadn’t been sure about that.

“Rosa, you paid the money back, why?” Southerland asked McAllister-McRae.

“Because we were all in a meeting when Rod Malone said, ‘If I were you all, I would pay that money back,’” McAllister-McRae said.

“Why?” Southerland said.

“I’m just going by what the lawyer said,” McAllister-McRae said.

Blue said she remembered Malone had not been certain about it.

“Then he turned around, Rosa, you remember, he said ‘I’m not sure if you have to,’ do y’all remember him saying that? He said, ‘Ya’ll might have to pay money back,’ but then he said ‘I don’t know, you might not have to pay the money back,’” Blue said.

The discussion of the topic ended there when board member Ruben Castellon spoke up to say, “I think we need to stay focused,” and the board moved to take action on selecting a new law firm.

McAllister-McRae previously went on record saying she paid the $4,000 back. Southerland said during the meeting that “even though two of y’all paid back money, you still didn’t pay back all of the money.”

It wasn’t clear which of the other four members Southerland referred to as having paid back the bonus money. The News-Journal has asked the district and individual board members for that information several times over the past months, and has not received an answer.

Both of the bonuses in 2023 were paid at the same time that other school staff received a bonus. The school board publicly voted to approve the school staff bonuses.

The funds for the $4,000 bonuses paid to the school board members came from local taxpayer money, the district said in the August 4 press release.

“While the employee bonuses were paid from state, federal, and/or local funds, Board member bonuses were paid exclusively from local funds,” Hoke County Schools Director of Public Relations Meredith Bounds said in the email.

Former Superintendent Dr. Debra Dowless and former Interim Superintendent Dr. Shannon Register, respectively, approved the school board bonuses, but it wasn’t clear what – if any – official process or policy exists for approving board member bonuses. Hoke County Commission Chairman Allen Thomas said earlier this year that the commission had not known about the bonuses.

Further investigation

Southerland said that several former Board of Education members were also allegedly involved in the matter, saying that it was “not just us.”

“And what makes it so bad, they went all the way back and got other board members involved, like Mrs. (Irish) Pickett, Ms. Barbara Buie, Della Maynor, even Frank Richards – all of these people are involved,” Southerland said. Another board member spoke up to say the correct name was Hank Richards rather than Frank Richards.

Then Southerland continued, “All of them are involved because of a law firm that specialized in education.”

Southerland later went on to say, “But these people that’s supposed to be home, retired, they’re in just as much trouble or worse, and they served longer than we did. But now y’all want to depend on a firm because they specialize in educational law, so be it.”

Richards left the board at the end of his last term in 2020, and based on public records, did not appear to have received any money beyond the regular board member stipend. Buie, Maynor and Pickett, along with current board members Gill and McAllister-McRae, received two $900 “COVID stipend” checks, one each in December 2021 and June 2022.

A court records check at the Clerk of Court’s office at the Hoke County Courthouse this week didn’t turn up any documents showing official charges against the school board or any former school board members.

The News-Journal still has multiple pending information requests at the district, including requests asking for text messages from board members, and contracts and emails related to the upcoming $78 million Hoke High School building project. The newspaper has been seeking board member text messages since February, and has not received them.

This is a developing story and will be updated as more information becomes available. The documents referenced here, and an audio recording of the discussion at the meeting from last week are available below. States-Motion-and-Order-To-Compell-Records-08-18-2023