- Associated Press - Tuesday, June 2, 2015

RALEIGH, N.C. (AP) - A high-ranking manager at a regional mental health agency in eastern North Carolina took more than a half million dollars in illegal kickbacks and used taxpayer money for personal expenses, including repairs to his fishing boat, a state audit issued Tuesday says.

State Auditor Beth Wood issued the findings following her office’s lengthy investigation of Eastpointe Human Services, a government-funded managed care organization serving a dozen counties. The agency has an annual budget of $310 million, most of it paid by the state and federal governments through the Medicaid program.

The audit’s findings have been referred to the Internal Revenue Service, the State Bureau of Investigation and a state prosecutor. No criminal charges have been filed.

The audit primarily focuses on the actions of Eastpointe’s former chief financial officer, who reportedly approved more than $1 million in payments to two part-time, unlicensed contractors for renovations at the agency’s offices. According to the audit, those contractors then wrote personal checks back to the chief financial officer totaling $547,595.

The audit also determined that the chief financial officer used agency credit cards to rack up $117,549 in questionable charges, including a $4,500 down payment for repair work on his fishing boat and $935 for fish finder software. He also bought gift cards totaling $933 at Dick’s Sporting Goods and $2,950 at Wal-Mart.

The audit also found the money manager used agency funds to buy a $15,900 tractor and a $2,700 trenching machine, both of which were kept at his home. Another $143,041 in state funds was spent on two luxury pickup trucks and a Buick SUV driven by the chief financial officer, the agency’s chief executive officer and a maintenance supervisor.

The audit also questioned actions by Eastpointe’s accounting manager to underreport payments the agency made to her husband, ex-husband and father-in-law, in violation of state and federal tax regulations.

The audit does not name the individuals involved.

A staffing directory obtained by The Associated Press lists Bob Canupp as Eastpointe’s chief financial officer during the period covered by the audit and the agency confirmed Tuesday that he is no longer employed there. A home phone number listed for Canupp rang Tuesday with no answer.

Eastpointe CEO Ken Jones said an internal investigation had been ongoing for the last two years and the agency will “pursue legal action to the fullest extent of the law” in an attempt to recover the money.

“These circumstances are unfortunate and very disappointing,” said Jones, who has led the agency since 2003. “Our former CFO and manager of accounting services worked for years without incident to gain the trust and confidence of our leadership and our board. Their recent actions were deliberate and for their own personal gain.”

While Jones’ statement condemned wrongdoing by former employees, the state audit also questioned his use of an agency vehicle on nights and weekends and $19,322 in expenses he charged on an agency credit card. According to the audit, Jones spent $2,850 on gift cards and $5,850 for a staff luncheon.

Jones told the auditors the gift cards were provided to agency employees as Christmas presents, along with $1,045 for duffel bags and $575 spent on candy.

In a call with reporters, Eastpointe Board Chairman James Simmons said he still has “full confidence” in Jones’ ability to lead the agency.

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Follow Associated Press writer Michael Biesecker at http://Twitter.com/mbieseck

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