Students lose in alleged money-skimming scheme at NCCU | Durham County | Indy Week
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Students lose in alleged money-skimming scheme at NCCU 

Nan Coleman (left), former director of NCCU's Historically Minority Colleges and Universities Consortium; Beverly Washington Jones (right), former NCCU provost

Nan Coleman (left), former director of NCCU's Historically Minority Colleges and Universities Consortium; Beverly Washington Jones (right), former NCCU provost

Cheryl Thomas is trained in scrutiny, in fitting puzzling details together until they make sense. So when Thomas, a licensed private investigator and the single parent of a teenage boy, felt uneasy about a mentoring program where she was sending her son, she started to ask questions.

"I knew something was not right," she said. "I guess it's just the investigator in me. It's with me all the time."

Thomas' son, CJ, enrolled in the African American Male Leadership Academy (AAMLA), administered by N.C. Central University in 2005, the same year he entered high school. The program was supposed to push African-American boys to greater academic and social successes, exposing them to new opportunities and prepping them for college. It started well, but soon lost momentum. There was discord and disorganization inside the grant-funded program, Thomas said. Trips and tutoring sessions were cancelled, and some mentors were absent when they were supposed to be regularly contacting students.

"The program was dysfunctional," Thomas said. "There was no order. No one could give you answers. And answers started changing."

Thomas requested detailed budget information from the program's director, Nan Coleman, but she received inadequate documentation. In 2008, Thomas rounded up fellow parents and they asked NCCU to audit the program. As it turns out, something was, indeed, not quite right—not just with the program CJ was in, but with the entire NCCU-led initiative overseeing the mentoring project.

Coleman, the director of the NCCU Historically Minority Colleges and Universities Consortium, allegedly siphoned more than $1 million into a secret bank account, withdrawing thousands of dollars at ATMs, writing herself checks and even shopping at clothing, jewelry and makeup stores, according to a state audit released last month. The investigation also indicates former NCCU provost Beverly Washington Jones received almost $62,000 from the account, even though she told auditors she didn't recall providing any services to the program outside her duties as provost. (Lawyers for both Coleman and Jones declined the Indy's requests for interviews.)

But as chatter about the report circulates in the NCCU community and beyond, Thomas and other parents say they weren't surprised to hear the accusations.

"I knew it would come out eventually that things weren't right," said Cynthia McEachin, a Durham teacher who also enrolled her son in AAMLA.

The mentoring program was one of several programs Coleman oversaw as director of the now-defunct consortium, a partnership between a dozen historically black colleges and universities in North Carolina and the N.C. Department of Public Instruction. Created in 1999, the program sought grant funding for programs that could help close the well documented achievement gap between minority students and their white counterparts. NCCU served as headquarters for the statewide effort.

The AAMLA offered tutoring, trips to college campuses, leadership development, internships and educational tools such as graphing calculators and laptop computers. Several parents said that in 2005, both Coleman and Jones also promised full scholarships to students who stayed in the program for the four years of high school—a statement they say Coleman later denied making.

Initially, students received tutoring, practiced public speaking at events and traveled to state historic sites. They even attended a luncheon with professionals in Research Triangle Park, riding to the corporate offices in limousines, said Derrick Best, whose son enrolled in the academy during its first year.

Yet the program began to unravel. Parents say that as early as 2006 they were disappointed by unreliable mentors and cancelled events. When they pressed Coleman for information, they received unsatisfactory answers. Coleman frequently hired and fired program leaders. In one year, there were as many as three different coordinators, parents said.

They also said Coleman was quick to sideline anyone who questioned the program's effectiveness or her management. In a 2007 email obtained by the Indy, a mentor urged changes to the structure of the program.

"Promises were made, however plans were not created and implemented to secure the promises," he wrote. "We are all responsible for this failure, from the chancellor to the provost ... We need to be less concerned about protecting our image as an academy ... and actually get down to business of helping the guys in our charge."

In the lengthy email, the mentor suggested a number of changes, including involving the university in matters regarding the program's finances and personnel.

"Since you have such strong negative feelings about the academy, the progress it has made, and future direction under the leadership of someone else" Coleman wrote in an August 2007 response, "I am relieving you of your responsibilities as a mentor and tutor in the African American Male Leadership Academy immediately ... The problem ... is that you have your own VISION, which may not be aligned with the objectives of the FUNDING AGENCY." (Emphasis is Coleman's.)

The mentor also asked to be compensated beyond the roughly $10,000 he was receiving for tutoring and mentoring. It's unclear which mentors and tutors were paid through the program, and which were volunteers. In her response, Coleman notes that while mentors aren't generally paid for services, she had "been very generous" with those who worked for the program. But Thomas, one of the parents, said some mentors told her they were spending their own money for activities such as taking the students out to eat. Meanwhile, mentors who weren't familiar to the parents or students had allegedly picked up paychecks from the program office, Best said.

The state audit doesn't mention specific problems with accounting in the academy.

Thomas said that by 2008 she was fed up. She called unofficial meetings with other parents, and they started writing letters to state and local officials. In October of that year, one of those letters landed on the desk of NCCU Chancellor Charlie Nelms, who arrived at NCCU the previous year.

"The program has failed the young adults it was created for," the parents wrote. They asked for a meeting with Nelms and an audit of the program or they would take their complaints to the UNC Board of Governors. They didn't get that far. Nelms initiated an internal audit that pointed beyond the academy, to a much bigger problem. According to the state investigation, Coleman opened the private account in 2004 and began diverting income from a separate consortium program—a for-profit tutoring operation—into the account.

The tutoring program was a state-approved provider of Supplemental Educational Services, a type of academic support offered under federal law to specific groups of students in low-performing schools. The services are free to families and are paid for by federal funds allocated to school districts. Parents choose from among several providers of the after-school tutoring, and the districts pay the providers directly. Tutors are typically current or retired teachers working part-time to earn extra money.

The program, which operated under the consortium, was eligible to tutor students in as many as 20 school districts beginning in 2004, according to records of the N.C. Department of Public Instruction. Just how many districts used the program is yet undetermined, as individual school districts keep their own records of the services. In their audit, state investigators said they could not "easily quantify" how much money the program brought in while Coleman was in charge. Auditors did state, however, that the money in Coleman's private bank account was revenue from the tutoring program.

Locally, records from the Durham Public Schools show that from 2007 to 2009, during Coleman's tenure, the district paid the consortium almost $520,000 for tutoring for 2,271 students at several elementary schools. The district continued using the services in 2010–11, but Coleman was no longer in charge of the program.

McEachin, the mother of one teenager who participated in the AAMLA, is also a speech therapist for Durham Public Schools. She said she worked part-time as a tutor for the consortium tutoring program during the 2008–09 school year. The program was disorganized, McEachin said, and she and other teachers didn't receive their pay on time. Several tutors quit because of the irregularities, McEachin said.

"I don't understand why everything they put their hands on was a mess," McEachin said. "Here are people with [advanced] degrees who had been in education forever. It wasn't like they didn't know how federal funding was supposed to work."

With access to 190 boxes of records and a 60-page audit to consider, it could be weeks or even months before authorities, including the Durham district attorney and the Internal Revenue Service, determine whether to file civil and criminal charges against Coleman, Jones and others who may have received unwarranted cash from consortium accounts. The taxpayers, the university and NCCU's partners are not the only ones who might have been bilked; it's also the students the program was charged with helping.

"This program really could have been some help to these black boys," McEachin said. "If they had been really dedicated to finding good mentors for these boys, this program really could have gone far."


The audit

State Auditor Beth Wood's office released a 60-page report on the N.C. Central University Historically Minority Colleges and Universities Consortium (HMCUC) on June 28. The consortium operated from 1999 to 2010 and received more than $3.5 million in state money before state lawmakers discontinued it.

NCCU Chancellor Charlie Nelms commissioned the audit in 2008 after he received complaints about consortium-related programs. The audit says:

Nan Coleman, former director of the consortium, diverted more than $1 million in program revenue to a private bank account between 2004 and 2009. From those funds, she took more than $287,000 for personal use.

Former NCCU provost Beverly Washington Jones received almost $62,000 from the bank account. She told investigators she didn't recall providing services for those payments.

Two administrative assistants, Barbara Fields and Vermal White, received at least $15,000 in improper salary advances and loans.

An unnamed contractor received payments for accounting services she wasn't qualified to perform and received payments even after Coleman was fired.

The consortium kept insufficient records; was improperly established as a center or institute; improperly used the nonprofit NCCU Foundation for accounts related to a for-profit tutoring program; had employees without contracts or agreed-upon salaries; failed to prepare and submit required tax documents to its employees or state and federal departments of revenue; and lacked proper oversight.

In a response to the audit, Nelms wrote that the university would implement all recommended changes to ensure these types of failures do not occur again. "Personally and professionally, I am disappointed and dismayed regarding the alleged behavior of a few to the detriment of the university as a whole," Nelms said in a June 28 statement. "However, I am confident that North Carolina Central University will emerge from this situation stronger and even more committed to excellence." Nelms declined an interview with the Indy to further discuss the matter.

Correction (July 13, 2011): In print, the word "million" was omitted from "$3.5 million in state money."


The numbers

An investigative report released by State Auditor Beth Wood last week alleges the former executive director of a statewide program housed at N.C. Central University, Nan Coleman, diverted more than $1 million in program funds to a private account and used more than $287,000 for her own purposes. The report also indicates that former NCCU provost Beverly Washington Jones said she provided no services but received almost $62,000 from the account. The 60-page analysis has been turned over to state and federal authorities. Coleman and Jones could face criminal charges and be forced to repay the money if prosecuted. Jones retired in early 2009 and Coleman was fired later that year for poor performance.

Payments Nan Coleman allegedly made to herself and family, 2004–2009
Check card purchases $67,362.37
Checks payable to Coleman's company $62,000.00
Checks payable to Nan Coleman $60,770.00
ATM withdrawals $46,643.50
Checks written for credit card payments $34,595.41
Wire transfers $8,345.00
Checks payable to "cash" endorsed by Nan Coleman $7,500.00
Checks payable to Coleman's husband $500.00
TOTAL $287,716.28
   
Payments to Beverly Washington Jones
Checks payable to Jones' company $37,700.00
Checks payable to "cash" and endorsed by Jones $13,000.00
Checks payable to Jones $11,259.00
TOTAL $61,959.00

Sources: NCCU; Report, Office of State Auditor


The players

The four employees indicated in the audit no longer work for NCCU.

Coleman, 68, worked for Durham Public Schools for 26 years until 1999 as vocational director. NCCU then hired her to work for the consortium before she was fired in 2009 for reasons unrelated to the issues raised in the audit, NCCU officials said. Coleman and her attorney, Rhonda Young, declined to be interviewed for this story. According to records with the N.C. Secretary of State, Coleman owns Youth Educational Services, a company she incorporated in 2008. In 2010, the office notified Coleman that the company's annual report was overdue. Records do not reflect that the report has been submitted.

Jones, 63, rose from a faculty member in 1974 to various leadership roles at NCCU, becoming provost in 2005. Jones was asked to step down as provost in 2008 for reasons unrelated to the issues raised in the audit, then took a six-month paid leave before retiring in 2009. Jones graduated from Hillside High School in 1966 and served on Durham's school board from 1992 to 1998. She has published numerous books and articles, including writings about growing up in Durham. Her parents both worked for the Liggett & Myers Tobacco Company.

Attorney James D. "Butch" Williams, who represents Jones, declined the Indy's request for an interview for this story, but said, "Before people rush to judgment or criticize, you need to look at her record of service over the last 40 years to the university, and you'll see [the accusations are] a contradiction to everything she has done for the university. We're digging through records now. We'll be able to produce records to show that she hasn't received anything under false pretenses."

According to the N.C. Department of Public Instruction, Jones is the contact for an education company, Academic Enrichment Services and Systems, based in Durham. The company is an approved provider of tutoring services under a federal educational program. Durham Public Schools says that it paid Jones' company $29,534 for services for 99 students in the 2010–11 school year.


Interns Rebecca Collins and Jason Y. Lee contributed to this report.

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