Raleigh non-profit facing possible fraud charges will stay open - WSLS 10 NBC in Roanoke/Lynchburg Va

Raleigh non-profit to stay open despite fraud charges

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A Raleigh non-profit organization that's the subject of a criminal investigation will be allowed to stay open, for the time being. An audit released by the City of Raleigh revealed improper financial management at the Raleigh Business and Technology Center.

Read the audit

Every year, the city allocates $162,000 in tax dollars to the program.  A city audit alleges possible financial crimes by some board members including missing documentation for checks totaling more than $100,000 and hundreds of thousands of dollars more that went to third parties, again, without proper documentation.  That includes $290,000 paid to an organization co-founded by former executive director Bob Robinson. 

Robinson recently resigned from the position.

What's more, the audit revealed the RBTC lost its tax-exempt status in 2012 after managers failed to file 990 tax forms for three years.  The audit showed the RBTC now owes $57,500 in state and federal taxes.

The audit also alleges that the year-to-year building lease contract between the city of Raleigh and RBTC was never signed. After the allegations, the city tried to evict the business from the building. The eviction was supposed to take place by Aug. 9.

But in court Friday, attorneys from RBTC argued that a questionable audit shouldn't close down the entire center. They asked the judge for the chance for the non-profit and its tenants to stay in the building, at least until the end of the lease. The same lease the city says doesn't exist.

The city argued they should be shut down if the non-profit is in fact conducting financial fraud.

RBTC attorneys countered saying since most of the allegations are possibly centered around a few employees, it would hurt the reputations of the legitimate businesses if the center closed.

The judge ruled in favor of RBTC with certain stipulations. RBTC will only be allowed to stay in the building until Dec. 31 or until a ruling is made in court involving any fraud claims. RBTC must follow spending guidelines set by the city, and they have to pay a $22,222 bond. The non-profit must also provide a full summary of their financial records within the next 30 days for the city to review.

As for the criminal allegations, the case is still under investigation and will be battled out in court.

The Raleigh Police Department executed a search warrant seizing documents and computers belonging to RBTC board members.

"After going through some people's computers, I think they'll find some real stuff," RBTC board chairman Lawrence Wray said.

The former assistant city manager for Raleigh says he went straight to police when he learned about the program's financial irregularities.

"I'm not at liberty to say what I think about it," Wray said, "other than what the audit said."

The center was founded in 2000 as a way to help spur economic growth in Southeast Raleigh by offering training, discounted office space and other tools to people who live there.

Raleigh police will not comment on whether board members will face criminal charges, but at the very least, it appears the program is ending. 

Mayor Nancy McFarlane announced the city terminated its contract with the RBTC at the end of July.  She said the city will look at starting a new business incubator program within six months.

Wray hopes the city reconsiders.

"I want them to understand," he said, "that it's not the program that is guilty."

 

Jonathan Rodriguez

Jonathan Rodriguez is an investigative reporter and member of the WNCN Investigates team. His storytelling specialty is connecting the dots to get to the truth, with a goal of delivering results for our community. If you have something you’d like WNCN to investigate, contact Jonathan.

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