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Wednesday, 05 April 2006 00:00

Supporters confident Wingate will be exonerated

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When Danny Wingate agreed five years ago to set up a credit line for the Haywood County Schools maintenance department, he thought he was just doing the school system a favor.

Ted Norman, the school maintenance director, had money left in his budget toward the end of the fiscal year. Norman told Wingate if he didn’t spend his budget, he would lose it. Norman wanted to deposit the money with Haywood Builders Supply.

It seemed logical to Wingate, the general manager of Haywood Builders Supply. After all, doesn’t everyone in government scramble to spend up their budget surplus at the end of the fiscal year or risk losing it? Some government employees will buy anything as the end of the fiscal year approaches, whether they need it or not. Norman could have bought a truck load of shovels, a life-time supply of Exacto knife blades, or top-of-the-line cordless drills for every maintenance worker.

But the money would come in handy for a real need one day, so instead of a frivolous budget spend down, Wingate agreed to let Norman set up a spending account for the school maintenance department. Norman also needed an invoice showing the money had been spent so his books would balance, so Wingate made out an invoice for building supplies that weren’t actually purchased, with the understanding the money would be there for real supplies when Norman needed them.

Over the next few years, Wingate frequently sold Norman supplies. When Norman asked, the supplies occassionaly were deducted from the spending account. And occasionally, usually toward the end of yet another budget year, Norman added more to the spending account.

 

Not so fast

Late in 2005, school officials found out about Norman’s ongoing secret spending account at Haywood Builders and were not pleased. Norman promptly resigned.

Wingate agreed to meet with school officials and go over his records on the spending account. In the meantime, school board attorney Pat Smathers wrote Wingate a letter asking for his full cooperation in straightening out the secret spending account.

“It is my understanding that you have been made aware of, and have knowledge of a situation where a former employee of the school system, with the consent of Haywood Builders has been submitting invoices for payment of goods supposedly sold by Haywood Builders but not delivered,” Smathers wrote in a Dec. 20 letter. “That in lieu of actual deliveries, other items were purchased on a fictitious credit account which is supposed to equal the amount of the paid invoices.”

Smathers requested Wingate meet with the school finance officer Larry Smith and go over the details of the spending account. The letter seemed unnecessary to Wingate since he had already scheduled a meeting with Smith to do just that.

By Wingate’s figuring, the school system had $18,575 left in the spending account. Wingate says he offered to close the account and write the school system a check for that amount.

But the school system wanted an additional $5,123 for plywood Norman purchased in June 2000. The school system claimed it was never delivered. Wingate claimed it was, but couldn’t produce a delivery receipt five and a half years later to prove it.

In addition, the school system wanted Wingate to pay Smathers’ legal fees and overtime accrued by the school finance officer for reviewing all the invoices and records.

 

The spin battle

To settle the matter, Wingate agreed to not only pay the $18,575 credit balance in the spending account, but to give the school system a donation for $5,123 for the allegedly undelivered plywood, and another donation of $3,100 to cover the accounting costs.

The school system objected to Wingate’s word choice. It wasn’t a “credit balance” nor a “donation,” school officials claimed. School officials felt they had been deceived and were recouping a loss, and they wanted Wingate to agree.

Wingate’s offer stood, but he would not agree to the school’s description of events. The stalemate came to a head when Smathers threatened to sue.

“I have been instructed by the Board of Education to recoup the money lost due to the wrongful activity between your clients,” Smathers wrote in a letter to Wingate’s and Norman’s attorneys on Jan. 7.

Smathers gave Wingate two days to write a check for $28,634.38 to cover “the direct loss, staff investigative costs and attorney fess to date.”

Smathers wrote that the suit would accuse Wingate and Norman of “falsification of school records, misappropriation of assets, conspiracy to commit fraud, fraud and unfair and deceptive trade practices, among others.”

Wingate sent a check the next day, but continued to insist the account was nothing other than a credit balance.

“We emphasize that reimbursement for the credit balance has been continuously available,” Wingate wrote back. “We repeat, as we have on numerous times ... that issuance of a check in the settlement of the credit balance has always been an option awaiting only the school board’s request.”

As for the rest of the money — the allegedly undelivered plywood and the accounting costs — Wingate stuck by his description of the payment as a donation.

“In a spirit of good will rather than of obligation, we also enclose two other payments: first in the amount of $5,123.51 to reimburse for a shipment which we assert was indeed delivered, but your records or acknowledgements do not show,” Wingate wrote. “As a second part of our demonstration of good will and civic responsiveness, we enclose payment of $3,100 to reimburse expense of the board’s auditor’s time in reconciling payments we received and the shipments against those payments.”

The school system fired back with a press release, challenging Wingate’s description of the matter.

“We cannot, under any circumstance, consider the losses incurred by the Haywood County Schools as a credit balance,” the press release stated. “Mr. Wingate and a former school employee system employee independently established a false or dummy account outside the regular accounting procedures for Haywood County Schools.

“We are very concerned that local taxpayer resources were used in this secretive manner,” the press release from Haywood County Schools stated. “This is wrong and clearly beyond any acceptable bookkeeping practices for school systems or other governmental agencies. We do not understand how anyone can justify ‘banking’ taxpayer resources with a supplier, especially when this is done secretively over a period of years.”

Ultimately, however, the school system accepted Wingate’s check.

 

Digging in

But things weren’t over.

In the meantime, Smathers had requested the State Bureau of Investigation to conduct an investigation. An SBI agent concluded no crime was committed. Perhaps Norman didn’t follow school policy, but unless someone had actually pocketed the school’s money, or absconded with building supplies paid for with school money, there was no crime.

The school system was not satisfied, however. The SBI agent only interviewed Norman and Wingate. School officials wanted the SBI agent to interview other school system employees as well, namely the whistle-blowers who went to the school administration with concerns in late 2005 that led to the discovery of the secret spending account.

“We felt that was not very thorough,” Chuck Francis, chairman of the Haywood County school board, said of the SBI investigation. “That is the reason the board decided to pursue it further. We are looking out for the assets of the school system. That was our concern. All we want is the truth to come out, and if there was any wrongdoing it will be addressed by the district attorney and police department.”

The school board voted to turn the case over to District Attorney Mike Bonfoey, who in turn asked the Waynesville Police Department to conduct an investigation. That investigation is under way.

School officials have hinted there is more to the story. The school employees who came forward with concerns that led to the discovery of the “dummy account” — a.k.a. “credit balance” — may have more information about school maintenance supplies that could come to light if a thorough investigation was conducted.

Smathers and school officials claim the “dummy account” created by Wingate and Norman allowed school money and school building supplies to exchange hands under the radar, creating a climate that made it possible for supplies to go missing once they were in the hands of the school system.

“It is clear that any missing supplies or inventory are a direct result of the false and dummy accounting procedure established by Mr. Wingate and the former employee,” according to a school system press release.

 

Wingate’s supporters

Haywood Builder’s Supply has a large and loyal customer base. Many of Wingate’s customers were puzzled by the unraveling news accounts of the school maintenance accounting scandal that alleged Wingate was partly responsible.

If a school employee violated accounting practices or circumvented the school’s budget procedures, what does that have to do with Wingate, some of them asked? If building supplies weren’t used for their intended purpose or weren’t catalogued correctly by the maintenance department, what does that have to do with Wingate? In most business transactions, the seller’s obligation ends once they deliver the goods into the buyer’s hands. David Price, owner and president of McCarroll Construction in Arden, explained a typical transaction between their company and Wingate.

“When we agree upon a price for something, we send him a purchase order. It is his obligation to fill that purchase order, put it on a truck and deliver it,” Price said. “When someone signs the form saying it has been delivered, Danny is out of the picture. What is done with it after that he has no way of knowing.”

Those questions puzzled numerous builders in the community who followed the story in the media.

“I was surprised it came out like that, and I think it is kind of unfair,” said Kinney Liner with Haywood Contracting. “I don’t really see what that had to with him.”

An informal poll of builders found an upstanding image of Wingate.

“Haywood Builders, Danny Wingate and their sales staff and everybody associated with that company has been nothing but upright and professional,” said Scott Campbell with Campbell Construction in Maggie Valley. “Everything about the company is top notch. This community couldn’t survive without them.”

Builders who together have conducted tens of millions of dollars in business with Wingate over the years seemed to take the accusations against Wingate somewhat personally, given the high regard they have for his operation.

“These are the most honest people I’ve ever seen and I would trust them with anything I ever had anytime,” said Richard Lanning, a builder in Haywood County and loyal Haywood Builders customer. “They have never been anything other than excellent to deal with.”

Builders said juggling account balances is nothing new for Wingate.

“They are very, very accustomed to credit balances,” Lanning said. “I trust them emphatically. If they saw there was a problem with the credit balances, they would be the first to pop up and say, ‘Hey, you have a credit balance you haven’t taken.’”

In addition to credit balances for some builders, Haywood Builders keeps a running tab for others.

“They help a lot of smaller builders stay in business because of the way they sell materials and get paid later,” said Liner with Haywood Contracting. “In Lowe’s for example, you have to pay when you go in there. If you go to Haywood Builders and you have an account, you can get your materials and pay them later a lot of times. That gives you a chance to get paid before you pay for your materials.

“As many trips as I make to a builders supply in a month, it would be very hectic to pay every time you go,” Liner added. “If you are in business with someone like that and been a customer for many, many years they aren’t worried about me paying and I’m not worried about them delivering.”

It is also common for customers to order supplies in advance.

“We can’t wait until we need windows to order them,” Lanning said. “We have to order them ahead of time. They are stored at Haywood Builders and we call them for them when we are ready for them.”

Customers’ descriptions of Wingate are not consistent with the image of a businessman out to make a dollar by cheating the school system.

For example, a hurricane anywhere on the east coast creates a spike in demand for lumber and can send costs skyrocketing.

“When those have hit he works very hard to get material in here so local contractors aren’t having to pay the inflated rates,” explained David Price, owner and president of McCarroll Construction in Arden. “I would trust him with everything I had.”

Wingate is well-known as a generous contributor to local causes.

“I have never asked Haywood Builders to help us whether it was something for the kids, a civic group, the church, and they haven’t particiapted in one form or fashion,” said Scott Campbell with Campbell Construction.

Wingate also has a history of taking care of his customers.

“Anytime we have had any kind of issue come up, Danny has done whatever he had to do to make things right. He has gone above and beyond because of the relationship,” Price said.

In some ways, Wingate likely extended Norman the kind of customer service he would to any loyal client by working with his needs.

“If everybody in the business community was like Danny Wingate, it would just tick simple as a clock,” said Campbell. “He is nothing but up and up.”

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