SMITHFIELD – Johnston County Public School administrators gave glowing reviews last week about a wellness audit firm they are considering hiring to conduct an examination of their finances. While naming and giving high praise to three of the four partners in the audit firm, they failed mention the fourth partner was recently named in a lawsuit alleging misuse of company funds, spending $10,000 at a Raleigh strip club while on business trip, allegations of inappropriate conduct, sexual harassment, and withholding information.
During the Feb. 11th school board meeting, Chief of Human Capital Brian Vetrano announced, “We have a meeting scheduled later this week with School Efficiency Consultants to discuss with them the work they do. They are well respected in the State of North Carolina, have been highly recommended to our school system, and in fact on their website you can see they have experience in conducting wellness audits… and we look forward to a conversation with them later this week.”
Board Chairman Todd Sutton said he had researched School Efficiency Consultants and specifically mentioned three of the four partners in SEC. “I just want to add I did some research on SEC, or School Efficiency Consultants, as well. Hank Hurd is very well known across the state, if not the United States. He is a former associate state superintendent for financial and business services and CFO at the NCDPI (NC Department of Public Instruction). And then you have Kathy Isenhour, who is Associate Superintendent for Hickory Public Schools. She has expertise in maintenance, food service, purchases, capital improvements, long range planning, and transportation. And then Ricky Lopes. A lot of us have met him at meetings across the state, the school board association. He was the associate superintendent for business operations in Cumberland County. And he is often called up for presentations on school finance.”
Sutton did not name or publicly disclose SEC had a fourth partner, Leon L. Rives II. Rives is a founding partner of School Efficiency Consultants and Rives and Associates LLP, in Lexington, NC where he is also a managing partner of the tax, audit and accounting firm.
According to The Dispatch, a Hickory County news organization, two former partners of Rives and Associates LLP recently filed a lawsuit in Wake County Superior Court against Leon L. Rives II and his father, William L. Rives, for misuse of company funds, among other serious allegations.
According to the civil lawsuit, between October 2017 and January 2019, Leon Rives used a Rives and Associates company credit card for $200,000 in personal purchases, including plane tickets for vacations in Disney World, the Bahamas, Amsterdam, Sweden, and Colorado, according to The Dispatch.
The lawsuit alleges Leon Rives withdrew $300,000 in funds from business accounts for personal use, including paying for a lawyer’s bill for a court case. Additionally, the lawsuit claims Leon Rives spent $10,000 at a strip club in Raleigh while attending an industry event. Rives and Associates was ordered in January 2020 to pay $2.2 million in damages to the owner of an Iredell County company after Leon Rives failed to discharge his duties as a corporate director, used his position to the detriment of the company, and converted company property to his own benefit.
The court filing also states a former employee of the company filed a sexual harassment complaint against Leon Rives and that he has had numerous verbal altercations with other employees and partners, according to The Dispatch.
The two former Rives and Associates partners claim in the civil complaint they were improperly dismissed and Leon Rives changed the partnership agreement without their knowledge and had them expelled from the firm.
The lawsuit does not name School Efficiency Consultants. SEC’s only connection to Rives and Associates is Leon Rives. Leon Rives is one of the four partners of SEC and is still listed as a partner on their website. Leon Rives was the only partner not mentioned by Chairman Sutton on Feb. 11th.
In an email Monday, Sutton said, “I was not aware of this lawsuit prior to our meeting last week. We will be gathering more information on the lawsuit and how it would affect us before we make our final decision on who will perform our wellness audit.”
The Johnston County School Board voted in January 2020 to hire a company to conduct a wellness audit after their 2019-2020 budget came up millions of dollars short. Johnston County Commissioners recently agreed to give the school board at least $3.8 million in an emergency bailout this year.
JoCoReport reached out to School Efficiency Consultants on Saturday for a comment. We did not hear back from SEC prior to our news deadline Monday. However, WRAL did hear back from Hank Hurd on a story involving Leon Rives and Durham County Schools. Hurd told WRAL that Rives was a silent partner in SEC and they were working “to terminate that relationship.” Hurd said Rives had not been active in any engagements or with clients for 10 years.