State Auditor Finds Major Financial Control Failures In Town Of Newland

NEWLAND, N.C. – A state investigation into the Town of Newland uncovered hundreds of thousands of dollars in spending without competitive bidding or board approval, payments to a dissolved company owned by the town’s then-mayor, overdue financial audits and weaknesses in banking controls that resulted in the loss of public funds.

The North Carolina Office of the State Auditor released its 23-page investigative report Thursday, Aug. 20.

The investigation began after the Auditor’s Office received an allegation involving a chronic imbalance in Newland’s general fund, including a claim that approximately $300,000 may have been lost over several years without a clear explanation to the Board of Aldermen. Investigators said they uncovered additional financial management problems while examining the allegation.

Newland is an Avery County town with an estimated population of 715.

Among the findings, investigators said the former town administrator bypassed bidding and board oversight involving $418,658 in general fund expenditures, while another $63,460 was paid to a dissolved business owned by the then-sitting mayor. Investigators also found $15,210 in public funds remains unrecovered following a fraudulent wire transfer.

$418,658 Spent Without Board Approval

One of the most significant findings involved work performed by CCG Enterprises LLC.

According to investigators, the former town administrator hired CCG, an unlicensed contractor based in Guilford County, to perform debris removal and maintenance work, initially at the Roby Shoemaker Wetlands and Family Recreation Park.

The company submitted 35 invoices totaling $510,426 for work between August 2023 and June 2024. Nineteen invoices totaling $327,642 were connected to the park, while another 16 invoices totaling $182,784 involved other public works and maintenance projects. Investigators said the Board of Aldermen was unaware of the full scope of the work and had not approved or budgeted for the activities.

A review of town financial records showed that between September 2023 and January 2024, Newland issued 46 general fund checks totaling $418,658 to CCG and its owner.

The State Auditor determined the work met the legal definition of general contracting and required a licensed general contractor. CCG was not licensed at the time. Investigators also found no permits had been issued or requested for work on the park’s pond.

Avery County issued a stop-work order in September 2023 after observing substantial grading activity involving the pond, wetlands and creek. The Auditor’s Office said invoices showed work continued while the stop-work order was in effect.

Investigators found no board-approved contract with CCG, no documentation establishing the total project scope or cost and no requests for proposals associated with the work.

The Board eventually directed in January 2024 that CCG perform no additional work for the town. The former town administrator was relieved of his duties Aug. 6, 2024.

Mayor-Owned Business Received $63,460

The investigation also examined mowing contracts involving Caretaker Services Inc., or CTS, a company owned by Newland’s then-sitting mayor.

State investigators said the Board approved a sealed bid that financially benefited CTS even though the company had been dissolved years earlier. Town bank records showed 12 checks totaling $63,460 were issued to CTS between April 8, 2024, and Aug. 14, 2025.

The report said CTS had been incorporated in 1999 but was dissolved by the N.C. Secretary of State in 2005. State law limits a dissolved corporation to activities necessary to wind up its affairs rather than conducting new business, according to the report.

The Auditor’s Office also examined potential conflict-of-interest concerns.

In 2022, the then-mayor acknowledged that he would financially benefit if CTS received a mowing contract. That particular contract was ultimately awarded to another bidder. Two years later, however, the Board selected CTS after voting to accept the lowest bid for mowing services.

The report noted that North Carolina law generally prohibits public officials from receiving a direct financial benefit from contracts they make or administer. However, investigators determined the former mayor appeared to qualify for a small-jurisdiction exception because Newland has fewer than 20,000 residents and CTS received $36,210 during the applicable 12-month period, below the statutory $60,000 limit.

The Auditor nevertheless faulted the town for doing business with a dissolved company and recommended verifying that vendors are legally authorized to conduct business before awarding contracts or making payments.

Financial Audits Years Behind

Investigators also found Newland delinquent on its required annual financial audits for fiscal years 2024 and 2025.

The town is currently on the Local Government Commission’s Unit Assistance List, which subjects local governments to additional fiscal oversight and requirements.

The town’s fiscal year 2022 audit was filed 19 months late, while its 2023 audit was filed 11 months late.

As of April 2026, neither the 2024 nor 2025 audit had been submitted.

The Auditor’s Office said the delays meant Newland operated for multiple fiscal years without timely independent financial reporting, impairing fiscal transparency, oversight and accountability.

Officials Served Without Required Bonds

The report also found lapses in surety bond coverage required for certain town officials.

Newland’s current town manager was not properly bonded in that capacity from May 6 through May 28, 2025, according to the investigation.

The interim finance officer position went without the required bond from May 6, 2025, until June 10, 2026. The town obtained the required coverage June 10.

Investigators noted that the town manager is also serving as interim finance officer. While state law allows one person to hold both positions, the Auditor warned that combining the duties weakens financial safeguards and increases the risk of errors, unauthorized transactions and undetected irregularities.

Fraudulent Email Costs Town $15,210

A separate finding involved an $82,123 wire transfer initiated after the town finance officer received a spoofed email impersonating a company doing business with Newland.

The fraudulent email requested payment for equipment being purchased for the wastewater treatment plant and instructed the town to send the money by wire transfer.

Investigators found several warning signs in the messages, including writing errors and a claim that the vendor’s bank account was under audit. The legitimate company later confirmed it accepted payments only by check.

The finance officer processed the wire transfer without secondary review or independently confirming the payment instructions with the vendor, according to investigators.

Newland recovered $66,913, but $15,210 remains unrecovered.

The Auditor recommended requiring independent verification of wire-transfer requests, supervisory approval of electronic payments and employee training on phishing and vendor impersonation scams.

Town Responds

In a written response, Town Manager David Epley said Newland is working with the Local Government Commission to bring its overdue audits into compliance and has issued several requests for proposals seeking an auditor.

Epley said the bonding issue has been corrected and that the town is now following proper procedures involving contracts, pre-audits and board approval of expenditures.

The town has also contracted with a local CPA firm to assist with day-to-day financial transactions and improve the separation of financial duties, according to Epley.

The State Auditor made six recommendations, including timely completion of financial audits, proper bonding of finance officers, stronger procurement controls, verification of contractor licensing and vendor eligibility, required ethics training for elected officials and tighter controls over electronic payments.