Potential Criminal Charges and Consequences: Dana Cope

IMG 0188The News & Observer reported yesterday that former SEANC leader Dana Cope may have misspent – stolen (?) – as much as $500,000 in organization funds for his own personal use. This report comes following an independent audit conducted by a Washington DC firm hired by SEANC’s parent union, the SEIU.

SEANC represents some 55,000 state employees; Cope was its executive director for nearly 15 years, before resigning on February 10 amid allegations of misappropriation of funds. At the time, Cope told reporters: “I take full responsibility of [sic] my shortcomings.”

Auditors found, however, that certain documents had been shredded and at least one SEANC computer hard drive was removed and is no longer available.

Wake County District Attorney Lorrin Freeman asked the State Bureau of Investigation to look into what were termed “spending irregularities,” first brought to light by the N&O investigation and by several former SEANC leaders, including former treasurer Betty Jones.

At least initially, SEANC stonewalled, claiming that the N&O report was flawed, and accepted Cope’s resignation “with regret.” In thanks for his service, SEANC paid Cope a severance reported to be about $150,000, or 150 percent of his annual salary.

The audit, however, lays bare the extent of the Cope problem (Executive Summary of Audit). Cope, SEANC now reports, benefitted “from a culture of submissiveness, deliberately built over time by Mr. Cope, and maintained for his own financial benefit.”

Potential Crimes

The SBI investigation is apparently on-going. The question then becomes what, if any, criminal charges could he face.

While there are a variety of crimes, a few come to mind

  • Embezzlement – N.C.G.S. 14-90 makes it a crime for someone who is an agent of a corporation or person to misapply or convert to his own use property of the corporation or person. If the amount is $100,000 or more, then the person can be charged with the Class C felony which, for a person with no criminal record, would result in a prison sentence of about 6 years. Each time frame or instance can be charged, resulting in potentially multiple Class C or Class H (if $100,000 or under) felonies. Arguably, SEANC is an organization that falls under the purview of N.C.G.S. 14-92 which enhances the penalty for embezzling any amount up to $100,000 as a Class F felony for people who steal from a “charitable” organization.
  • Obtaining Property by False Pretense – N.C.G.S. 14-100 makes it illegal for anyone to essentially commit a fraud in order to obtain something of value. Here, a fraud might occur if Cope had, for instance, represented to any of the retailers or companies he had used that the money he was spending was his own when, in fact, it was SEANCs. In that instance, Cope would have received as a benefit the property or services from those companies after having committed a material misrepresentation. If the value of those services, say landscaping, was $100,000 or more, then Cope could be convicted of a Class C felony. If the items or services were less than $100,000, then Cope could be convicted of a Class H felony.
  • Obstruction of Justice – N.C.G.S. 14-221.1 makes it a Class I felony for anyone to enter into any building…, file, cabinet, or any other enclosure wherein evidence relevant to any criminal offense is kept with the purpose of destroying or stealing such evidence. The auditors report found that documents had been shredded and at least one computer hard drive was unable to be located. If prosecutors can show that such items were destroyed or stolen with the purpose of eliminating evidence of criminal wrong-doing, an Obstruction of Justice charge may be warranted.
  • Tax Evasion – It is rare that people who embezzle or steal money actually report the theft as income on their income tax filings to either the state or federal authorities. Any person who willfully attempts, or any person who aids or abets any person to attempt in any manner to evade a tax or its payment, in addition to civil penalties, may be guilty of a Class H felony. Any person who willfully fails to file or pay taxes may be punished for a Class 1 Misdemeanor. Federal income tax evasion is a separate matter with stiffer penalties.

Potential Penalties

Assuming Cope is criminally charged, restitution might be forthcoming which could include the liquidation of assets that would then be returned to SEANC. But restitution does not alone resolve the matter: In 2013, Susan Rouse, an office manager at a Raleigh law firm, was convicted of embezzling more than $1 million over a seven-year period from the firm. Most of the money was recovered, less about $230,000 that was unaccounted for.

Still, Rouse received a prison sentence of more than 10 years – 131 months to 179 months.

In Rouse’s case, at least some of the money went to the Hospice of Wake County, a charitable cause.

Extent of the Fraud and Theft

The audit report makes no mention that Cope’s misspending went to charity.

Instead, it lists the following:

  • $33,000 to Maupin Travel (for travel, in part, to Asia for Cope and his family), of which SEANC has recovered $18,677 from the travel agency.
  • $31,000 to Blue Line Aviation, LLC for flying lessons
  • $26,500 in either undocumented expenses or expenses that had no apparent SEANC purpose, including a 5 night stay at the New York Marriot Marquis including $582.09 in room service.
  • $10,908 at Garner TV and Appliance
  • Nearly $2,000 in online gaming and iTunes expenses
  • $16,700 for Kensington Tours
  • $2,917 for a Raleigh-based interior design company

The audit concludes with a Summary of Dana Cope Expenditures with no apparent SEANC purpose.:

  • Landscaping: $101,123.50
  • Maupin Travel: $14,708.55
  • Direct Reimbursements to Cope Missing Receipts: $5,675.10
  • Direct Reimbursements to Cope for Questionable Charges: $11,593.92
  • Credit Card Charges by Cope Missing Receipts: $293,211.30
  • Credit Card Charges by Cope for Questionable Charges: $67,731.23

Total Misappropriated: $494,043

Damon Chetson

Damon Chetson is a Board Certified Specialist in State and Federal Criminal Law. He represents people charged with serious and minor offenses in Raleigh, Wake County, and the Eastern District of North Carolina. Call (919) 352-9411.