Auditor finds wrongdoing in Manteo dredge project

By Catherine Kozak | Outer Banks Voice on December 17, 2019

The report said former Commissioner Hannon Fry, left, potentially broke state law. Town Manager James Ayers, right, said the town will follow the auditor’s recommendations.

A long-awaited report from the Office of the State Auditor released Tuesday found that former Manteo Mayor Lee Tugwell, former Manteo Commissioner Hannon Fry and current Manteo Finance Officer Shannon Twiddy each violated proper procedures and policies in their dealing with a $50,000 handshake agreement related to the Doughs Creek dredging project that lasted from November 2017 to August 2018.

Fry potentially broke state law by not revealing his involvement to the town in accepting $12,500 for the deal, according to the report.

“The Commissioner derived a direct benefit from the lease agreement by failing to disclose his conflict of interest,” the report stated. “No Town employees or officials knew that the Commissioner would receive a payment related to the dredging project.”

The auditor handed the question of whether Fry broke the law to a prosecutor to decide.

“This finding referred to the District Attorney for the First Prosecutorial District to determine if there is sufficient evidence to pursue criminal charges related to the direct benefits derived,” the report said.

Tugwell, owner of contracting company Tugwell Transport, and Fry, who was then serving on the Manteo Board of Commissioners, had negotiated an agreement with the Klimkiewicz family, who owned land along Doughs Creek, to allow the town to temporarily deposit dredge spoil on their land.

Acting as the local representative and third-party observer, the parties agreed to an oral contract where the town would pay $50,000 for use of the land. Tugwell subsequently submitted three invoices to the town, one for $25,000 and two for $12,500, which Twiddy paid out of town funds.

At the time, Tugwell, who had previously served as mayor and town commissioner, was not representing Manteo in any official capacity. But in February 2018, he was appointed to serve on the Manteo Planning and Zoning Board. He submitted his resignation on Nov. 20, 2019.

Fry, who had served as commissioner for 14 years, ran for re-election this past November. But he conceded his post to challenger Jason Borland when election results resulted in a tie. Twiddy is still employed by the town.

Tugwell and Fry did not respond to messages left on Tuesday afternoon seeking comment. Twiddy declined a request seeking comment relayed to her by Town Manager James Ayers.

According to Auditor’s Report, Fry, as commissioner, voted to approve the town’s $50,000 budget amendment without revealing that he would benefit. After Tugwell deposited a $25,000 check from the town into his corporate account – the remainder went to the property owner – he wrote a check for $12,500 to Fry. Tugwell later said that the payment to Fry was a “gift,” the report said.

“Let me be clear,” Tugwell told investigators, according to the report, “that money was all given to me, and I am allowed to spend my money in any way I see fit and for whatever reason I see fit.”

Tugwell also explained to the auditor that the payment to Fry was not public knowledge “because people would start connecting it to (Fry) got paid for some of this dredging project.”

The report said that state law and town ordinances prohibited public officials from benefitting from public contracts. It also said the town may have overpaid for the use of the property. The auditor also faulted Twiddy for not seeking documentation of the contract and for not following policy and procedures when issuing the checks.

In its recommendations to the town, the auditor said the town should seek repayment of the funds from Fry and Tugwell. The auditor also recommended that the town take disciplinary action against Twiddy and conduct training for elected officials and town employees.

In a brief interview with the Voice, Ayers, the Manteo Town Manager, said the town will be working with the UNC School of Government and the League of Municipalities to develop training, in addition to continuing ongoing in-house training. He also said the town intends to follow the auditor’s recommendations, but he said it is too soon to speculate on timelines for the responses.

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