Former police chief violated federal regulations

Cops for Kids wasn’t the only fund that former Mooresville Police Chief John Crone mishandled.

In 2002, Crone violated federal guidelines when he used $4,862 in federal asset forfeiture funds to pay airfare costs for the Mayor’s Youth Council trip to New York City.

The federal asset forfeiture program is a nationwide cooperative effort among federal, state and local law enforcement agencies that share proceeds resulting from federal forfeitures of assets – such as money and property – used in crimes. The local agencies that are responsible for the seizure or forfeiture of property receive up to 80 percent of the proceeds, while the federal government keeps 20 percent.

But the money has strings attached in the form of guidelines for how it can be spent. In a 1994 U.S. Department of Justice memo titled “Equitable Transfers of Forfeited Monies or Properties,” Assistant Attorney General Walter Dellinger stated: “When the federal government makes an equitable transfer of forfeited monies or property to a state or local law enforcement agency, that transfer is more appropriately characterized as a conditional gift to the agency rather than as a formal contract between the federal government and the agency.

“If the state or local agency fails to use the transferred property for law enforcement purposes, the federal government may be able to pursue restitution of the property.”

Airline tickets for the 2002 Mayor’s Youth Council and chaperones – including then-Mayor Al Jones – would appear to be an impermissible use of shared assets under at least the following three sections:

(c) Payment of Non-Law Enforcement Expenses. Shared funds may be used to pay the expenses for drug testing of law enforcement personnel, but may not be used for the testing of all municipal employees. Shared funds may not be used for scholarships or financial aid, except for law enforcement personnel pursuing training that is necessary to the performance of their official duties.

(f) Non-Official Government use of Shared Assets. Any use that creates the appearance that shared funds are being used for political or personal purposes is not permitted. For example, the use of shared funds for a sheriff’s campaign paraphernalia is impermissible. The use of shared funds to settle a lawsuit is not a permissible use.

(h) Extravagant Expenditures. Receiving agencies should use federal sharing monies prudently and in such a manner as to avoid any appearance of extravagance, waste, or impropriety. The payment of personal credit card bills, the purchase of meals (except personal meals incurred during official law enforcement travel), alcoholic beverages and other such expenditures are impermissible.

For a complete look at the federal guidelines, provided by Town Hall, click on the documents below:



The federal government can grant permission on a case-by-case basis for local agencies to use the shared funds for purposes other than those listed as permissible. However, the Town of Mooresville provided no such documentation on Wednesday, when the Report obtained from Town Hall copies of Crone’s expenditures from the shared asset funds from 2002 through 2008.

Just about an hour ago, the Town of Mooresville released the following statement to the press:


After 2002, Crone did not use federal asset forfeiture money for the Mayor’s Youth Council trips; instead, he began in 2003 to use state drug tax money – formally called Unauthorized Substance Abuse Tax – in conjunction with Cops for Kids funds.

A cursory review of the state drug tax expenditures recorded by Crone shows that the former police chief used more than $25,000 from 2003 to 2008 to fund trips for the Mayor’s Youth Council, accompanied from time to time by the Police Explorers. Crone spent an additional $20,000 on the trips from his Cops for Kids fund, according to his own balance sheet.

Town Finance Director Maia Setzer said “discrepancies” exist between Crone’s expenditure sheet from the drug tax fund and the finance office’s audited ledgers.

The state drug tax fund has no restrictions on how local agencies can spend the money. However, the N.C. Attorney General has issued an opinion on the matter, which the Report is in the process of obtaining. As soon as we’ve been able to fully scrutinize the state drug-tax records – and compare them with Crone’s town purchasing-card statements, the town’s audited drug-tax ledgers and the Cops for Kids expenditures – we’ll let you know what we find.

Meanwhile, the town’s investigations into the Cops for Kids fund are ongoing.

Town Manager Steve Husemann told commissioners and town administrators in an e-mail this week that he, Setzer and Town Attorney Steve Gambill met on Wednesday “to review the status of the current investigations.”

“I am generally keeping out of that process,” Husemann said, “but I do want to address where we are going and how we can get there as soon as possible.”

He said the town needs to “put procedures in effect which will assure that similar events cannot happen in the future.”

Setzer also e-mailed commissioners an update on each investigation on Wednesday.

Internal investigation/SBI probe
The internal investigation being led by Ken Andrews of Special Investigative Services “is complete with documentation returned to the Town of Mooresville,” Setzer said.

The investigation, she added, “was not fully completed by Mr. Andrews as the N.C. State Bureau of Investigation asked Mr. Andrews to stop his interviews of certain people so that the Special Agent could interview them for his investigation.

“Once the Special Agent gives us permission to do so,” Setzer said, “Mr. Andrews may continue his interviews.”

Setzer said that the SBI’s Special Agent assigned to the Cops for Kids case “has not discussed his investigation with me.” She said, however, that she has a meeting scheduled with him today, Sept. 19, and “if there’s anything I can relay to you following that meeting, I will.”

Financial audits
Setzer also told commissioners that the first financial investigation, or audit, “is essentially as complete as it can be given the documents the town has received regarding the Cops for Kids bank records,” Setzer added. “The documentation of the investigation has been received and will be shared with the SBI and the secondary financial reviewers as appropriate.”

Setzer said that the town has remitted a contract to Greer and Walker, LLC and that “I have received word … that the firm expects to accept the engagement.

“When I receive final confirmation of that agreement and the firm begins work,” Setzer told commissioners, “I will let you know.”

Evidence room
The first review of the police department’s evidence room, directed by the SBI, is complete, Setzer said. “We have been asked by the SBI to conduct an additional audit which will be done under the direction of the SBI.”

Husemann added that the Mooresville Police Department has developed a “property (evidence) room physical layout plan.”

Under Setzer’s direction, Husemann said, “We plan to inventory and remove everything from the property room and place it in a sealed POD. We will then have shelving installed in the property room and return the evidence in an organized and recorded fashion.

“That which is no longer needed will be disposed of in accordance with state law,” Husemann continued. “We plan to order security doors for the property room which will record every time the door is opened and by whom. It will also be documented with video tape.”

He said that some of the items will require town board approval because of cost. “This may seem like overkill,” he said, “but it is probably the norm for the more professional departments.”

Husemann added that the town “will obviously coordinate this with the SBI, but we feel that this would not interfere with their investigation.” Also, he warned: “This will be a very lengthy process.”

The town manager also told commissioners that the finance department will work with the police department “to assure the proper recording of all revenues and expenditures related to the property room and the state and federal drug forfeiture accounts. This would also address the disposal of future property no longer needed for evidence.”

Finally, Husemann said he is interested in seeking accreditation of the Mooresville Police Department through CALEA (Commission on Accreditation for Law Enforcement Agencies, Inc.). “While this is an expensive and time consuming process, it would have avoided a lot of the problems that we are facing today,” Husemann said. “It would also help re-establish the credibility to the department.”