State Auditor Dave Boliek met with Wake County District Attorney Lorrin Freeman and the director of the North Carolina State Bureau of Investigation on Monday to discuss the Town of Cary.
Investigators said their work includes a procurement card analysis of several transactions that are "potentially indicative" of fraud.
It all comes after town manager Sean Stegall stepped down last month after open records requests found a pattern of questionable spending.
"As we move forward with our own review into the Town of Cary, the State Auditor's Office will continue working with law enforcement officials and the Wake County District Attorney's Office on this matter," Boliek said. "Our goal is to be as useful as possible in providing information that may support any prosecution of criminal activity."
ALSO SEE | Cary Councilmember Sarika Bansal calls for transparency amid town manager controversy
It's unclear what particular charges the report is mentioning, but records found, among other things, that Stegall approved a more than $1 million land deal without council approval, and allowed the town to cover nearly $40,000 for a master's degree program for councilmember Lori Bush, money Bush says she later paid back.
Freeman said she will be reviewing the preliminary reports she received Monday.
"I anticipate this is a matter that will need to be investigated to determine whether any of the alleged conduct rises to a criminal violation," Freeman said. If our review of this report from the State Auditor leads to the opening of a criminal investigation that will be done by a request to the SBI from me and Cary Chief of Police Terry Sult. As in all matters of public interest, we will exercise all due diligence in examining this matter."
Newly released records also show Stegall's book "Top of Arc," highlighting his vision for running cities of the future, cost the town more than $150,000, including a ghostwriter for the book, and publishing and promoting the book.
Cary Mayor Harold Weinbrecht Jr., who has been a vocal critic of Stegall's performance as town manager, also reacted to the latest development.
"The State Auditor has raised concerns about potential legal violations by Sean Stegall that we take very seriously," Weinbrecht said. "Once presented to us, we will review the Auditor's findings carefully and will partner fully with any additional investigations. Our decision to act in November was based on values, not legal determinations. If legal lines were crossed, that reinforces the importance of acting when standards aren't being met.
"Following the laws that govern us, as a town and as individuals, is fundamental to everything we do," Weinbrecht continued. "When one person violates the laws meant to protect taxpayers, it contradicts our commitment to serve our community with integrity. We will address any violations consistent with legal obligations and our values."
The mayor added that several transparency measures have already been implemented, including live-streaming of Council work sessions, restructured meetings, improved documentation processes, and a public records portal for residents.
Some expressed concern about why Stegall was still entitled to a nearly $200,000 severance package, worth six months of his salary.
When asked about that on Sunday, Councilmember Sarika Bansal said criminal charges could change that.
"We had to go give him that severance package, but if there is something that later stage that is identified and is criminal in nature, then that would be a different story," Bansal said.
According to Stegall's original contract when hired in 2016, if he were charged or convicted of a felony or crime of moral turpitude, the town would not be obligated to pay severance.
ABC11 also spoke to Congresswoman Deborah Ross, who said she's confident the truth will come out in Cary.
"The good news is that we have very clear processes for dealing with these issues in North Carolina, getting the facts, and getting them corrected," Ross said.
The next steps would be if Freeman believes this warrants a criminal investigation, the DA and the Cary police chief would make that request to the SBI.
ABC11 has also reached out to Stegall for comment but has not heard back.
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