Report: Ocean Isle Beach mayor's actions inappropriate, could face criminal charges
Ocean Isle Beach Mayor Debbie Smith inappropriately used confidential town information to her direct benefit when her real estate company purchased the town’s former police station site in 2018, according to a report from N.C. Office of the State Auditor.
The report outlines how Smith, Town Administrator Daisy Ivey, and the Ocean Isle Beach Board of Commissioners each are accused of acting inappropriately during the sale process.
It recommends the board, mayor, legal counsel, and town administrator take government training "to help ensure an appropriate control environment exists."
According to the report, the findings of the investigation were also referred to the 15th Prosecutorial District Attorney Jon David to determine if there is sufficient evidence to pursue criminal charges related to the direct benefit derived by Smith.
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In a press release David confirmed the District Attorney's office received the report.
"Because we just received this information, I am without the benefit of knowing the depth and scope of the investigation or important facts which underlie the decision to make this referral," the release stated. "Accordingly, we will scrupulously review the information to date to determine the appropriate path forward."
The investigation found in February 2018 a town resident expressed interest in buying the former police department building and land, located at 2 W. 3rd St. in Ocean Isle Beach. The following month an appraiser hired by the board valued the property at $460,000.
At a June 2018 closed session meeting, Ivey told the board the interested resident did not respond after Ivey tried to contact him about the offer amount. But according to the report, that resident told investigators that he never received a response from the town.
Two months later, Sloan Realty - owned by Smith and her brother - offered the town $460,670 for the property, and in October 2018 the board voted to accept that offer.
“The Mayor has a simultaneous obligation to act in the best interest of the Town and her real estate company,” the report stated. “She cannot temporarily set aside her obligations as Mayor in order to enter into a business transaction that may result in a direct benefit to her.”
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According to Smith, the sale discussion has been in the works for more than 10 years and the process was conducted in public.
"The offer was made in public and it was discussed in public," Smith said. "It was advertised, it was posted on front door of Town Hall and the town chose to do an upset bid process to obtain the highest purchase price for the town in the sale."
She questioned the timing of the complaint which led to the investigation, and said she thinks it's odd that it came in an election yeat and not in the two years between the time of her company's offer and when the town could move into their new police facility.
"Seems kind of peculiar that this never came up during those two years but it came up just a few months before municipal election," she said. "So I disagree with the auditor's position and his findings and you can see all the legal reasons in the town's response."
The report states five allegations concerning the town initiated the investigation, but does not say when those complaint came in.
The investigation found the Ocean Isle Beach Board of Commissioners inappropriately discussed details of the sale in closed session meetings and failed to disclose those discussions to the public. According to the report, while the acquisition of property is a permitted use of closed sessions under N.C. statutes, the sale of property is not.
Of the five commissioners serving at the time, three - Mayor Pro-Tem Dean Walters, Commissioner R. Wayne Rowell and Commissioner Betty Williamson - are still on the board. Former commissioners Carolyn Blythe and Bob Williams were also on the board at that time.
The investigation also found Ivey executed three contract amendments extending the closing date of the property sale without the proper authority.
According to a response to the report from the town, both the board’s and town administrator’s actions were mistakenly advised by the town attorney, Michael Isenberg.
In the report, N.C. State Auditor Elizabeth Wood also included “clarifications” to the town’s response, stating Ocean Isle Beach officials “made several statements that tend to obscure an issue, mislead the reader, and minimize the importance of OSA’s findings and recommendations.”
The full report can be read online at: auditor.nc.gov/documents/reports/investigative/inv-2022-0348.
Reporter John Orona can be reached at 910-343-2327 or jorona@gannett.com.
This article originally appeared on Wilmington StarNews: Ocean Isle Beach mayor could face criminal charges from property sale
