Greene hit with more charges; feds claim life insurance fraud, money laundering

Jennifer Bowman | The Citizen-Times

Show Caption Hide Caption More federal charges against Wanda Greene On June 5, 2018, federal prosecutors said former Buncombe manager Wanda Greene with misappropriated $2.3 million set aside for wrongful conviction settlements to pay for whole life insurance policies for herself, her son and other county employees. She faces 23 new counts of wire fraud, money laundering and more.

ASHEVILLE — Former Buncombe County manager Wanda Greene misappropriated $2.3 million set aside for wrongful conviction settlements in a botched murder case to buy life insurance policies for herself, her son and other county employees, according to a new 23-count indictment filed in federal court.

Greene, 66, has been ordered to appear June 13 on a summons on wire fraud, federal program fraud and money laundering charges, U.S. Western District Attorney R. Andrew Murray’s office announced late Tuesday.

The new charges were disclosed just as county commissioners took a brief recess during their regular meeting Tuesday night. They held a closed session before announcing they will file a civil lawsuit against Greene and her son, former county employee Michael Greene.

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"If proven true, this will be another example of Wanda Greene misleading the Board of Commissioners, a number of current and former county employees, and county taxpayers, with the goal to use public funds for her personal benefit while involving other county employees in an attempt to hide her actions," a news release from the commissioners said.

Additional information released Wednesday by the county said an internal investigation was launched in July. Buncombe also hired outside legal counsel "to determine the facts and pursue any available options to recoup any funds inappropriately expended," the statement said.

Attorneys for the Greenes declined to comment.

Prosecutors say that beginning in April 2015, Wanda Greene met with a Charlotte-based insurance agent and “falsely told” selected county employees she was working with commissioners on a new benefit program. She then took the surplus of a settlement fund to buy whole life insurance policies for herself, her son and eight other county employees, they said.

She also bought an annuity for a longtime director who did not qualify for a policy due to health concerns, according to the indictment.

Greene is accused of cashing out her policies for $396,000 within a month after retiring. A portion was used to pay $155,000 to a Tennessee law firm's account for a real estate closing. No further details on any property purchase were disclosed by prosecutors.

Officials do not specifically name the cases involved in a settlement. But the indictment mentions two people filed lawsuits against the county in August 2013 and September 2014 after their convictions were vacated by the North Carolina Innocence Inquiry Commission.

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Robert Wilcoxson and Kenneth Kagonyera, of Asheville, were exonerated in 2011 of the murder of Walter Rodney Bowman by the North Carolina Innocence Inquiry Commission. Both filed federal lawsuits against Buncombe County in the bungled murder investigation.

Bowman was killed in September 2000 in his Fairview home. Five men pleaded guilty to charges related to the murder. Kagonyera settled for $515,000; Wilcoxson for $5,125,000.

Following guilty pleas, Teddy Isbell spent six years in prison; Damian Mills was incarcerated for 10 years and Larry Williams, who was 16 years old when he was charged, spent nine years behind bars. Those men respectively received $240,000, $512,250 and $750,000 in settlements that came on the heels of the Wilcoxson resolution.

Prosecutors argue Greene was aware an $8.59 million budget amendment exceeded the amount required to settle the lawsuits and used much of the surplus to fund the insurance policies.

Payments to the five suing plaintiffs, including settlements and attorney fees, totaled $8.2 million. Buncombe’s indemnity insurance coverage paid for nearly $4 million, according to the indictment.

Those who received the policies were identified only by their initials in the indictment and how much was spent on prepayments. They were told by Greene to keep their participation “strictly confidential,” the indictment said.

Employee names were later reported in full by the county:

Jon Creighton, former assistant county manager: $175,000. Creighton retired late last year.

Pat Freeman, identification director: $150,000.

Tim Flora, finance director: $201,000. Flora submitted a resignation letter last week.

Michael Frue, county attorney: $150,000.

Greg Isreal, former general services director: $150,000.

Diane Price, budget and management services director: $307,000. Price had two policies.

Mandy Stone, then-assistant county manager: $150,000. Stone is now county manager.

Matt Stone, permits and inspections director: $202,000. Matt Stone is Mandy Stone’s brother.

Jerry VeHaun, emergency services director, received an annuity.

In addition, $458,000 was paid for two policies in Wanda Greene’s name, and $101,000 was paid for a policy for Michael Greene.

County officials said Tuesday that Michael Greene has an outstanding policy in his name.

Other than the Greenes, all employees came forward and assigned the policies to Buncombe. None received any financial benefit from the policies, commissioners said, and none outside of the budget or finance departments was aware of the actual cost.

The insurance provider, a Charlotte-based subsidiary of the Guardian Life Insurance Company of America, has so far cooperated with the county in its efforts to recover the money used to buy the policies, commissioners said. The board did not say how much of the $2.3 million has been recovered.

“None of these county employees had any knowledge or access to information that would have informed them that these policies were not approved nor of the actual cost involved,” the county's release said. “It is believed that Dr. Greene misled them as a vehicle for her own financial gain and that of her son.”

Prosecutors say shortly before announcing her retirement, Wanda Greene attempted to quadruple the quarterly payments from $40,000 to $160,000. After Flora expressed concerns over the increased amount and asked for further documentation showing commissioner approval, Greene tore up a handwritten note requesting the increase and told Flora to forget about any more payments.

The county's only legitimate, board-authorized life insurance program offers employees a basic term life insurance policy with a face value of $30,000. Employees also can buy supplemental life insurance coverage up to an additional $100,000.

Frue said Tuesday night that the county's cost for those term life policies for all employees totaled just $111,609 last fiscal year. The premium payments for the whole life insurance policies cost nearly 20 times more.

Whole life insurance policies are designed to provide coverage for the owner's entire life, according to information from New York State's Department of Financial Services.

The state's website said such policies generally offer fixed premiums, guaranteed death benefits and can build cash value.

"For that reason, a whole life insurance policy can be described as providing life insurance protection with a savings feature," the website said.

Greene prepaid several years' worth of annual premiums for each policy agreement, the indictment said. Money was withdrawn annually from a so-called suspend account, which is similar to an escrow account.

Prosecutors said the setup allowed recipients to become the owners of that money as soon as those payments were made, and enabled them to both cash out the policy and the balance remaining in the suspend account.

That means "upon termination of the policy, a policy owner should receive whatever cash value the policy had, as well as the remaining prepaid premiums," the U.S. attorney's office said.

Tuesday’s indictment is the second set of charges for the longtime county manager. She and her son, the county’s former business intelligence manager, were indicted in April on conspiracy and wire fraud charges. Wanda Greene additionally is charged with five counts of embezzling public funds and aiding and abetting such embezzlement.

Both have pleaded not guilty.

Commissioners said prior to the announcement of the new indictment, federal investigators requested Buncombe not take any action "that might impede the investigation." Now, they are "aggressively pursuing all legal recourse to recover public funds."

Chairman Brownie Newman said Asheville attorney Ron Payne will assist as outside legal counsel in the county’s civil lawsuit against the Greenes.

The U.S. attorney's office said late Tuesday that "the investigation into allegations of criminal activities within the Buncombe County government is ongoing."

By the numbers

Prosecutors say Greene decided who received the policies and told them to keep their participation strictly confidential. According to the indictment, here's the value and payments made for each recipient:

Wanda Greene: Two $700,000 face-value policies; $458,000 total premium payments.

Michael Greene: $419,000 face-value policy; $101,000 in payments. He is Wanda Greene's son and previously worked as the county's business intelligence manager.

Jon Creighton: $522,000 face-value policy; $215,000 in payments. The longtime assistant county manager and planning director retired in December.

Pat Freeman: $580,000 face-value policy; $150,000 in payments. She is the identification director.

Tim Flora: $671,000 face-value policy; $201,000 in payments. The finance director tendered his resignation last week.

Michael Frue: $557,000 face-value policy; $150,000 in payments. He is the county attorney.

Greg Isreal: $538,000 face-value policy; $150,000 in payments. He previously was the county's general services director.

Diane Price: Two policies, face-value worth $745,000 and $338,000; $347,000 total payments. She is the county's budget director.

Mandy Stone: $617,000 face-value policy; $160,000 in payments. Th former assistant county manager and health and human services director now is county manager, chose by commissioners after Greene's retirement.

Matt Stone: $587,000 face-value policy; $202,000 in payments. The permits and inspections director is Mandy Stone's brother.

Jerry VeHaun: $150,000 annuity. VeHaun is the county's emergency services director.