'Extravagant spending': State audit questions expenses and alleges lax financial oversight in Cary

Cary’s former town manager made more than $1 million in questionable purchases using town money, exposing weaknesses in the town’s spending policies and a culture of lax oversight, a new state audit says.

The 2,600-page audit report, released Thursday, is the culmination of a monthslong investigation launched after spending by former Town Manager Sean Stegall came under scrutiny in late 2025. Stegall resigned in 2025 after the auditor began questioning town staff.

State Auditor Dave Boliek says Stegall and other town employees made more than a dozen “questionable” expenses — ranging from expensive dinners with no apparent business purpose, unauthorized land purchases and graduate-school tuition for a councilwoman. And it highlighted other expenditures, such as $800-per-month car stipends and $1,600 worth of Ray-Ban sunglasses for council members, $121,314 for video production at a 2024 retreat in Wilmington, and thousands of dollars in hotel cancellation fees. 

"What the team found in the town of Cary is, quite frankly, a culture of extravagant spending of tax dollars by elected officials and the staff of the town of Cary," Boliek said Thursday at a news conference. "What started as a focused investigation on the prior town manager of Cary became a wider look at spending across the town of Cary. It was clear this extravagant spending, though, was led by the former town manager."

Stegall didn’t respond to a request for comment.

At an emergency news conference Thursday night, Cary council members faced questions from reporters about how the questioned spending continued for years without elected leaders raising stronger objections. Several officials said Stegall controlled much of the information flowing between town employees and the council.

Cary Mayor Harold Weinbrecht said council members received summarized financial information and didn’t know the full cost of several purchases and events until employees came forward late last year. “I like the analogy of boiling a frog in water slowly — that’s kind of the way it was,” Weinbrecht said. “We know now we should have. How much did that cost?”

Earlier in the day, Boliek said elected leaders should have been more vigilant. There was a lack of active oversight of the town manager, he said, and there was “a lack of tough questions on how the money's being spent.”

“This type of spending was acceptable not only to the town management, but was not really questioned by the council,” Boliek said. Whether they knew about it or not, there was no questioning by council.”

The audit report provides a long list of recommendations for how the town can shore up its controls over employee spending and financial reporting, offering a new perspective on a town that has long been regarded as one of the best-run local governments in the country.

Steagall ran Cary town government for nearly a decade before the allegations of financial mismanagement. In the town’s formal response to the audit, Weinbrecht and interim Town Manager Russ Overton wrote that Stegall “introduced private-sector thinking and ways of doing business that differed from Cary's past and from most other North Carolina cities and towns. … Yet over time, and especially toward the end of his tenure, he made questionable decisions.”

Cary is the state’s seventh-biggest municipality. And many of the expenses flagged by the auditor represent a small fraction of the town’s $573.5 million budget. But they represented a lack of financial discipline that warranted further investigation of compliance with town policies, the auditor said. “The findings in this report present examples of spending public dollars in a manner that appears excessive and is not readily tied to identifiable government purposes,” Boliek said in the report. “Additionally, the report presents financial management decisions that contributed to violations of procedure and includes many instances of undocumented purchases.”

Cary officials voted last month to raise property taxes by 8%, in part to pay for hiring 55 new employees in police, fire and other departments. WRAL reported that Weinbrecht blamed Stegall in part for that tax hike, too, saying the former town manager’s tenure had “led to inaccurate information being provided to council over several years leaving critical needs unaddressed, particularly with our police and fire departments.”

The auditor’s office launched the review after receiving “several reports of financial misconduct,” the report says. Boliek in January provided preliminary details of the investigation, noting at the time that he had shared the findings — including potentially fraudulent charges — with Wake County’s district attorney and officials at the State Bureau of Investigation.

Wake County District Attorney Lorrin Freeman said Wednesday that a criminal investigation is ongoing. “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," Freeman said in a statement in January. "As in all matters of public interest, we will exercise all due diligence in examining this matter.”

Boliek said Thursday that some of his office's findings are being withheld for now "in order to preserve the integrity of the criminal investigation." 

‘Accountability problem’

The auditor's office reviewed procurement-card transactions and expense-approval policies. It said it found that almost two-thirds of employees had town-issued cards, compared with an average of 16% in the nine other most populous municipalities in North Carolina.

Employees racked up more than $24 million in transactions on those cards over two years, the auditor said. “A lot of those expenses were not backed up by invoices or receipts, and that creates an accountability problem,” Boliek said at a news conference Thursday. 

Boliek recommended the council enact a policy for what kinds of purchases can be made with town procurement cards and that it should enact a policy related to meal expenses during town council travel. The auditor also recommended that the town’s finance director review and update any procurement-card policies and provide training to employees who are issued cards. He also recommended stronger purchase documentation policies.

In their written response to Boliek, Weinbrecht and Overton said: “The work of the [Office of the State Auditor] and others has helped us identify gaps in oversight, process, and culture. And while these concerns are largely rooted in the former town manager's actions, we recognize that, as an organization, we have the responsibility to understand what happened, identify how we can strengthen the systems that failed to prevent it, and ensure our practices reflect the standards our employees and community expect.”

One item the audit identified that has received substantial public attention is a 28-minute, documentary-style video that culminates with a scene in which town employees conduct a choreographed dance to the Abba song “Dancing Queen.” Weinbrecht said Thursday he thought it had been created by employees on their own time. He said the town council didn’t know that thousands of taxpayer dollars went toward producing it. “Why would we do that?” Weinbrecht said. He promised to keep a closer eye out in the future. “We’ll make sure that we know everything moving forward,” he said.

The town on Thursday also released its own independent review into its procurement-card spending, financial reporting and the workplace environment. The review, paid for by the town and conducted by law firm Womble Bond Dickinson, found failures in all three areas. It noted that Stegall significantly contributed to those failures. 

The report also pointed to structural weaknesses in the council-manager form of government. It said the model enables separation of elected officials from daily operations and employment decisions, but that the “separation can cause an elected body to become too dependent on the manager and ordinary reporting channels for information about operations, finances, and workplace conditions. 

“This risk tends to increase as a manager's tenure at a particular government lengthens,” the Womble review said. 

The review made recommendations similar to those found in the state audit. It also recommended adding an employee tip line, as well as suggesting policies mandating written justifications for the elimination of positions, the acquisition of technology, and authorizing council members to identify areas for internal audits. 

“The issues identified in the report are serious, but they do not define the town,” the Womble report said. “Rather, they present an opportunity for the Town Council to respond in a measured, lawful, and forward-looking manner by strengthening safeguards, improving transparency, and improving the flow of financial information to the Town Council and town residents.”

The town has initiated quarterly public financial reporting. Cary officials also say the town is now limiting spending by top town employees without council members’ knowledge and updating a host of other financial policies on expense approvals, financial reporting and debt management. 

Council members also said Thursday that the town has begun reducing the number of procurement cards. Council members also said they plan to share information more broadly instead of allowing it to flow through one person. Proposed changes include anti-retaliation protections, a whistleblower policy and a confidential employee tip line.

An independent audit, separate from the state audit and the Womble review, previously found material weaknesses in the town's internal controls over financial reporting. Auditors at Cherry Bekaert LLP in February said it found missing financial reports related to $2.1 million in grant expenses eligible for reimbursement. That review also noted a reported fraudulent check for $1.3 million that was perpetrated against the town by an outside source in April 2025.

Town manager allegations

Stegall was placed on leave in November after public records revealed a series of major expenses that much of the town council said they were unaware of. Steagall resigned a month later, following allegations of over-the-top spending and inadequate financial reporting, creating an unhealthy work environment, and a lack of transparency with the full council, staff and citizens.

Public records indicate that Stegall spent thousands of dollars at a four-star hotel during a conference in Texas in 2023. During Stegall’s tenure, the town also paid more than $1 million for land near Cary Elementary School against the recommendation of the assistant town manager and without the knowledge of every town council member. According to the state auditor, he did so without telling council members and against concerns raised by an assistant town manager.

He is also alleged to have encouraged the use of town money to pay for a councilmember's master's degree, which ended up costing more than $37,000. The auditor said Thursday that Stegall booked a hotel penthouse for himself during a conference trip. He noted the $3,419 charge was for "multiple staff," but other staff stayed at that hotel, the auditor said.

The town also paid a ghostwriter $65,653 to write a book about Stegall's management style, the auditor reported.

The state audit summary also said Stegall “instituted an intimidating work environment that included erratic behavior and bullying.”

The independent audit that was detailed in February also found that Stegall didn’t emphasize the need for compliance or accountability, according to Lee Ann Watters, the audit director at Cherry Bekaert. “The former town manager did not always model or reinforce the ethical behavior that is laid out in your policy,” Watters told Cary officials at the time.

In their response to Boliek, Weinbrecht and Overton took aim at Stegall, alleging that the former town manager encouraged staff to ignore procedures and practices related to travel, meals and procurement-card usage “and he personally modeled this behavior,” they wrote. 

Cary officials alleged that Stegall set a bad example by not consistently demonstrating expected ethical behavior. When staff considered raising concerns, officials said, employees worried about retaliation. 

Officials also said Stegall slashed key finance positions, including many budget staff and the town’s internal auditor. “This created gaps in oversight, increasing opportunities for the former manager's over-the-top spending and inadequate financial reporting,” Weinbrecht and Overton wrote in their response to Boliek. Stegall also discontinued employee exit interviews and surveys that offered outgoing staff with a safe way to report issues, they said.

“These things didn't happen all at once,” the Cary officials wrote. “They occurred over time, making it difficult to see a pattern in isolation.”

Over the past eight months, the town has provided hundreds of thousands of documents to the auditor’s office, and staff members have participated in interviews tied to the investigation, officials said. Officials say they are now working on strengthening internal reporting mechanisms, including launching a whistleblower policy, while also hiring an internal auditor, compliance officer, budget director and an additional budget analyst.

Boliek said Thursday that he thinks the process has helped town officials. "They have a a fresh attitude of looking at how money is being spent in the town of Cary," he said, "and so the hope is that there will be a serious look with respect to accountability and transparency to the public on how these dollars are being spent."

Town financial health

The town of Cary has long been held up as an example of solid municipal governance. It has won Government Finance Officers’ Distinguished Budget Presentation Award for sound budgeting multiple times. The Government Finance Officers Association of the United States and Canada has also recognized the town for excellence in financial reporting. 

The auditor’s report, however, highlighted possible concerns about how the town monitors and communicates the overall financial health of the town. 

The auditor reported that Cary’s fund balance fell below its 33.33% minimum level in the 2023 and 2024 fiscal years.

Bond rating agency Moody’s this month affirmed Cary’s AAA rating, which is the highest possible credit rating for municipal governments. 

The auditor recommended that the town council adopt a policy requiring board approval for all capital purchases exceeding a specified dollar threshold, and establishing procedures for documentation and authorization. The auditor also recommended strengthening internal controls over financial reporting to ensure that financial conditions — including noncompliance with fund balance thresholds ��� are identified and communicated to council members. The auditor also recommended that the town manager and finance staff provide monthly financial updates to officials.