Graham, NC -- Alamance County is owed hundreds of thousands of dollars due to "bid rigging" and "conspiracy" by the former tax administrator and an appraisal company, according to documents filed by Alamance County Attorney Clyde Albright.
The documents were filed on Nov. 5 in an effort to dismiss a complaint from RS&M Appraisal Services, Inc. in which the company wanted $13,750 from Alamance County.
A hearing is scheduled for Monday, Nov. 30 in Superior Court.
The county alleges RS&M, owned by Ronald McCarthy, overcharged the county, and that the county has "vastly" overpaid, more than $320,000.
Albright said in court papers that the overpayments might not have been made, and RS&M's bid might not have been accepted had McCarthy and former Tax Administrator Kim Horton not withheld information.
The county said the contract was obtained by "fraud and misrepresentation." The county attorney said the contract should be declared "void ab initio" by the court.
Horton resigned in May amid controversy over the revaluation process.
Horton worked for RS&M and county simultaneously
Kim Horton presented RS&M's bid to county commissioners on May 30, 2007 and recommended the county enter into an agreement.
The county attorney says Horton made the bid presentation without disclosing that at the time of the presentation and for six years prior, she was an independent contractor/employee of RS&M.
In court papers, the county alleges Horton did so "with knowledge and intent to deceive" the commissioners.
The county attorney said in court documents that the "concealment was calculated to deceive" and that under the circumstances McCarthy should have disclosed his "business and personal relationship" with Horton.
In deposition testimony, Horton admits she had a business relationship with McCarthy and RS&M, which began in 2001.
She admits in her testimony that she received monthly paychecks from RS&M while employed as tax administrator.
RS&M was not the lowest bid. Horton and Ronald McCarthy allegedly knew this and "intentionally withheld this key information" from the commissioners in order to ensure the bid would be accepted by the board, according to court papers.
Horton's alleged deception goes back even further, according to the documents.
She admitted in testimony that she failed to disclose her employment with RS&M during her job interview process for tax administrator, even after the interim tax administrator suggested to her that she should disclose the information.
Prior to Alamance County, she was tax administrator in Chatham County. In testimony, she admitted that she failed to tell the Chatham Board of Commissioners that she worked for RS&M while she worked as tax administrator in Chatham County.
Horton said in her testimony that her oath as tax administrator required her to "not let political or personal influences" influence any decision she made as tax administrator.
In testimony, she admitted she recommended RS&M in part because of her experience with them in Chatham County.
Horton and McCarthy allegedly conspired to overcharge
Alamance County and RS&M entered into contract on June 4, 2007 with a base fee of $275,000 to be paid in 20 equal installments of $13,750,000.
In court documents, Alamance County's attorney alleges that RS&M President Ronald McCarthy and Tax Administrator Kim Horton "engaged in a plan" in which extra contractual monthly invoices were prepared by McCarthy and sent to and approved by Horton.
A required amendment to the contract for the extra invoices was never written or approved, according to documents.
"In the absence of any written approved contract amendment, Ms. Horton was without legal authority to approve any additional invoices," Albright told WFMY News 2.
The county alleges RS&M overbilled the county and has been overpaid by more than $320,000. That's more than 100 percent of the base contract fee. The county has paid $592,327, according to Albright.
A court could award the county as much as $1.7 million, Albright told WFMY News 2, but said it's anyone's guess at this point.
The county attorney said McCarthy and Horton's actions "constitute bid rigging, conspiracy, combination, or unlawful act in restraint of trade." Under the law, any person who engages in that shall be guilty of a felony.
The invoices submitted by RS&M to Alamance County and approved by Horton were higher than estimates for comparable jobs or previous bids on similar jobs in other counties, according to documents filed.
Alamance County's attorney said RS&M's bid might not have been accepted by commissioners had they received full disclosure of Horton and McCarthy's relationship. And, the overpayments to RS&M would never have been made without Kim Horton's involvement in the invoice approval process.
The county is seeking the amount paid, and could potentially receive more.
"Under the provisions set forth in Chapter 75 and 133-28 a court may award treble damages and attorney's fees. So depending on the amount of damages found the ultimate amount could be substantial," Albright said.
WFMY News 2 left a message for RS&M's attorney, Pamela Duffy, on Wednesday. The call has not yet been returned.
Horton's bank records examined
In a separate investigation, investigators obtained copies of Kim Horton's bank records. It's part of the investigation into money missing from the tax department since Dec. 2008.
The lieutenant who requested the warrant to look at her bank records wrote, "there is probable cause to believe" Horton's account "has been used in the commission of a crime and contains evidence of the crime of larceny by employee."
The State Bureau of Investigation is currently handling the investigation.
"I can confirm that the SBI is investigating Kim Horton's activities as tax administrator at the request of the Alamance County District Attorney's Office. The investigation was opened on August 3 and is still underway. We generally aren't able to comment on the details of ongoing investigations," said Jennifer Canada, spokesperson for the NC Department of Justice.
Horton has not been charged with a crime.
WFMY News 2 attempted to reach Horton for comment Wednesay, but the call has not yet been returned.
WFMY News 2