MISUSE OF DRUG FUNDING REPORTED

LEXINGTON -- After squeaking through a hard-fought election last year,
Davidson County Sheriff Gerald Hege treated his command staff to a
Christmas dinner at Staley's Charcoal Steakhouse in Winston-Salem.

But when it came time to pay the bill, county taxpayers allegedly picked up
the $394.50 tab.

"Write it off to snitches," Hege reportedly told Maj. Thomas Glisson about
how to justify withdrawing $600 from funds designated for the department's
vice and narcotics unit to cover the meal. "Sheriff Hege did not return any
of the $600 vice money that I gave him on that occasion," Glisson told the
SBI in a recent affidavit. "I do not know what Sheriff Hege did with that
money."

It was not an isolated incident, according to sworn affidavits by seven of
Hege's officers and two former employees.

Their affidavits describe Hege routinely taking cash designated for
undercover drug purchases and informants without accounting for its use. In
some instances, sheriff's employees told the SBI, they were asked to
fabricate receipts to cover up the expenses.

According to one affidavit, the sheriff would often take money, usually
$1,000 or more, before leaving on trips. He also told his staff to pay for
repairs on his souped-up Spider car through the account, SBI affidavits
unsealed earlier this week reveal.

Hege was charged Monday with 15 felony counts, most involving embezzlement
in connection with $6,200 taken during the past six years from the special
drug fund.

Visiting Superior Court Judge W. Erwin Spainhour suspended the sheriff with
pay Monday pending a hearing to determine whether Hege should be removed
from office for misconduct, corruption or neglect of his duties. Hege
posted a $15,000 secured bond and was ordered to have no contact with any
potential state's witnesses in the case.

On Wednesday, Spainhour postponed that hearing from Sept. 29 to Oct. 27
after Hege's attorneys requested more time to prepare an argument.

They will likely challenge many allegations against the sheriff contained
in 67 sworn statements from 34 people, including 28 of his employees.

The county typically appropriates about $20,000 a year for the unit's
undercover drug-buying operations. According to the affidavits, detectives
routinely requested a lump sum, usually about $4,000 quarterly, through the
sheriff's secretary, who submitted paperwork to the county's finance
department. Finance officials would then cut a check made out to Hege, who
would sign it and get someone to cash it. The money then returned to Hege,
who distributed it to his vice unit. After using the cash, they wrote
receipts describing how the money was used.

But in affidavits to investigators, Hege's employees said on several
occasions he did not hand over the whole amount, instead taking $1,000 or
more with little to no explanation.

Todd Kates was a supervisor in the vice unit last June when he learned from
another employee that Hege took $1,000 of a $5,000 check designated for the
unit, according to affidavits taken by the SBI.

"Two weeks later I saw Sheriff Hege in the parking lot and asked him what
he needed the $1,000 for," Kates later told the SBI. Kates said Hege said
he needed the money for a sting operation he was going to do for the "COPS"
TV show. "To my knowledge, this sting operation never transpired, and I do
not know what happened to the money."

Glisson, one of the highest-ranking members in the department, told
investigators that Hege asked him to resign in 2000 when Glisson refused on
several occasions to fabricate receipts justifying how the county fund
money was spent for the prior fiscal year.

"The sheriff instructed me to write off the expenditures to 'informants or
whatever,'" Glisson told the SBI last month.

During a testy confrontation, Hege said he was just "testing me to
determine the extent of my loyalty to him," Glisson said.

County Manager Robert Hyatt said he was concerned by the allegations of
misuse of county money and would investigate whether new policies or
procedures would help maintain better oversight.

Jane Kiker, the county's finance director, said auditors did look into the
fund several years ago but didn't find any problems.

"I don't know if we could have caught it," Kiker said. "Until somebody
comes forward and says things were made up, how would you know?"

She said it is up to the sheriff to make sure the money is being properly
used once a check leaves the finance department.

A day after he took over as acting sheriff, Maj. Dallas Hedrick announced
on Tuesday the creation of a Division of Professional Standards that he
said would provide more aggressive accounting of each employee's actions,
including those with access to the drug-fund money. Capt. Jody Shoaf, a
spokesman for the department, said the department would welcome external
oversight of that account.

"There's no pressure to do anything but what's right," Shoaf said.