‘Confidential’ complaint with US Inspector General was ‘of a similar nature’ to NCDHHS findings in investigation of Robinson’s wife’s nonprofit

RALEIGH, N.C. (WGHP) — Complaints from a confidential source to a federal office regarding childcare centers predate the North Carolina Department of Health and Human Service’s findings of serious issues with a nonprofit run by the lieutenant governor’s wife, according to internal documents provided by the NCDHHS.

FOX8 has obtained documents from the NCDHHS showing the correspondence between the USDA Food and Nutrition Service’s Southeast Regional Office and the NCDHHS over the summer.

In emails, the NCDHHS indicated that a complaint concerning Balanced Nutrition, Inc. was submitted on June 27 to the U.S. Office of the Inspector General’s hotline regarding two childcare centers that were meant to be serviced by BNI.

NCDHHS confirmed they received the complaint the following day, though the OIG did not make the complaint public and did not disclose the identity of who submitted the complaint.

The complaint reportedly included “various allegations regarding two centers that were previously under the sponsorship of Balanced Nutrition, Inc. and alleges a lack of monitoring practices by the previous Sponsoring Organization,” according to an e-mail dated July 31.

The NCDHHS added, “As this complaint is confidential and the two child care centers referenced are not named, the allegations regarding these specific centers cannot be confirmed. However, the most recent compliance review of Balanced Nutrition, Inc. identified findings of a similar nature as those indicated in the complaint for other child care facilities included in the review.”

NCDHHS did include a timeline of their attempts to review Balanced Nutrition Inc., writing:

Due to the number of findings in the 2022-2023 compliance review, Balanced Nutrition, Inc. was included in the subsequent review schedule, as has been done in similar circumstances. A compliance review for the Federal fiscal year 2023-2024 was announced to Balanced Nutrition, Inc. on March 1, 2024, and scheduled to begin April 15, 2024. Prior to the announced Sponsoring Organization on-site review for 2024, facility unannounced reviews were conducted at five Family Day Care Homes and five Child Care Centers. The on-site portion of the Sponsoring Organization’s review was challenging. The requested documentation was not fully made available when the review team arrived at the offices of Balanced Nutrition, Inc. nor after additional requests. The State agency made multiple attempts to schedule an in-person exit conference, by email, telephone, and written communication, with no response.

The State agency issued the Finding Report and Disallowance forms to the Sponsoring Organization in three mailings. The first mailing July 24, 2024 pertained to the facility findings and disallowances. The second mailing on July 26, 2024 pertained to the Sponsoring Organization findings and disallowances. The third letter related to the compliance review was a summary document with the total disallowance due to findings that the State agency identified. Disallowances were accompanied by appeal rights. The total owed back to CACFP is calculated at $132,118.86. As of the writing of this response, no appeal request(s) have been received.
Due to the number and type of findings, including repeat findings from the prior compliance review, a Notice of Serious Deficiency was issued on July 24, 2024.

The documents sent to Balanced Nutrition at the end of July detail serious deficiencies, as well as the six-figure disallowances potentially owed to the program.

The second accusation outlined in the June OIG complaint is that “Balanced Nutrition, Inc. has family members on its Board of Directors that were not disclosed as employees at less than arm’s length.”

In an email to NCDHHS, the USDA FNS said, “A search of the FNS Instruction 796-2 rev 4 reveals over 40 references to arms-length and less-than-arms-length transactions. The reference below is specific to ‘purchased services – other,’ but other categories appear similar.”

NCDHHS reported that Balanced Nutrition, Inc. “did not disclose less-than-arms-length transactions, including family members as employees, to the state agency” in its most recent compliance review for Federal Fiscal Year 2023-2024.

The email elaborated on the less-than-arms-length rules, writing:

“The failure of the institution to identify related party transactions, less-than-arms-length transactions, ownership interests in equipment, supplies, vehicles and facilities or disclose any other information to the State agency that inhibits the State agency’s ability to make an informed assessment of the allowability of a particular cost will result in the disallowance of the cost and may subject the institution, its principals, employees, consultants or others to the administrative and legal remedies available to the State agency and FNS. If the State agency determines that the institution’s failure to disclose pertinent information was not deliberate, the State agency may permit the institution to claim and retain CACFP reimbursement up to the amount that would have been allowed had a full and accurate disclosure been provided to the State agency; however the State agency cannot permit the institution to claim unallowable costs, retain Program funds earned as a result of claiming unallowable costs, or use nonprofit food service account funds to pay for unallowable costs.”

Tax documents filed by Balanced Nutrition, Inc. show that in 2022, the last year for which it filed taxes, the nonprofit spent $172,796 in employee salary. $23,048 of that was paid to Hill and Robinson’s son Dayson Robinson, who was listed as working for the organization part-time. The nonprofit lists Hill and Cassaundra Spinks as its two other employees. No other employees are listed.

Campaign Response

The Robinson campaign has largely dismissed the investigation into Balanced Nutrition Inc. as an attack on Robinson’s gubernatorial aspirations, characterizing it as purely political. Robinson drew attention to opponent Josh Stein’s wife Anna, who has worked for the NCDHHS as a legal specialist, albeit in a different division.

In documents obtained by CBS17, Hill said that the compliance review felt like an attack, writing, “As an organization, there are numerous things that have happened and been documented that makes us feel as if we are the target of some type of vendetta, be it personal or political.”

“These findings are politically motivated at the core,” Mike Lonergan, the communications director for Robinson’s campaign, said on July 30. He has referred back to this statement in subsequent requests for comment. “Last year, an independent auditor issued a report on Balanced Nutrition, Inc. (BNI) with no material findings. Yet as soon as Mark Robinson announced his campaign for governor in April 2023, the Democrat-run state agency started moving the goalposts. Just as they are doing against President Trump, Democrats are weaponizing the bureaucracy to grind a political ax against their opponents. Needless to say, BNI is aware of these findings, vehemently disagrees with them, and is looking forward to challenging them on appeal.”

Lonergan provided the independent auditor’s report he referenced. The report, conducted by Florida-based accounting firm BAS Partners, was published in January 2023 and covers 2021. The report does not include information on the 2022-2023 year, which is when NCDHHS made its initial findings that would prompt BNI’s subsequent 2023-2024 compliance review.

“In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Balanced Nutrition, Inc. as of December 31, 2021, and the changes in its net assets and its cashflows for the year ended in accordance with accounting principles generally accepted in the United States of America,” the audit reads.

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