Audit of Oktoberfest beer sales leads to fraud investigation

A volunteer serves beer during Oktoberfest in 2018. The Hickory Police are investigating claims the Greater Hickory Jaycees underreported the beer sales to the Hickory Downtown Development Association.

The Hickory Police Department has opened a fraud investigation into allegations beer sales from Oktoberfest in 2018 were underreported by thousands of dollars.

The Greater Hickory Jaycees sold beer at the festival. Police have not identified the subject or subjects of the investigation.

Julie Owens

Owens

Julie Owens, president of the downtown association, said she turned over an audit of the 2018 beer sales to police.

The audit analyzed receipts for beer purchased and returned to Olde Hickory Brewery and United Beverages, Owens said.

Owens said even when a 10 percent product loss was factored in, the audit showed beer sales were at least $10,000 higher than reported by the Jaycees.

When asked about the case, Hickory police released a two-page report listing the date the incident was reported as Aug. 19. The report contains few details, but does say a downtown association “representative believes fraud was committed.” The amount listed on the report was just under $2,600.

The loss to the downtown association would be less than the total amount that was possibly underreported. This is because the downtown association takes 20 percent of the gross alcohol sales.

Hickory Police Capt. Jeff Young declined to comment further on the investigation other than to say they “are in the very early stages of the investigation.”

Colleen Anderson

Anderson

Jaycees President Colleen Anderson said Friday the organization has not heard from the police or the downtown association regarding the investigation.

“We do not have any further comment on the matter until we have more information,” Anderson said.

The investigation is the latest development in a dispute between the downtown association and the Jaycees that has been going on for months.

Even before the downtown association had completed the audit it was clear the Jaycees would not be serving beer at this year’s Oktoberfest.

The Jaycees have served beer at Oktoberfest since the festival began 34 years ago. The organization used the proceeds for charitable efforts including the Christmas for Teens program, Easter egg hunt prizes and donations to nonprofits like the Hickory Soup Kitchen.

However, Anderson said she declined to sign this year’s contract because of changes she thought were unfair to the Jaycees.

Aside from increasing the fee the Jaycees would pay the downtown association from 20 percent to 30 percent, the new contract also included new reporting requirements for the Jaycees.

The Jaycees would have been required to give cup counts and cash receipts for beer sales. They would have also been required to hire an independent auditor for the beer sales.

Anderson outlined her objections in notes written in the margins of a copy of the new contract. The volunteers are not able to write receipts because of the number of transactions they have to handle, Anderson said.

Anderson said the Jaycees have provided deposit slips to the downtown association when those records have been requested. She said the audit was an “unnecessary expense.”

“We are happy to provide a cash breakdown as in years past, but we will not pay for an independent audit,” Anderson said.

The downtown association subsequently lowered the fee increase from 30 percent to 27 percent but left the other provisions in.

Once the Jaycees declined to sign the contract, the downtown association decided to take over beer sales at the festival.

Owens said she thought the Jaycees' reaction to the new requirements, particularly the audit requirement, was disproportionately negative compared to the scope of the changes.

Owens said the Jaycees have not allowed representatives of the downtown association to be present when the Oktoberfest money was counted in the past.

“All they’ve ever done is said, ‘Here’s what we made and here’s your share,’” Owens said.

Anderson disputes that.

“It was in our contract that they be allowed to be present if they wanted to be, and they could request copies of bank deposits etc. if they chose to,” Anderson said.

Anderson added that she has provided information in the past when the downtown association has asked for it.

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Kevin Griffin is the City of Hickory reporter at the Hickory Daily Record.

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