Learn the eviction procedure for your area, perhaps contact a lawyer in the field to help you with this one, and get the fraudster you're currently housing out on the sidewalk to sleep in a cardboard box where they belong.You're going to lose plenty of money here, but this will never happen to you again, and you can minimize your losses if you move as quickly as possible.

The standard legal procedure, as far as I understand in NC is the landlord must make reasonable effort to re-rent the property (which I will), and any vacant time till new tenants are found must be paid by previous tenants.

Quote from @Brandon Larson: It's important to have established policies and procedures, but I wouldn't put a lot of effort into that with only a duplex under management.

That means having procedure and protocol for every situation--or at least, every common situation. 

The PM should be an expert on state law, and they should have policies and procedures in place to handle these situations.

If you're running a large portfolio then you would have policies and procedures.

But for many people, it is one of a number of sources of deal flow, to add to MLS listings, wholesalers, direct owner outreach, auction, etc.Assuming you are specifically talking about sheriff auctions, just make sure you familiarize yourself with the general procedures for the auction.  

You should consult a real estate attorney or tax advisor to handle the legal and procedural details.From a tax perspective, there are several implications.

Get some policies and procedures in place.

For instance, what are the rules around security deposits, eviction procedures, or property maintenance?