Across the state, embezzlement cases continue to rise

The (Columbia) StateSeptember 22, 2012 

COLUMBIA -- The money - gobs of it - was there. More was being added all the time. No one would know if it was gone.

So Brian Butz, athletics director at Lexington County's White Knoll High School, began dipping into an unofficial high school booster club bank account, taking out some $135,000, according to a 2010 arrest warrant issued by the Lexington County sheriff's office.

In the past few years, unfortunately, White Knoll's experience hasn't been all that rare in South Carolina. And the number of public embezzlement cases is continuing to rise.

Public employees are being accused of stealing taxpayer money they've been entrusted with or concocting schemes to bilk the public out of money. They involve all kinds of public agencies, including schools, foundations attached to public entities and magistrate's offices.

"They tend to be people who would be the last ones you would think would do it," Richland County Sheriff Leon Lott said.

Recently, these cases have hit the news at the rate of about one a week:

  • On Sept. 7, Howe Springs Volunteer Fire Chief Shannon Smith was charged with embezzlement for allegedly taking more than $10,000 from the fire department in Florence County between 2007 and 2011. Smith also forged the title of a pickup that the department owned to make it appear the department sold it to him, according to a warrant in the case.

  • On Sept. 14, former Clemson University employee Eli Ker, 29, was charged with stealing $33,000 in money meant for students. Ker had been associate director of fraternity and sorority life.

  • On Thursday, Camden city attorney Charles Cushman was arrested and charged with official misconduct in a seven-year scheme in which he allegedly got people who were charged with low-level drug offenses to make a donation to a city drug fund in return for dropping the charges, according to a warrant. Cushman has not been charged with accessing that money, and no one has identified a motive as yet.

  • Most of the time, as in the above cases, it is SLED that brings, or helps bring, criminal charges against suspected embezzlers. The State Law Enforcement Division has several hundred detectives and specialized law officers who can deploy around the state.

    Often, SLED is called because of its expertise. But since it's a statewide agency, it can bring an independence to a local investigation that a local law agency can't. Many misuse of public money cases happen in small towns or counties where everyone knows each other, where a police detective might go to the same church as his suspect, or his child to the same school as the suspect's child.

    "Police chiefs and sheriffs often call us in to avoid the appearance of conflict of interest," says SLED Chief Mark Keel, who has made prosecution of public corruption cases by his agency a priority.

    The number of cases involving the misuse of public money is rising.

    In 2010, SLED made 107 embezzlement, breach of trust and official misconduct charges. In 2011, SLED made 127 charges in those three categories.

    So far this year, SLED has made 119 embezzlement, breach of trust cases and official misconduct charges.

    "There's plenty of time left in the year to have more of these cases than last year," Keel said.

    SLED doesn't keep detailed statistics on those charges, but Keel said most of the cases involve a public agency or public money. Embezzlement and breach of trust nearly always involve public money, and official misconduct charges often involve money, he said.

    John Crangle, executive director of the watchdog group Common Cause of South Carolina, said the cases the public knows about "are just the tip of the iceberg."

    "My guess is we only learn about 10 to 20 percent of these cases," Crangle said. "These thefts don't just take place one time. These people take money over a period of years and get quite good at it."

    A way to stop it?

    The lack of effective whistleblower laws that would give people who know about the thefts a financial incentive to tell authorities about a thief's illegal activities makes it easier for embezzlers, Crangle said.

    And all too often, the bank accounts where public money is held lack effective monitoring controls, he said.

    State Sen. Jake Knotts, R-Lexington, who tried but failed earlier this year to get a tough state whistleblower law passed, said he'll try again in next year's legislative session.

    "We have to protect the public's money on the front end when we're appropriating it, and then make sure, after it's allocated, that it's not stolen," Knotts said.

    Knotts said he got interested in the topic several years ago, after reading about how two Lexington County sisters defrauded the federal government of more than $20 million by selling the government material for the Afghanistan and Iraq wars at vastly inflated prices.

    One sister, Charlene Corley, was sentenced to six years in federal prison. Another, Darlene Wooten, committed suicide after learning she was being investigated. In one instance, their company was paid $998,788 for shipping two 19-cent washers.

    SLED doesn't bring all the cases.

    In the 2010 White Knoll High School case involving Butz, for example, the Lexington County Sheriff's Department made the case, which involved a longstanding but neglected bank account once used by school athletic boosters. According to law officers and a warrant in the case, Butz deposited money meant for sports in the account and used a debit card to take money out in cash.

    The money was supposed to go into another account, where it would be used to buy sporting equipment and help athletic teams travel, law officers said.

    The break in the case came when the account was overdrawn and bank officials contacted school officials to ask about the situation. In short order, school officials contacted the sheriff's department.

    "It was pretty much an open and shut case," said Sam Gunter, the detective who investigated the case. He is now a sergeant over community services in the county's west region.

    A spokesman for the 11th Judicial Circuit Solicitor's office said last week the case will go to court by the end of the year. "We will have a disposition on the case," the spokesman said.

    Theo Willams, Butz' attorney, did not return calls for comment.

    "Sometimes people are trusted too much," Lott said. "And maybe the normal checks and balances are lax - and, lo and behold, it happens."

    Before his death in 2010, Orangeburg County Sheriff Larry Williams pilfered tens of thousands of dollars from public coffers, according to a lawsuit filed in May against the estate of the late law enforcement chief.

    Orangeburg County alleges that Williams took money that his department had received as reimbursements for participation in state and federal task forces and put it into personal bank accounts.

    Current Sheriff Leroy Ravenell audited the office's books after Williams died and found more than $200,000 that had not been included in financial statements. According to the suit, Williams spread the money among 11 bank accounts and used it for personal expenses, such as paying off a $60,000 loan on an RV.

    In August, two other sheriff's departments brought criminal embezzlement charges against county residents. In Berkeley County, deputies charged a former Hanahan human resources director with embezzling $10,000 in city funds. In Union County, the sheriff's department charged two former county magistrate's employees with embezzling more than $10,000 in public funds.

    Sometimes, the S.C. Attorney General's Office gets involved in public corruption cases, including:

    Last November, David Madison, who controlled a charitable trust meant for University of South Carolina students, pleaded guilty in Richland County criminal court to breach of trust in the disappearance of some $500,000 in trust funds meant for students.

    Last October, Marion School District 2 superintendent Nathaniel Miller pleaded guilty to embezzling some $487,000 in funds from his school district. He and another man had hatched a scheme involving fictitious billings to the district.

    In July, Abby Nolind pleaded guilty to embezzling some $27,000 from a Barnwell County magistrate's office.

    A priority

    Attorney General Alan Wilson said last week that public integrity cases - which include theft of public money - are a top priority with him.

    Wilson is in the process of talking with the heads of SLED, the S.C. Ethics Commission, the Department of Revenue and the Inspector General to see if they can't come up with a more efficient way of handling some of these cases.

    Bill Nettles, the U.S. Attorney for South Carolina, also said his office is making white collar crime, which includes the theft of public money, a high priority. Turning to the FBI and other federal law enforcement agencies, with the massive and sophisticated resources they can bring to a criminal case, is sometimes the best way to handle a case, he said.

    The number of federal lawyers working on white collar fraud cases has doubled in recent years, said Nettles, who predicted some major indictments in coming months.

    One of the biggest U.S. Attorney cases in recent years, he said, involved former S.C. Department of Social Services finance director Paul Moore, who helped orchestrate a major scheme involving dozens of people who cashed checks written by the state Department of Social Services and then returned many of the proceeds to Moore and an accomplice.

    Moore is now serving a 10-year prison sentence.

    No one keeps track in South Carolina of the total number of embezzlement and breach of trust cases, how much is stolen and by what method or where the thefts occur.

    Wilson said it's impossible to know just how much public money is being embezzled at any given time.

    "If we are catching as many as we are, you can only imagine how many we're missing," Wilson said. "People do it for years and years before they get caught."

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