EDITOR’S NOTE: This story has been corrected to show that former North Myrtle Beach lawyer Chad Hatley pled guilty to three misdemeanor tax charges.
William Bailey, the former public safety director in North Myrtle Beach, last week won another battle against the city for access to public information, and Bailey’s lawyer said the city appears to be adopting a new attitude toward compliance with the S.C. Freedom of Information Act.
“I do feel that they are being more open,” said Kenneth Moss, a Little River lawyer who represents Bailey. “It’s positive that they have seemingly had a change in position” toward access to public records.
Bailey had been seeking disciplinary records for police officers involved in a Sept. 14, 2010, incident in which former police Sgt. Jeff Senter had a heated confrontation with Melissa Edge, wife of state Rep. Tracy Edge, R-North Myrtle Beach. Bailey wanted disciplinary action reports for police Lt. Mike Baldasarre and Rick Buddelmeyer, who was acting public safety director at the time.
Baldasarre and Buddelmeyer, who is now the city’s police chief, were Senter’s supervisors on the night the confrontation with Melissa Edge took place. Senter was fired for his actions and Bailey – who is suing the city in a separate case for unlawful termination – wants to know what actions the city took against his supervisors, saying that information could be helpful to his employment case.
Bailey filed a lawsuit in May seeking the disciplinary records, among other information. Moss said the city at first refused to supply the documents, so he filed a motion asking a state judge to force the city to turn over the records. City Attorney Chris Noury ultimately supplied some of the requested information to Moss just minutes before a court hearing was to take place last week in Conway, and the city is in the process of obtaining other records that Bailey has requested.
“He [Noury] provided the report to Ken because, after further study of existing case law, he came to believe that that particular document should be released under the terms of the S.C. FOIA,” said city spokesman Pat Dowling.
The Sun News also has requested the disciplinary records and Dowling said those could be available this week.
This is the second victory for Bailey in his fight against the city for public documents.
A state judge forced the city last year to release a nearly hour-long police dashcam video showing the confrontation between Senter and Melissa Edge. The city had claimed the video was protected from public disclosure because it involved a personnel matter. Bailey and The Sun News sued the city, winning the video’s release and $47,802 in legal fees.
“Maybe the city has a new attitude toward public information,” Moss said last week, adding that “William’s situation would have been much different” if the current attitude had existed under previous City Manager John Smithson’s tenure.
Moss has blamed Smithson’s refusal to release public information and address media concerns about mistakes the city made during an April 2009 wildfire for Bailey’s eventual forced retirement. Bailey has said the city forced him into retirement as a scapegoat for those mistakes and in an effort to stop media scrutiny of the city’s operations.
Smithson did not return a telephone call seeking comment last week.
Smithson has said he forced Bailey to retire in April 2010 because Bailey lied to him about the storage of his police handgun on the night it was stolen from his unlocked truck. Bailey says he did not lie to Smithson and that his statements to city officials matched those he made in an incident report filed with the Horry County Police Department.
Bailey is suing the city for wrongful termination and is seeking unspecified damages. That lawsuit is pending and state Judge Steven John is scheduled to review the status of the case for a possible scheduling order, Moss said last week.
Thompson pleads guilty on mortgage fraud charge
Gaither B. Thompson II – who was accused last year of taking part in a mortgage fraud scheme involving his brother-in law, Ford Shelly – pleaded guilty in federal court last week to a misdemeanor charge of unlawfully receiving compensation in a real estate transaction involving the U.S. Department of Housing and Urban Development.
Thompson will be sentenced at a later date. The charge carries a maximum sentence of one year in prison and a $100,000 fine.
Thompson originally had been charged with filing false information on a loan application for the Pineapple Bay condominium project in Myrtle Beach, which was developed by Shelley. In an indictment last year, prosecutors said Thompson received kickbacks totaling $161,247.74 from Shelley, the project’s developer. Prosecutors will drop that charge against Thompson in exchange for the guilty plea.
The guilty plea follows Thompson’s request last month to exclude from court hearings all statements he made to federal investigators in 2009, when the fraud probe was in its early stages. Thompson signed an agreement with the FBI at that time that said “no statements made or other information provided by [Thompson] will be used against [Thompson] in any civil or criminal case,” unless the statements prove to be false or Thompson fails to cooperate with investigators.
A judge had not ruled on Thompson’s request by the time the plea agreement was reached.
Two other condo buyers – Linda Audino and Anthony Audino – have been charged with conspiracy to commit wire fraud related to their Pineapple Bay condo purchases. That charge carries a maximum sentence of 20 years in prison and a $250,000 fine.
Shelley, who is being tried separately, pled guilty in November to one felony charge of mail fraud related to the Pineapple Bay project. Shelley – who faces a maximum sentence of 20 years in prison and a $250,000 fine – told The Sun News that he agreed to the guilty plea even though he is an innocent victim of a mortgage broker who misled him about the legality of loan programs used to sell the condos.
Most of the buyers at Pineapple Bay included Shelley’s family – including Shelley’s wife, Gina, and Thompson – and friends or business associates. All but one of the condo loans wound up in foreclosure and most of the buyers never made a payment on the mortgages, real estate and court documents show.
Sentencing dates for Thompson and Shelley have not been scheduled.
Hatley plea deal leads to three misdemeanors
The S.C. Attorney General’s office dropped seven felony charges against former North Myrtle Beach lawyer Chad Hatley and reduced another felony charge to a misdemeanor in exchange for Hatley’s guilty plea last month to three misdemeanor charges of failing to pay state income taxes and failing to pay state employee withholding taxes, according to court records.
Judge Edward Cottingham sentenced Hatley to three concurrent one-year jail sentences or a $5,000 fine, as well as 15 days of public service. Hatley also must pay restitution to the S.C. Department of Revenue.
Hatley was arrested on Sept. 23 and charged with two counts of income tax evasion, two counts of failure to file income tax returns and six counts of failure to collect or pay withholding taxes.
According to a S.C. Department of Revenue news release, Hatley failed to file individual income tax returns for 2005 and 2006, when he earned $461,816 in gross income and owed a tax of $21,599. In addition, Hatley failed to timely file tax returns for 2007 and 2009, when he earned $164,408 in gross income.
Also, as sole member of the Hatley Law Firm LLC, Hatley failed to truthfully account for and remit over $11,826 of state income taxes withheld for the quarters ending Dec. 31, 2005 through June 30, 2009. During that time period, the company deducted $17,562.22 in state income taxes from employees’ wages but remitted just $5,735.53 to the revenue department.
Hatley was suspended from his law practice by an order of the state Supreme Court on Sept. 28
.
Judge dismisses city’s pool enclosure suit
A federal judge last week dismissed a lawsuit filed by the city of Myrtle Beach against several hotels over their continuing use of pool enclosures that puts the city’s flood insurance at risk.
Judge Bryan Harwell, in an order filed Tuesday, said the hotels cannot be held individually accountable for federal rules that the city as a whole is supposed to follow. In addition, Harwell said the city’s lawsuit does not belong in federal court because it alleges violations of a city ordinance that bans the pool enclosures. The city’s ordinance should be enforced locally or in state court, Harwell said.
The city filed a lawsuit against 11 properties in 2010, saying the hotels failed to meet a Nov. 1, 2010, deadline to comply with federal rules prohibiting hard-structure pool enclosures in the flood plain.
Many oceanfront hotels traditionally have enclosed their outdoor pools during winter months so visitors can enjoy them during cold weather. The Federal Emergency Management Agency pointed out the violation to city officials in 2007 and gave Myrtle Beach until 2010 to comply with the federal rules. Non-compliance could put the city’s ability to obtain federal flood insurance at risk.
The city, in its lawsuit, asked a judge to declare that the hotels are in violation of regulations enacted by the National Flood Insurance Act. Harwell, however, said the federal rules apply to communities – such as Myrtle Beach – and not to individual businesses.
Harwell’s decision cannot be appealed, and city spokesman Mark Kruea said the city has not decided whether it will pursue further legal action in state court.
“We’re still thinking about our response,” Kruea said Friday.
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