The federal government has given Five Rivers Community Development Corp. until the end of this month to explain how it spent nearly $1 million in public money, much of it set aside for construction of a community center in Georgetown County.
Five Rivers has told the U.S. Department of Housing and Urban Development that it is making progress toward building the community center, according to documents obtained by The Sun News.
However, the community center project has been on hold for nearly two years and progress that Five Rivers claims in its reports to HUD has not occurred.
HUD's request for proof of how the money has been spent is the latest in a series of inquiries into Five Rivers' finances. The S.C. Secretary of State's office, 15th Circuit Solicitor
Greg Hembree and Five Rivers' board of directors also are conducting investigations of the nonprofit agency.
Those investigations were prompted by a series of reports in The Sun News that questioned financial and management practices at Five Rivers.
Beulah White, Five Rivers' executive director, has not responded to repeated e-mails and telephone calls from The Sun News and could not be reached for comment.
Sam Livingston, president of Five Rivers' board of directors, declined to comment.
Documents obtained through the federal Freedom of Information Act show Five Rivers has spent $617,000 of the $994,100 set aside for the community center in a 2004 federal budget appropriation administered by HUD.
Five Rivers' financial documents show $71,653 has been spent on the community center project.
It is not clear how the remaining $545,347 has been spent.
HUD, in a Sept. 29 letter to Five Rivers, also asked for proof within 30 days of how the agency spent a $357,660 budget appropriation it received in 2003.
Five Rivers' grants could go into default if public money has been misused, according to HUD regulations. If that happens, HUD could cancel the grants, force repayment of misspent money or pursue criminal charges.
HUD seeks details
Five Rivers also must provide to HUD by the end of this month a detailed account of its progress toward building the community center, HUD spokesman Brian Sullivan said.
The community center project has been stalled since January 2005 because Five Rivers cannot get a state permit to start construction on the land it owns along S.C. 521 near the intersection of U.S. 17 Alternate. Five Rivers has tried unsuccessfully to find another site for the project.
However, Five Rivers has told HUD for more than a year that construction is almost ready to begin at the S.C. 521 site. Earlier this year, Five Rivers blamed "poor weather and a backup of current county projects" for delays in construction.
White and Dayo Smith, the agency's chief financial officer, signed the semiannual progress reports that were sent to HUD. Smith is White's daughter. The only other Five Rivers employee is a receptionist.
Sullivan said HUD will review Five Rivers' responses at the end of this month to decide what, if any, action should be taken.
"We'd be getting ahead of ourselves to say anything at this point," Sullivan said. "Right now, we're seeking additional information from Five Rivers."
The grant, funds
Former U.S. Sen. Ernest Hollings gave Five Rivers the $994,100 budget appropriation for the community center in 2004.
Hollings also gave Five Rivers the $357,660 budget appropriation in 2003.
Both grants were administered through HUD.
Hollings, who has an office at the Medical University of South Carolina, was out of the country and could not be reached for comment.
The application for the 2004 grant says $198,820 can be used for architectural, engineering and administration costs related to the community center. The remaining $795,280 is for construction costs.
White signed that application in December 2004, agreeing to use the money for those purposes.
Five Rivers started withdrawing money from that grant in February 2005, according to HUD records. The agency has made 12 withdrawals, taking $617,000 of the $994,100 that is available.
The only money Five Rivers has documented spending on the community center is $2,000 toward mortgage payments on the S.C. 521 land and $69,653 for architect's drawings.
Monthly operating costs at Five Rivers average about $30,000, according to the agency's financial documents. That matches the withdrawals Five Rivers made from the grant account between April 2005 and June 2006.
Five Rivers, which also took $200,000 from the account in February 2005, stopped withdrawing money after June, when The Sun News started questioning the agency's financial practices.
Five Rivers told HUD in semiannual progress reports from August 2005 to February that construction of the community center was about to begin, although the agency has known for almost two years it can't build at the site.
"We are still in the process of laying elevation pads, placing berms," the agency's reports to HUD in August 2005 and February state.
One of the requirements for getting the 2004 grant was that Five Rivers had to construct a berm between its land and an adjacent Georgetown County fire station. The berm was to act as a thermal barrier should a diesel tank at the fire station ignite.
No berm has been constructed on the Five Rivers site.
Ray Funnye, Georgetown County's director of public works, said no construction has started at the Five Rivers property.
Georgetown County's public works department had agreed to provide labor for initial site work for the community center project.
"We've just been waiting on further word from them [Five Rivers]," Funnye said.
The 2003 budget appropriation to Five Rivers, in the amount of $357,660, was supposed to be used to help provide affordable housing, jobs and economic development opportunities for Georgetown County's low- to moderate-income residents.
Five Rivers spent all of that money in one year, according to HUD records.
Documents show more than half of the 2003 grant - $180,500 - went toward salaries for White, Smith and other Five Rivers employees.
Another $75,000 was spent on employee benefits, insurance, training and office costs.
Five Rivers said it spent $71,080 of the 2003 grant for consultants. It is not clear how much of that money was paid to White and Smith. White said in an interview this summer that she and her daughter provide much of the consulting work for participants in the agency's programs.
The remaining $31,080 was used to pay for a minority business expo and advertising, according to the grant document.
Five Rivers had wide discretion about how it could use the 2003 grant because the stated purpose - for economic development and affordable housing - was more general than the following year's community center grant.
Five Rivers promised in its grant application that the $357,660 would result in the creation or preservation of 75 jobs and the creation or preservation of 25 businesses.
It is not clear from the agency's progress reports whether those goals were met.
Five Rivers said in those reports that 86 people participated in the agency's job-training classes during the grant period. Five Rivers said those participants created five new businesses with "several people poised to open businesses in the near future."
A report Five Rivers included with the 2003 grant application said the agency's classes had created or preserved 157 jobs. A year later, Five Rivers told HUD in another report that the agency's classes had created or preserved 210 jobs.
That is a difference of 53 jobs, or about two-thirds the number Five Rivers promised in its 2003 grant application.
Five Rivers Community Development Corp.
What it does | The nonprofit agency's current programs include a seven-day class about starting a business, which is taught four times a year; a four-day class about buying a home, which is taught twice a year; one-day credit counseling sessions offered three times a year; and a $50,000 revolving loan account for small-business owners.
Salaries | Beulah White, who helped found Five Rivers in September 1995, received a 91 percent salary increase - from $43,500 to $83,039 - between 2000 and 2004, the most recent data available.
Dayo Smith, White's daughter and the agency's chief financial officer, has had salary increases of 87.5 percent since she joined the agency in 2000 - from $26,000 to $48,755 this year.
Five Rivers' board of directors cut those salaries by 50 percent last month pending a review of the agency's finances.
Travel | White, Smith and other Five Rivers employees have spent $102,496 on travel since 1996, including $70,937 in travel-related expenses between 2001 and 2004. For many of those trips, there is no documentation showing how the travel related to the nonprofit's purpose.
Other expenses | White and Smith receive health insurance paid by Five Rivers and White is allowed full-time use of the agency's Volvo automobile.
Lack of oversight | White and Smith regularly write checks to each other from Five Rivers' bank account, with no apparent independent oversight. White and Smith also approve each other's expense reimbursements.