Five Rivers Community Development Corp. spent $105,950 on two consultants who lobbied federal legislators for money and influence, but the nonprofit agency did not report those activities on its federal tax returns, according to a review of Georgetown-based Five Rivers' financial records by The Sun News.
Five Rivers paid $16,600 over 16 months in 2004 and 2005 to Charles Clyburn, the brother of U.S. Rep. James Clyburn, for consulting work.
Five Rivers also paid consultant David Richardson $89,350 between 2002 and 2005 to lobby legislators for grants.
The nonprofit's failure to disclose the lobbying expenses is a possible violation of federal law, according to nonprofit experts.
James Clyburn's staff said Charles Clyburn wanted the congressman to intervene in a dispute between Five Rivers and the S.C. Department of Transportation, which refused to give the nonprofit a permit that would allow construction of a community center.
The DOT never issued the permit.
Charles Clyburn would not discuss the work he did for Five Rivers.
"That's nobody's business but mine," he said when asked what type of consulting work he provided for Five Rivers.
The consultant Five Rivers hired, Richardson, is not a registered lobbyist, according to a congressional database.
The federal Lobbying Disclosure Act of 1995 requires registration for lobbyists who earn at least $6,000 in a six-month period or spend 20 percent of their time lobbying legislators for a client. The civil penalty for failing to comply with the Lobbying Disclosure Act is a fine of up to $50,000.
Minutes of Five Rivers' board meetings show Richardson's responsibilities included lobbying legislators and their staffs for public money.
Richardson, the former head of the Atlantic Beach Community Development Corp., would not discuss his work for Five Rivers. The Atlantic Beach group received $800,000 in federal grants starting in the late 1990s and dissolved in 2001 without making any progress toward development in the town.
"I'm not going to talk to you because I don't think you like black people," he told The Sun News.
Five Rivers' executives, board members and clients predominantly are black.
Beulah White, Five Rivers' executive director, told The Sun News in an interview last summer that she made several contacts with former U.S. Sen. Ernest "Fritz" Hollings' office to lobby for federal funds.
White also met with James Clyburn's staff and with Clyburn at his Washington, D.C., office to ask for help funding Five Rivers' projects, Clyburn spokeswoman Hope Derrick said.
White is not a registered lobbyist. She could not be reached for comment last week.
Five Rivers told the IRS on its tax returns that it did not engage in any lobbying activities during any of the years it operated.
Five Rivers also stated on its tax returns that it has never spent any money on lobbying. The Internal Revenue Service has strict limits on how much money can be spent on lobbying by nonprofits that receive public money.
About two-thirds of the $5 million Five Rivers received over the past decade was from state and federal grants.
The lobbying activities came to light in financial documents recently subpoenaed by the 15th Judicial Circuit Solicitor's Office. The Sun News reviewed those documents under terms of the S.C. Freedom of Information Act. Five Rivers previously had refused to give The Sun News access to its financial records.
Five Rivers shut down in October after a series of reports in The Sun News raised questions about how Five Rivers spent public money.
Sam Livingston, Five Rivers' former board president, could not be reached for comment. He said earlier this month that he did not know what type of work Richardson did for Five Rivers.
Five Rivers' board of directors resigned in October, saying White and her daughter, Chief Financial Officer Dayo Smith, were spending money and selling the nonprofit's assets without board approval.
A family connection
Financial records show Five Rivers paid Charles Clyburn $16,600 in 15 checks written between March 10, 2004, and July 1, 2005.
It was during that period that James Clyburn set aside $145,500 in the federal budget for a community center Five Rivers wanted to build.
White was not happy with the $145,500 appropriation, according to minutes of Five Rivers board meetings, because the money had to be used for purchasing land instead of salaries, travel and other operating costs. Those minutes also state that White had hoped James Clyburn would appropriate $500,000 that Five Rivers could use for operating costs such as salaries.
Charles Clyburn produced the initial architect's drawings for the community center, for which Five Rivers paid him an additional $1,500 in 2003.
Five Rivers also paid $69,653 to an architecture firm led by Charles Clyburn's son for additional work on the community center project.
James Clyburn told The Sun News in August that he did not know family members were involved with the community center project when the appropriation was made in the fall of 2004.
Five Rivers did not get to use the money James Clyburn appropriated because the nonprofit went out of business before its community center was built.
James Clyburn's office was aware that Charles Clyburn worked with Five Rivers as early as June 2004, according to minutes of the nonprofit's board meeting for that month.
Those minutes state that Charles Clyburn represented the nonprofit in a meeting with Dalton Tresvant, a legislative aide to James Clyburn, when a proposal for funding was made for another project the nonprofit wanted to start called H2O Academy.
Tresvant is a grants coordinator for James Clyburn and is the person who takes requests for funding from different groups, Derrick said.
The minutes of the June 2004 meeting refer to Charles Clyburn as Five Rivers' "community liaison." That is the same title given to Richardson in minutes of other board meetings.
"Tresvant was quite impressed by the scope of the proposal and its uniqueness," the board minutes state. "Follow-up from his office will be in two weeks."
It is not clear whether Charles Clyburn lobbied his brother or other lawmakers for funds for Five Rivers, but he is not a registered lobbyist according to databases set up as part of the Lobbying Disclosure Act.
The H20 Academy, which was to provide math and science career opportunities for girls, was never completed.
Trips to Washington
Richardson worked throughout 2002 and 2003 lobbying federal lawmakers on Five Rivers' behalf, according to minutes of the nonprofit's board meetings.
Those efforts helped Five Rivers get a $357,660 budget appropriation, better known as an earmark, from Hollings, according to the minutes.
Richardson also traveled to Washington, D.C., with White in July 2003 to meet with S.C. politicians Sen. Lindsey Graham, Rep. Henry Brown and Sen. Hollings, according to minutes of the board's August 2003 meeting.
"Sen. Fritz Hollings warmly greeted us," White told Five Rivers' board in her monthly report. "We spent a considerable amount of time with Sen. Hollings' staff. We were assured that our appropriation request for 2004 is at the top of his list."
Hollings set aside $994,100 for Five Rivers in the 2004 federal budget.
Five Rivers paid Richardson $19,000 in consulting fees in 2002 and 2003, but the nonprofit's tax returns for those years state that the agency spent no money on lobbying.
Marc Owens, a nonprofit law expert with the Caplin & Drysdale law firm in Washington, D.C., said nonprofits must report any money spent on direct lobbying contact with lawmakers.
"An earmark would be difficult to obtain without direct, rather than oblique, contact," said Owens, who spent 25 years in the IRS' Exempt Organizations Division including a decade as its director from 1990 to 2000.
Lobbying legislators for budget appropriations "certainly appears to constitute precisely the sort of activity that would be considered 'lobbying' for purposes of the [IRS]," Owens said.
The IRS can fine a nonprofit agency as much as $10,000 for failing to include information on its tax returns. If the IRS determines that the information was not included for fraudulent purposes, the individual responsible can be fined up to $10,000 and imprisoned for as long as one year.
Most of the money Five Rivers gave to Richardson for consulting fees was paid in 2005, when the nonprofit paid $70,350 to his company, D.B. Richardson & Associates. It is not clear whether any of that money was used for lobbying. Richardson would not say what services his company provided to earn the money.
D.B. Richardson & Associates is not a registered lobbyist with the federal government. That company, which was registered in Florida, was dissolved last year according to that state's records.
Minutes of Five Rivers board meetings show White was not always happy with the results of the nonprofit's lobbying efforts.
White had hoped to get a $500,000 budget appropriation from James Clyburn in 2004 instead of the $145,500 he set aside, according to minutes of the board's October-November 2004 meeting.
White also wanted to be able to use the money for salaries, travel and other operating expenses, but Clyburn designated it only for the purchase of land.
"Needless to say, we've got a huge deficit for 2005's general operating budget," White told the board in her director's report at the time. "We will work to have the appropriation earmarked for general operating."
White also was not happy that the $994,100 appropriation by Hollings limited the amount that could be spent on salaries, travel and other operating costs to 20 percent. The remaining 80 percent had to be spent on construction costs.
"This is not what we asked for in the original application," White told the Five Rivers board, according to minutes of an April 27, 2004, meeting. White told the board she planned to appeal the award to get more money for operating costs.
White was not able to change either budget appropriation, and federal authorities say Five Rivers ignored spending limits placed on the 2004 grant.
The U.S. Department of Housing and Urban Development, the pass-through agency for the budget appropriations, ordered Five Rivers last month to repay $418,180 of the $994,100 grant because the nonprofit misspent the money on salaries, travel and other operating costs. Five Rivers has until the end of this month to repay the money.
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