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Spending muddled, lavish at nonprofit

Five Rivers Community Development Corp. over the past 20 months has spent nearly half of the $1.35 million in federal budget appropriations the nonprofit agency received in 2003 and 2004.

That public money has been used to cover salaries, travel and other costs, according to a review of the agency's financial documents by The Sun News.

The financial review also shows that the S.C. Department of Commerce did not give $200,000 in public money to Five Rivers in 2004, though the grant was shown as revenue on Five Rivers' financial audits and federal tax return.

And Plantation Federal Bank did not give donations of $5,000 to Five Rivers in 2002, 2003 and 2004, although those donations were reported on the agency's annual budget audits.

Beulah White, the nonprofit agency's executive director, could not be reached for comment on the grant discrepancies.

Sam Livingston, the board's president, said he does not want to comment until after the board has had more time to investigate the agency's finances.

"We're about to launch some studies of our own and when they are completed we will be glad to sit down with the press and discuss them," Livingston said Thursday. The board ultimately is responsible for the agency's finances and operations.

White and Dayo Smith, the agency's chief financial officer, told Five Rivers board members during their May 23 meeting that the state commerce department money was available to help build a proposed community center in Choppee.

That grant expired months before that board meeting, according to commerce department spokeswoman Rose Dangerfield.

Smith, who is White's daughter, also told board members on May 23 that the agency still had "the two appropriations from the U.S. Department of HUD."

There is only $377,100 left from the $1.35 million in federal appropriations, said Brian Sullivan, a spokesman for the U.S. Department of Housing and Urban Development, which is a pass-through agency for Five Rivers' appropriations.

White told The Sun News in June that there was nearly $700,000 left.

Five Rivers has spent $974,600 of the federal appropriations as of Thursday, Sullivan said. It is not clear how much of that money had been spent when the board met on May 23.

A third federal budget appropriation, for $145,500 in 2005, is available, but Five Rivers has not requested the money. That appropriation can only be used to buy land, not to cover salaries or other costs, according to federal budget documents.

Federal dollars

Five Rivers received federal budget appropriations of $357,600 in 2003 and $994,100 in 2004. There is little federal oversight of budget appropriations because members of Congress designate the money to go directly to recipients without any review process.

The two appropriations that Five Rivers has been spending came from the U.S. Senate. It is not clear whether former Sens. Strom Thurmond or Ernest Hollings made the 2003 appropriation. Hollings made the 2004 appropriation, according to White and federal budget records.

Thurmond died in 2003. Hollings, who retired from Congress in 2004 and has an office at the Medical University of South Carolina, did not return calls this week.

The 2003 and 2004 appropriations can be used for anything related to "economic development and affordable housing," according to federal budget documents. That includes paying salaries for White and Smith, who teach classes about those topics to Georgetown County's low- to middle-income residents.

Five Rivers' financial audits show $124,532 of that money was spent in 2003.

Another $617,000 was spent since Jan. 1, 2005, according to Five Rivers' financial statements.

It is not clear how much of the remaining $233,128 was spent in 2004, 2005 or this year because the agency's 2005 tax form has not been filed.

Five Rivers does not need approval to withdraw money from the appropriations as long as the withdrawal is less than 70 percent of the total amount that was granted, Sullivan said.

Five Rivers must submit reports twice a year briefly outlining how it is using the money. Five Rivers must keep documentation backing up those reports, but HUD does not review that documentation unless it suspects there is a problem, Sullivan said.

Sullivan would not say whether HUD will review Five Rivers' documentation.

State money

The $200,000 grant that Five Rivers sought from the S.C. Department of Commerce initially was approved in 2004 pending answers to some questions the department had about how Five Rivers would use the money.

That Rural Infrastructure Fund (RIF) grant was to be used for the agency's community center, but the funding expired in 2005 because Five Rivers would not answer the department's questions, according to department spokeswoman Rose Dangerfield.

"Typically, our grants are to be used for infrastructure costs," Dangerfield said. "We usually don't give grants that help pay for salaries or operating costs."

Dangerfield said there also were questions about how Five Rivers would ensure the community center would only be used by the low- to middle-income residents the nonprofit is supposed to serve.

Smith, Five Rivers' chief financial officer, told the agency's board during its May 23, 2006, meeting that "we still have the the RIF fund and the two appropriations from the U.S. Department of HUD." By "RIF fund," Smith meant the commerce department grant the agency never received.

According to Five Rivers' financial audit, that $200,000 grant was included on the company's 2005 tax return, which showed income of $411,508.

The agency had $445,571 in expenses in 2004, according to the tax return. More than half of those expenses went to the company's management: $203,565 for salaries; $18,174 for travel; $39,069 for health, automobile and other insurance for White, Smith and the agency; and $15,286 in lease payments for a Volvo automobile the agency lets White use.

Local money

Five Rivers shows it received $5,000 grants from Plantation Federal Bank on its 2002, 2003 and 2004 audits.

Ed Norris, president of Plantation Federal, said the bank has not made donations to Five Rivers since 2001. Norris said he does not know why donations for subsequent years were shown on Five Rivers' financial statements "except maybe her [White's] assumption that our contribution was annually renewable since we had given to the organization in the past."

It is not clear if that purported income also was included on the agency's federal tax returns.

Norris said the only other money Plantation Federal has given to Five Rivers was $500 in March for an advertisement in the agency's newsletter.

Also, White told Five Rivers board members during the May 23 meeting that Plantation Federal planned to donate another $5,000 to the agency.

"Ed Norris and I met, we had a good conversation," White told the board, according to minutes of that meeting. "Unless something happens, we'll be receiving a donation of $5,000. That's a recommendation he'll make."

Norris said he met with White in May but did not commit the bank to making a donation.

"I believe we talked in general about fundraising plans and a mortgage seminar," Norris said. "I told her that we would again consider support for [Five Rivers] in the $5,000 range, but that nothing was budgeted for them in 2006."

Norris said he told White the bank's board of directors might discuss making a donation during its July meeting.

"We did not, however, have the opportunity to address contributions at the meeting," Norris said.

Budget crunch

Five Rivers now faces a budget crunch, according to its latest financial statement, which shows a $181,635 deficit through the first half of 2006.

"We have to raise some serious money," Beulah White, the agency's executive director, told Five Rivers' board of directors Tuesday during a closed meeting.

That meeting appeared to violate the S.C. Freedom of Information Act because the board discussed several topics unrelated to the stated purpose of the closed session, which was for legal and contractual matters related to personnel.

Some of the discussions by Five Rivers staff and board members during that closed session could be heard by media and other members of the public waiting in the hallway outside the agency's office.

Five Rivers' latest financial statement shows the agency received $5,818 in grants and contributions through the first six months of 2006. The agency's expenses for that period totaled $187,453.

White asked the board during the closed meeting this week to help think of ways to raise money for a $1 million community center the agency wants to build in Choppee.

Five Rivers hopes to get a $600,000 loan from the Federal Home Loan Bank in Atlanta to help pay for that project.

David Hamilton, a Five Rivers board member and vice president of BB&T, said during the May 23 board meeting that the Federal Home Loan Bank "seems to be resisting making a commitment until we say what's going to happen."

U.S. Rep. James Clyburn, D-S.C., appropriated $145,500 for that project in the 2005 federal budget. Five Rivers has not followed up with a request for that money, said HUD spokesman Sullivan.

Sullivan said. "Until they submit an application, they can't use the money," Sullivan said.