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Nonprofit's board requests audit

The board of directors for Five Rivers Community Development Corp. has asked an accountant and lawyer to help investigate the nonprofit agency's finances and operations, according to a statement the board released Friday.

The board also said it will reduce by half the salaries of Chief Executive Beulah White and Chief Financial Officer Dayo Smith, pending the results of the board's review.

"While we have the utmost respect for and confidence in the staff of Five Rivers CDC, we have begun an internal review of our financial management practices and administrative functions," Sam Livingston, the board's president, said in the statement.

Livingston said results of the board's review will be made public when it is completed.

Livingston, White and Smith could not be reached for comment.

The statement does not name the accountant or lawyer who will conduct the review.

The board's action comes two days after state Sen. Ray Cleary, R-Murrells Inlet, told The Sun News he will ask 15th Circuit Solicitor Greg Hembree to conduct a criminal investigation of Five Rivers to see if public money has been misspent.

That request was sparked by a review of Five Rivers' finances by The Sun News. That review shows a pattern of questionable spending practices at the Georgetown-based nonprofit, including executive salaries that far exceed the state average, annual pay raises of as much as 29.5 percent for White, regular use of the agency's Volvo for personal reasons and expense reimbursements for travel that appears unrelated to the nonprofit's purpose.

Five Rivers has received more than $3.8 million in grants and contributions between 1996 and 2004, the most recent year for which data is available. Nearly two-thirds of that money was from local, state and federal grants funded by taxpayers.

The S.C. secretary of state's office also is investigating Five Rivers' finances, and Livingston said in the statement that the board has contacted state officials to aid them in their investigation.

Secretary of State Mark Hammond, whose office regulates nonprofits and charities, said earlier this month that the investigation is in the early stages. Hammond said he may refer his findings to the Internal Revenue Service for further investigation.

Five Rivers is run by White and Smith, who is White's daughter. The agency's only other employee is a receptionist. The nonprofit is supposed to create affordable housing and economic opportunities for Georgetown County's low- to moderate-income residents.

The salaries paid to White and Smith have been one focus of the secretary of state's investigation because the IRS forbids excessive compensation packages for directors of nonprofits.

White, who helped found Five Rivers and has served as its only executive director, received a 91 percent salary increase to $83,039 from $43,500 between 2000 and 2004, the most recent year for which data is available.

The average salary for executive directors of nonprofits in South Carolina that are of a similar size to Five Rivers' annual revenue of about $500,000 is $54,614 per year, according to Guidestar, a group that tracks nonprofit finances nationwide.

Smith's salary has increased 87.4 percent since she joined the agency - to $48,755 this year from $26,000 in 2000. Smith's salary for 2006 was included on a financial document she provided to The Sun News.

Smith's salary, which is approved by her mother, includes an increase of $10,619, or 40.8 percent, in 2001. She also received raises of 7.5 percent in 2002, 9.6 percent in 2003 and less than 1 percent in 2004.

Smith's salary has been reduced to $24,377.50 pending the outcome of the board's review. White will not tell The Sun News how much money she now makes so it is unclear what amount she will be paid during the board's review.

Five Rivers' board on Aug. 29 gave White and Smith a unanimous vote of confidence, even though its review of the agency's finances had not yet begun.

The secretary of state's office will handle the administrative aspects of an investigation into Five Rivers.

The office can fine a nonprofit agency or shut it down if laws have been violated. Hembree's office would handle any possible criminal prosecution for alleged misuse of public money.

FIVE RIVERS

What happened | The board of directors for Five Rivers Community Development Corp. has asked an accountant and attorney to look over the nonprofit agency's records. It also cut in half the salaries of the executive director and chief financial officer.

What's next | The board will release the probe's findings to the public. No deadline was set for that release.

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