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3 Five Rivers board members leave posts

Three members of Five Rivers Community Development Corp.'s board of directors resigned from the agency Wednesday, saying the nonprofit's staff is spending public money and selling land without the board's approval.

It is not clear whether the agency's fourth board member, Marjorie Hemingway, has resigned. Hemingway could not be reached for comment Wednesday.

Those who resigned Wednesday include board President Sam Livingston, Treasurer David Hamilton and Darren Holmes.

Livingston said board members considered firing Executive Director Beulah White and her daughter, Chief Financial Officer Dayo Smith, but reconsidered because the board does not believe the nonprofit agency can be salvaged.

"If the board had felt there was an opportunity to fix the agency and run it, that would have been our first choice," Livingston said. "I don't know that it can survive."

Livingston said White and Smith will not follow the board's direction and have been running Five Rivers as if it were their personal business.

"They don't want to adhere to the wishes of the board, so they don't need a board," Livingston said. "They are running the agency the way they want to run it, and they want to continue running it their way. The board is not going to be a part of that foolishness."

White has not responded to repeated e-mails and telephone calls from The Sun News and could not be reached for comment.

It is not clear whether Five Rivers can continue to legally operate without a board of directors. Five Rivers' bylaws state that the agency must have at least five board members, but the nonprofit had been operating with four board members since May.

The Five Rivers board members who resigned Wednesday sent a letter to 15th Circuit Solicitor Greg Hembree on Monday offering their help in a criminal investigation of Five Rivers.

That investigation, and investigations by the S.C. Secretary of State and the U.S. Department of Housing and Urban Development, were prompted by a series of reports in The Sun News that questioned the agency's financial and management practices.

Hembree was not in the office Wednesday and could not be reached for comment.

The letter to Hembree includes examples of financial irregularities that board members say they discovered at the nonprofit in recent weeks.

For example, White and Smith will not tell board members how they have spent $617,000 of a $994,100 grant the agency got through HUD, Livingston said. That grant was supposed to be used for construction a community center in Georgetown County, but the center never was built.

HUD told White in a Sept. 29 letter that Five Rivers has 30 days to explain how the money was spent.

"[White and Smith] told us we'll get our explanation when HUD gets theirs," Livingston said.

White also is selling some of the nonprofit's land without the board's approval, Livingston said.

That land, in the Lincolnshire subdivision, was supposed to be used for an affordable housing project.

Unilateral land listing

Livingston said board members found out White is selling some of the agency's land when they saw the property on a Web site that lists homes and land for sale along the Grand Strand.

Livingston said he thinks White is selling the land to raise money to cover operating costs.

A financial report presented at the agency's last board meeting in August shows Five Rivers is in a cash crunch, with income of $5,818.65 through the first six months of this year. Expenses, such as salaries and travel, totaled $187,453.88 for the same six-month period.

Georgetown Realty agent Wayne Hardee is handling the Lincolnshire land sale, according to a listing on the Coastal Carolinas Association of Realtors' Multiple Listing Service.

Hardee could not be reached for comment Wednesday.

The MLS listing shows a $17,500 sale price for one Lincolnshire lot, which went on the market Friday.

Five Rivers got the Lincolnshire land free in March 2002 from Peoples Federal Savings and Loan, now First Federal bank, which donated the property so Five Rivers could build affordable housing for its clients.

Five Rivers never built housing on the property.

First Federal donated four Lincolnshire lots to Five Rivers in 2001 and 2002. Each lot was valued at $8,000 at the time, according to Five Rivers' federal tax returns.

First Federal spokeswoman Dee Bee Wright declined to comment on the land sale Wednesday.

Livingston said White is selling two of the lots, but the MLS listing is for one lot. The MLS listing does state that multiple lots are available.

White told The Sun News in June that the agency planned to build four homes costing between $75,000 and $85,000 on the Lincolnshire property.

Accounting unexplained

Livingston also said White and Smith did not include money they were taking from the $994,100 federal grant on financial reports presented to board members during meetings.

Minutes of those board meetings show White and Smith told board members as late as May that the HUD money was available, even though most of it already had been withdrawn.

Livingston said the HUD money was wired to a bank account that required only a signature from White or Smith for withdrawal. That bypassed the need for board approval to withdraw money, Livingston said.

Livingston said the board was not aware that White told HUD in semiannual progress reports as late as February that Five Rivers was making progress toward building the community center. The project has been on hold for nearly two years because Five Rivers can't get a state permit needed for construction.

Of the $617,000 that has been spent, $71,653 went toward architectural drawings and mortgage payments associated with the community center project, the agency's financial records show.

It is not clear how the remaining $545,347 has been spent.

HUD also wants Five Rivers to document how it spent a separate $357,660 grant the agency received in 2003.

That grant was supposed to be used to 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.

Board investigation

This week's resignations come less than two months after the board gave White and Smith a unanimous vote of confidence at their last board meeting Aug. 29.

Livingston said a board investigation that followed that meeting led to the reversal. The resignations are effective immediately, Livingston said, although the agency's bylaws require a 30-day notice for resignations.

"The board of directors has been severely tarnished for trying to provide some much-needed community service and trusting staff to be honest with their reporting," Livingston's letter to Hembree states. "The board of directors has worked relentlessly trying to save this organization."

The board last month cut the salaries paid to White and Smith by 50 percent pending the outcome of its investigation of the agency's finances. Those salaries 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.

Smith's salary, which is approved by her mother, has increased 87.4 percent since she joined the agency - to $48,755 this year from $26,000 in 2000.

It is not clear whether White and Smith will start paying themselves their full salaries again now that the board members have resigned.

It also is not clear whether the agency's receptionist will be allowed to use the nonprofit's van for personal travel, as he had been doing prior to the board's investigation. The van was purchased with public money, and the board had told Five Rivers' staff to stop using the vehicle for personal travel.

Five Rivers also owns a 2003 Volvo, which is used full time by White for business and personal travel.