Five Rivers Community Development Corp. missed the federal government's Sunday deadline to explain how it spent nearly $1 million in public money, and the U.S. Department of Housing and Urban Development wants to know why.
"We haven't received the requested source documentation yet," said HUD spokesman Brian Sullivan. "We're asking for an explanation."
Five Rivers was supposed to provide a detailed account of how it spent money from two federal budget appropriations the nonprofit agency received through HUD in 2003 and 2004.
In a Sept. 29 letter, HUD gave Five Rivers a 30-day deadline to provide the financial documentation. That deadline expired Sunday.
Digital Access for only $0.99
For the most comprehensive local coverage, subscribe today.
HUD required the documentation after learning about questionable financial and management practices at Five Rivers from a series of reports in The Sun News.
Those questionable practices include salaries that far exceed the state average, reimbursements for travel apparently unrelated to the nonprofit's purpose and no independent oversight of expenses.
Beulah White, executive director of Five Rivers, has not responded to repeated telephone calls from The Sun News and could not be reached for comment Tuesday.
Three members of Five Rivers' board of directors resigned Oct. 18 because they said White and her daughter, Dayo Smith, have been spending the agency's money and selling its assets - including land the agency was supposed to use for an affordable housing program - without board approval.
Smith is the agency's chief financial officer. The only other Five Rivers employee is a receptionist.
Marjorie Hemingway, the agency's fourth board member, has not responded to repeated telephone calls from The Sun News and could not be reached for comment Tuesday.
HUD wants to know how Five Rivers spent $617,000 of a $994,100 grant the nonprofit received in 2004. That money was supposed to be spent on construction of a community center, but no construction has taken place.
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. Those penalties are outlined in the grant applications signed by White.
Five Rivers' community center project has been stalled since January 2005 because Five Rivers cannot get a state permit to start construction on land it owns along S.C. 521 near the intersection of U.S. 17 Alternate. White and Smith told HUD in semiannual progress reports 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.
HUD has suspended the $377,100 that is left from the 2004 grant. That means HUD must approve any expenses before Five Rivers can withdraw money.
Five Rivers previously could withdraw money from the grant account without any explanation, and the nonprofit was withdrawing an average of $30,000 per month.
HUD also wants a more detailed account of how Five Rivers spent a $357,660 grant it received in 2003. That money was supposed to be used for affordable housing and job programs that benefit 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.
In addition to the HUD inquiry, Five Rivers is being investigated by 15th Circuit Solicitor Greg Hembree and the S.C. Secretary of State's office, which regulates nonprofits.
The secretary of state's office is waiting for Five Rivers to supply additional financial information that is due by Nov. 15, spokeswoman Melissa Dunlap has said.