Five Rivers Community Development Corp. has closed its office and gone out of business, and it is not certain what will happen to the nonprofit agency's assets as the corporation is dissolved in the wake of a financial scandal.
Five Rivers' closing will not affect a criminal investigation of the agency by 15th Circuit Solicitor Greg Hembree. That investigation focuses on whether the nonprofit's executives misspent public money.
It is not clear how the closing will affect the U.S. Department of Housing and Urban Development's investigation of Five Rivers. HUD is looking into how the nonprofit's executives spent federal tax dollars.
Five Rivers' latest tax return, filed last week with the S.C. Secretary of State, shows the agency received $1.13 million in state and federal grants and other contributions in 2005 but gave just $4,008 that year to low- and middle-income participants in the agency's programs.
Another $467,090 was spent on salaries, travel, health and other insurance for the agency's executives, a leased Volvo automobile for Chief Executive Beulah White and other administrative costs.
Included in that amount were salaries of $84,223 for White and $52,955 for Dayo Smith, White's daughter and the agency's chief financial officer. Those salaries represent raises of 1.4 percent for White and 22.3 percent for Smith compared with the previous year.
White told The Sun News last summer that she and her daughter did not receive pay raises in 2005. White has refused to say how much she and her daughter were paid this year.
Also shown on Five Rivers' 2005 tax return was a $70,350 payment to D.B. Richardson & Associates, a Florida business that was run by David B. Richardson, the former head of the Atlantic Beach Community Development Corp.
The tax return states the payment was for consulting fees, although it is not clear what type of work Richardson did for Five Rivers or what type of consulting he offers. D.B. Richardson & Associates was dissolved in September 2005, according to Florida records.
Five Rivers paid $113,583 in consulting fees in 2005, according to the agency's tax return. It is not clear how much of that money, in addition to salaries, went to White and Smith. They said in interviews last summer that they provide much of the consulting work for the agency's clients.
Richardson's 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.
Richardson would not comment on his work with Five Rivers.
White could not be reached for comment last week. Five Rivers' telephone numbers have been disconnected and there was no answer at White's residence.
In a Nov. 10 letter to the Secretary of State's office, White wrote: "We do not have legal counsel, an accountant or any board members. ... The office of Five Rivers Community Development Corp. is closed for business."
Five Rivers has received more than $5 million in government grants and contributions since it was formed in 1995.
Five Rivers now must be dissolved and its assets distributed to a similar nonprofit agency or to the local, state or federal government, according to S.C. law and Five Rivers' articles of incorporation. A circuit court judge also could dispose of some of the agency's assets.
It is not clear how it will be determined who gets Five Rivers' assets. State law requires an agency's board of directors to hold a special meeting to discuss distribution of assets, and a distribution plan can go forward only if a majority of the directors agree.
Five Rivers does not have a board of directors because its members resigned last month, saying White and Smith were spending public money and selling the agency's land without board approval.
"They don't want to adhere to the wishes of the board, so they don't need a board," Sam Livingston, the board's former chairman, said last month, referring to White and Smith.
Five Rivers' 2005 tax return shows the agency had $1.2 million in cash and other assets at the beginning of this year. It is not clear how much money remains.
The agency's other assets include land, a Ford van, computer and office equipment, furniture, a digital camera and a video recorder.
Also, Five Rivers has $377,100 left from a $994,100 grant it received from HUD in 2004. HUD restricted Five Rivers' access to that money after learning about questionable financial and management practices at the nonprofit agency 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.
HUD told Five Rivers in September that it wanted documentation of how the nonprofit spent $617,000 from the 2004 grant and $357,660 from another grant Five Rivers received in 2003.
Five Rivers missed its 30-day deadline to provide that documentation, but sent some information to HUD in recent days.
"We have received the requested documentation and we are reviewing it," said HUD spokesman Brian Sullivan. "I don't know how much documentation was provided or how long the review will take."
Sullivan said he does not know how Five Rivers' closure will affect HUD's inquiry.
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.