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Five Rivers misses deadline

Five Rivers Community Development Corp. has ignored the federal government's demand that it repay $418,180 in grant money the nonprofit agency misappropriated, forcing the U.S. Department of Housing and Urban Development to take tougher action to reclaim the funds.

"Despite our best efforts, Five Rivers has not responded to our request for repayment," HUD spokesman Brian Sullivan said Friday. "It has now become apparent that the department will explore other enforcement avenues to resolve this matter."

Sullivan would not say what enforcement options HUD might take or whether the Five Rivers case has been referred to HUD's Office of Inspector General, which handles criminal investigations.

Beulah White, Five Rivers' executive director, and Dayo Smith, the agency's chief financial officer, could not be reached for comment.

Five Rivers shut down Nov. 10 in the face of growing questions about the lack of oversight at the agency and how its executives spent public money.

HUD could take civil and criminal action against White and Smith, according to terms of the grant documents both women signed.

White and Smith, who is White's daughter, each could face up to five years in prison and $250,000 fines if they are convicted of fraudulently using HUD grant money. Each woman also could face civil fines of up to $10,000 and restitution of three times the amount of money the government says it lost.

Five Rivers was supposed to use the $418,180 for construction of a community center for low- to moderate-income residents. The community center never was built.

HUD says White and Smith spent the money on salaries, travel and other management and operating expenses.

The money is part of a $994,100 grant Five Rivers received in 2004 for construction of the community center.

Five Rivers had spent $617,000 of that grant when HUD asked in October to review the nonprofit's financial records.

HUD's review of Five Rivers was prompted by a series of reports in The Sun News that questioned the nonprofit's financial and management practices.

Only 20 percent of the $994,100 grant - or $198,820 - was supposed to be spent on planning, management and operating expenses, according to terms of the grant. HUD's review found that Five Rivers spent all of the $617,000 on planning, management and operating expenses.

HUD sent a letter to Five Rivers on Nov. 30 telling the nonprofit to repay all of the money in excess of the 20 percent allowed for management expenses. That amount, $418,180, was due by the end of December.

Five Rivers did not repay the money or communicate with HUD about repayment, Sullivan said.

In addition to its problems with HUD, Five Rivers is the focus of a criminal investigation by the 15th Judicial Circuit Solicitor's Office. The solicitor's office is reviewing financial records to see if the nonprofit's executives misspent public money.

Five Rivers' community center project ran into trouble in January 2005 when the S.C. Department of Transportation refused to give the nonprofit a construction permit for land along S.C. 521 near the intersection of U.S. 17 Alternate.

For more than a year after the permit was denied, White and Smith told HUD in semiannual progress reports that construction was about to begin.

In 2006, Five Rivers blamed "poor weather and a backup of current county projects" for construction delays at the S.C. 521 site.

Five Rivers continued to withdraw money from the HUD grant even though it did not have a construction permit, taking $200,000 in February 2005 and another $417,000 over the next 16 months.

HUD froze Five Rivers' access to the rest of the grant money - $377,100 - on Aug. 26 after it received copies of The Sun News' reports about the nonprofit.

Those reports showed a pattern of questionable spending practices at the nonprofit, including executive salaries that far exceed the state average annual pay by 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 stated purpose of providing job training and affordable homes.

On the Net

To read the Investigating Five Rivers series, go to www.MyrtleBeachOnline.com

In addition to its problems with HUD, Five Rivers is the focus of a criminal investigation by the 15th Judicial Circuit Solicitor's Office. The solicitor's office is reviewing financial records to see if the nonprofit's executives misspent public money.

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