July 21, 2024

Who owns the mysterious $1.8 billion? State finance committee searches for more answers – Queen City News

SOUTH CAROLINA (QUEEN CITY NEWS) — The mystery deepens into that $1.8 billion found in a South Carolina state bank account.

The state’s Comptroller General (the state’s top accountant) and Treasurer’s office testified about the funds today in a hearing with the state’s senate finance committee. Because of the seriousness of the hearing, both elected officials had to swear in.

Both Treasurer Curtis Loftis and CG Brian Gaines say the other’s office is responsible for knowing about the $1.8 Billion account. 

Treasurer Loftis says the $1.8 Billion generated more than $200 million in interest, which the general assembly has spent because it was sent back to the general fund.

He testified today for more than 5 hours with only one break. 

But one senator says the ownership of the $1.8 billion is unknown and could be federal funds, dot funds, or a trust fund.

The finance committee’s main questions are: Where did the original money come from, how do we know it is nearly two billion dollars, and the main question—will the constant inconsistencies eventually mess up the state’s AAA credit score?

“The $1.852 billion that’s in the account today, we don’t know who it belongs to,” said State Senator Tom Young, who represents the 24th district. 

Loftis, who oversees and invests the state’s money, says it wasn’t his job to notify lawmakers about the miscellaneous funds.

“I want to be part of the solution. I’m too damn old to be arguing about nothing. This 1.8 needs to get out to the people it belongs to,” Loftis told committee members. “We did what we were supposed to do.”

His office manages more than $50 billion of the state’s money. 

Grooms said that comment was laughable. “You thought that a nickel was material but $1.8 billion is not?”

He continuously blamed the CG’s office and the South Carolina Department of Administration.

“You believe that the state needs to hire forensic accountants to go back and try to figure out where this money belongs?” Sen. Young asked. 

“Well, I don’t know that it’s necessarily a forensic accountant, but we need to have people who are schooled on a software who can forensically look and determine certain aspects of the system to lead us so we can understand whether these funds actually have ownership,” Loftis argued. 

During Tuesday’s hearing, members learned Loftis asked the comptroller’s office to open the account in 2014.

But the treasurer says he didn’t know where the money came from—something he’s been trying to determine since at least 2016.

“The $1.8 billion is a serious matter. It matters to the people of South Carolina, and you sat on it since 2016 after the SCEIS—you didn’t know what to do with it, so you stuck it in an account and didn’t say Bo peep about it. You put smoke all around it so nobody could see it,” Grooms argued. 

“You can characterize this however you want to characterize this..” Loftis argued. “That is patently false.”

The heated back-and-forth continued until senators adjourned the hearing.

“The difference is [that] it’s a violation of law. The difference—it looks like a deliberate act of you trying to cover something up?” State Senator Stephen Goldfinch asked. 

“I don’t…I’m not going to stand here. Be accused of breaking the law,” Loftis responded. 

One thing Loftis did admit to senators was that he was not running for re-election. It is important to note that he was reelected in 2022, with no democratic challenger.  

To note, the Senate committee hearing started at 9 a.m. and went to 1 p.m. It reconvened at about 3:15 pm. They wrapped just after 5:30 p.m. The chairman of the committee, Sen. Grooms, adjourned the hearing, saying:

“Members. As you can see, there’s a little bit more work to do. We’ve heard from the Treasurer since about 9:30 this morning. It’s now 5:30. We’ve taken a little break. There has been a lot of statements that have been made today and members, the information packet that we have is absolutely based in fact, and the evidence is irrefutable.

When I’m looking at this and I’m listening, it’s apparent that Mr. Loftis has lost control of the state treasury. He’s allowed a $1.8 billion error and $30 billion in banking adjustments to remain unresolved for seven years. His actions indicate that the General Assembly cannot rely on him to resolve the problems that occurred under his watch.

The cash deficiency of the general fund at year-end 2023 likely is not permitted by law and is likely to have a material impact on the state’s financial position. He suppressed reporting of cash deficiency to the Fiscal Accountability Authority, the General Assembly, and the public.

His actions led to a misrepresentation of the financial condition of the state, thereby misleading the General Assembly, the people of South Carolina, and others that rely on the state’s financial statements, Mr. Loftis has abrogated his responsibilities as a state treasurer. He has breached the public trust. We will continue our inquiry into the $1.8 billion and two other issues that were raised here on the day.” 

Sen. Grooms

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