Monday, Oct. 26, 2009

Checks conceal Myrtle Beach campaign donors

Some of the corporations involved in a Myrtle Beach campaign finance flap used cashier's checks to make contributions to local politicians, making it difficult to trace the source of the funds, and a partner in one of those corporations said Wednesday he had no idea the business was being used to funnel money to politicians.

Mark Lazarus, a former Horry County Councilman and partner in Creek View Land Partners LLC, said he did not learn that the corporation had made $14,500 in campaign contributions until after news reports this week detailed the donations.

Lazarus said Creek View Land Partners did not have that much money in its bank account. Lazarus said he does not know where Myrtle Beach lawyer Shep Guyton, the corporation's registered agent, got the money that was funneled through Creek View Land Partners.

"It does not have money, it has a piece of land," Lazarus said of the corporation. "I have no idea where the money came from and I absolutely did not approve of this. Shep did this without discussing it with any of the partners. He needs to answer questions about where the money came from and why he did it without his partners' knowledge."

Guyton has not returned telephone calls to The Sun News.

Despite growing questions over the source of the campaign money, state agencies that regulate corporations and campaign finance say it does not appear that any laws have been broken. Herb Hayden, executive director of the S.C. Ethics Commission, said his agency has no plans to investigate the matter.

"I haven't seen anything that needs to be looked into," said Hayden, whose agency enforces campaign finance laws. "Multiple corporations making donations to multiple candidates is certainly legal."

That has not stopped some local leaders from demanding to know how at least $324,500 made its way this summer to politicians including four incumbent Myrtle Beach City Council candidates, seven state legislators from this area and U.S. Rep. Gresham Barrett, R-3rd District, who is running for governor next year.

"I'm not pointing any fingers at anyone or accusing anyone of anything, but I would like to know where the money came from," said Bill McKown, chairman of the Horry County Airport Advisory Commission and vice president of the state Aeronautics Commission.

McKown said the local commission helps steer county money to the Myrtle Beach Area Chamber of Commerce for marketing, and he would like chamber officials to clarify what role, if any, it had in raising the campaign donations.

"I just want someone to let me know what the truth is," McKown said.

Brad Dean, the chamber's president and chief executive, said none of the campaign money came from the organization and the chamber was not involved in raising funds for the candidates.

The chamber has been linked to the donations because Brant Branham, chairman of the chamber's board of directors, said last week that he "raised the contributions ... from like-minded businessmen and women."

Branham said he raised money for the candidates on his own and not as part of any chamber initiative.

In addition, Darren Gore, the chamber's chief financial officer, is the registered agent for one of the corporations that donated money. That corporation lists the same address as the chamber. Gore's home address is listed for another corporation that gave money to politicians.

Tom Herron, spokesman for Business Owners Organized to Support Tourism, said he questions whether the donations were payback for the politicians' support of a 1 percent "ad tax" that started Aug. 1. That tax, which was added to the city's sales tax, will generate up to $18 million per year that will be given to the chamber for tourism marketing programs.

Horry County's legislative delegation pushed through a state law this spring that paved the way for the ad tax, which the City Council approved in May.

"I would not want to think that this was a quid pro quo for the politicians' support of the ad tax," Herron said. "But from the perspective of the giver, it's absolutely a reward for their votes."

A group of two dozen corporations and individuals made the contributions in question. Some of the corporations and individuals used personal or business checking accounts to make the donations. Fifteen of the corporations, however, used cashier's checks from South Atlantic Bank to make donations.

Guyton, a former director of the chamber's board and a current member of the bank's board of directors, is the registered agent for those 15 corporations.

The remitter line on each of the cashier's checks includes the name of one of the 15 corporations followed by a six- or seven-digit number. In some cases the number is typed and in other cases the number is handwritten.

Joy Klein, director of marketing and advertising for South Atlantic Bank, did not say whether those numbers represent a bank account. She said the person requesting a cashier's check "provides instruction as to what is to be printed in the remitter section, just as you would on the 'memo' line in a personal check."

It is not clear whether the 15 corporations used money from the same bank account or separate accounts for the cashier's checks. S.C. law states that corporations must maintain appropriate accounting records. Renee Daggerhart, spokeswoman for the S.C. Secretary of State, which regulates corporations, said she is not aware of any law requiring corporations to have separate bank accounts.

Two of the companies that donated money - Miller Direct Inc. and Visit Media LLC - used the same Bank of America account for the donations. Those marketing companies are related and share the same address, according to their bank records.

One of the corporations used for campaign donations - Beach Paralegal Services Inc. - was dissolved in 2007 for failing to pay its taxes, according to the secretary of state. Guyton is listed as the registered agent for that corporation.

Cathy Hazelwood, general counsel for the ethics commission, said state law does not address whether a defunct corporation can make campaign contributions.

Herron said the state's ethics laws are too weak and he would like to see legislation that would shed more light on who is behind corporate donations.

"We have created a mess of a campaign finance system that encourages this kind of thing," Herron said. "I would rather have all contributions totally transparent."

Lazarus said he agrees campaign donations should not hide behind corporations.

"If someone wants to make a contribution, they need to do it on their own," he said.

Robert Kelley, president of BOOST, said he questions how a group of corporations with little apparent financial backing could have raised so much money for candidates.

"Many of these 'companies' have no offices, no phone numbers, no employees and no revenue," Kelley said.

"I do understand that using an LLC to donate to any candidate is legal, but I am unsure of how the law relates to companies that only exist as a 'shell,' for lack of a better word," Kelley said.

Herron said he does not understand how some small businesses that donated to campaigns managed to put together so much money in a poor economy. For example, Carter Studios and its owners donated $40,500 this summer to City Council candidates, legislators and Barrett. A Dun & Bradstreet report shows Carter Studios - a photographic studio near Surfside Beach - has annual sales of $31,000. Jonathan and Heather Carter, the studio's owners, could not be reached for comment Wednesday.

S.C. law caps campaign contributions by any one entity to $1,000 for local candidates and $3,500 for statewide candidates. However, there is nothing to stop an individual or group of individuals from using numerous established corporations to make multiple contributions, according to Hazelwood.

"You would have to prove that the corporations were created solely for the purpose of making campaign contributions, and then it would be a criminal fraud issue," Hazelwood said. "Otherwise, there is nothing to prohibit it."

The corporations involved in the local campaign donations were created at least a year ago - some have been in existence for as long as four years - and some have contributed to politicians in previous elections, state records show.

Kelley sent an e-mail this week to Greg Hembree, solicitor for the state's 15th judicial circuit, asking for an investigation into the campaign donations.

"As a business owner and taxpayer of Horry County, my main concern is to make sure that no public or chamber money has been used to fill the bank accounts of these shell companies to fund elections," Kelley said in the e-mail.

Hembree said he has no current plans to investigate the matter. Such an investigation, he said, typically would be initiated by the ethics commission.

Even though Guyton is listed as the registered agent for the 15 corporations, the campaign contributions did not necessarily come from him because there could be numerous partners involved with each of the businesses. The secretary of state's office does not require those businesses to list all partners in public filings.

In addition, individuals who are not related to the corporations could have legally funneled campaign contributions through the businesses by giving the corporations money intended for political candidates.

That is what Branham says happened, according to statements he made last week. Branham said he solicited contributions from local business owners who support the pro-business candidates that received money from the 24 entities.

McKown, the local airport commission director, said he now doubts that story.

"It's a guise that all of these donations came from 24 individual, legitimate businesses," McKown said. "I'd like to have someone clear the air and say where the money really came from."