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More than a dozen Horry politicians could face ethics fines -- but the law isn't perfect

The Sun News logoThe Sun News 4/30/2021 J. Dale Shoemaker and Maya Brown, The Sun News (Myrtle Beach, S.C.)

Apr. 30—MYRTLE BEACH — More than a dozen politicians across the Grand Strand could face fines from the South Carolina Ethics Commission because they failed to file a required ethics report, or filed that report past the March deadline.

Those same ethics reports also reveal the business and other economic interests of elected officials across Horry County. Because most politicians in the county don't serve in those positions as full-time jobs, almost all of them have day jobs, or own businesses. Some own multiple businesses.

But due to "big holes" in South Carolina's ethics law, those ethics reports don't tell the whole story of where a politician earns their money, what business interests they have and what conflicts of interest could arise as they serve the public. Several local council members, for example, own restaurants but don't list those businesses on their economic interest forms.

And although officials are required to list their private sources of income, those in Horry County don't do so in a uniform manner, leading to a patchwork of information about where your elected officials are earning money, and what other interests they may have besides serving the public.

"The core point in every single ethics issue is: Is the public official working in the public interest or working in personal interest?" said Lynn Teague, the vice president for issues and action with South Carolina's chapter of the League of Women Voters. "(South Carolina's ethics law) is not as comprehensive as it should be, and there are elements that should be in there that aren't."

Each year, the South Carolina Ethics Commission requires politicians and other officials to submit what's called a statement of economic interest report — a form listing their government and private sources of income, business interests, government contracts, contributions from lobbyists, gifts and more — by March 30. The Sun News compiled a database of information from those reports for 77 elected officials in Horry County, from town council members and mayors to the chair of the county council and the school board.

Check out the economic interest filings from Horry County officials below. If you find something interesting, or if you have any questions, contact reporter J. Dale Shoemaker at dshoemaker@thesunnews.com or reporter Maya Brown at mbrown@thesunnews.com.

Click here to download a copy of the full database.

Taken together, those reports from dozens of elected officials across the Grand Strand reveal a patchwork of information that may not give voters all the information they need to make informed decisions at the ballot box.

One apparent gap in the reports is the requirement to report private sources of income. Though a major reform in 2016 required officials to list those sources of income for the first time, which Teague said was a good thing, officials aren't required to list amounts of how much they make. That leads to a situation in which some state legislators from Horry County listed that they received a hat worth $37 from a BlueCross BlueShield lobbyist, but not how much they made from businesses they own, or sell. Rep. Tim McGinnis, for example, listed the $37 hat as a lobbyist gift, but not how much he earned from his popular restaurant, Famous Toastery. And Horry County Council member Harold Worley owns a number of restaurants and buildings in North Myrtle Beach, the district he represents, but under the law isn't required to disclose much of that information.

"There should be more information," Teague said. "If the company that they own is becoming enriched and they will ultimately, or at any time could, cash out by selling that company, they should be reporting that income."

Fines likely for local officials

If a public official fails to file their annual economic interest statement, or files it late, South Carolina's ethics law outlines what fines the Ethics Commission can charge that person. After a five-day grace period, the commission charges a $100 fine, and then up to $100 per day that the person doesn't file their report. That means collectively, public officials in Horry County could owe thousands of dollars to the state for failing to file their reports, or filing them late.

The Sun News identified at least nine public officials from Horry County who failed to file their reports at all, including school board member W. Russell Freeman, County Council member Danny Hardee, Loris City Council member Terrence Hardee, Surfside Beach council member Bruce Dietrich, Atlantic Beach Mayor Jake Evans and Atlantic Beach council members Josephine Isom, Lenearl Evans, Glenda Williams and Jacqueline Gore.

Freeman, contacted Thursday, said he already filled out his form. The Sun News checked for the report a second time on Thursday but was still not able to find it.

Also Thursday, Danny Hardee said he simply forgot to complete an ethics form. He said he is aware of the fines and is already working to address it.

"I've got to get caught up mainly," he said. "I just haven't gotten it done."

The Sun News was unable to reach Atlantic Beach Mayor Evans and council members Isom and Williams. Gore said she forgot to fill out her report. She said she would complete it as soon as she could.

Lenearl Evans declined to comment on his filing for health reasons.

Dietrich said he had not forgotten about the form and plans to fill it out soon.

Terrence Hardee did not return a call for comment.

The Sun News also identified eight public officials in Horry County who filed their reports late, meaning they could face penalties. Loris Mayor Todd Harrelson, Loris council member Lewis C. Hardee Jr. and Horry County Council member Gary Loftus all filed their reports after March 30, but within the grace period and may escape fines.

Fines for South Carolina officials stemming from the ethics law aren't uncommon. Last month, Horry County Chairman Johnny Gardner told myhorrynews.com that he plans to pay the fines from a campaign finance violation he received from the ethics commission. And in Beaufort County, one out of every five officials were likely subject to fines from the commission.

Horry County Council members Bill Howard, Orton Bellamy, Tyler Servant and Johnny Vaught, along with Myrtle Beach City Council member Jackie Vereen-Hatley filed their reports after that grace period, meaning fines are more likely. Vereen-Hatley filed her report the latest, missing the deadline by two weeks. Messages seeking comment by The Sun News were left with Servant, Bellamy and Vereen-Hatley asking why they missed the deadline.

Howard said he wasn't aware that he missed the deadline, because he hires an accountant to handle those required filings, he said. He suggested that the accountant filed the report on time, but that the state didn't register it right away.

"I would not want to be late," he said.

Vaught said he thought he had until April 10 to file the report — the date quarterly campaign finance reports are due — and assumed the economic interest form was due then, too.

"I never miss a deadline," he said, noting that he received a notice about the campaign finance report deadline, and filed both reports on the 10th.

Harrelson, who missed the March 30 deadline but still filed his report within the grace period, said he was assured by a member of the state ethics commission that he was okay to file when he did and wouldn't face a fine.

"There was only one thing that was missing, and (the person) said, 'Don't worry about it, you have a five-day grace period,'"Harrelson recalled.

Those facing fines, though, might not see those penalties for quite some time. Loftus, who also missed the deadline, said he thought he had until April 10 to file the report, and joked that he'll see a small fine from the state several years from now.

"I may have been a few days late which means I'll get a fine in two years," he said. Loftus, though, wasn't totally kidding. He said back in 2012 he "totally blanked out" and forgot to file campaign finance and ethics forms for both he and his wife, who served on the school board.

"It took them two-and-a-half years to fine me," he said.

That's evidence, Loftus said, of the gaps that exist in the state's ethics law. "It's pitiful," he said.

Gaps in the law

Perusing the accumulated economic interest filings reveals several quirks and gaps in the state's ethics law. For example, a number of elected officials in Horry County have businesses in which they buy and sell real estate, but the law only requires them to report property they own if "public improvements" worth $200 or more are made to the property. That means that some elected officials listed improvements done to their personal homes while others who buy and sell valuable real estate meant for future developments didn't list the specific transactions. In Loris, for example, city council member Jan Vescovi listed that she owns two homes in the city, while Harrelson, who owns a real estate company, didn't have to list any properties he bought or sold last year under the law.

Other examples include what legal work officials have to list. Several elected officials in Horry County work as attorneys, and those who represented clients before, or on behalf of, government entities listed that work and what they earned, but other officials who did legal work that didn't directly involve the government — but nonetheless could have resulted in a conflict of interest — don't have to list that work or what they earned.

Land and legal earnings, Teague said, is an especially gray area under the law.

"It's a very messy area. Some of them are very, very good lawyers and some of them have very good lawyers," she quipped.

Similarly, not all elected officials who own businesses list those interests. County Council member Worley, for example, owns several restaurants in North Myrtle Beach, but didn't list those on his ethics form. Worley didn't return a call for comment on Thursday. And Myrtle Beach City Council member Michael Chestnut, who owns Big Mike's Soul Food, didn't list that fact on his form. Instead, he mentioned having additional income outside of his city pay but didn't specify the source or amount. Chestnut also didn't return a call on Thursday.

On the other hand, some elected officials listed their businesses and other sources of income but didn't include how much they made last year. For example, Surfside Beach Councilman Michael Drake, North Myrtle Beach Councilman Terry White and some Myrtle Beach councilmembers, including Gregg Smith and Philip Render, included information about other sources of income but did not mention a specific dollar amount.

Drew Kurlowski, a political science professor at Coastal Carolina University said gaps like those exist because South Carolina's ethics laws — at least they're currently written — are meant to capture the most egregious conflicts of interest, not all conflicts of interest.

"You're capturing situations that might be problematic but that's such a limited set of circumstances under the law that you're not going to find much on those forms," he said about the state's economic interest reporting system. "It's a reporting system that relies on the truthfulness of the reporters and it's only going to signal the gravest potential threats, this is not something that's going to yield much info on the average filer."

The ethics law also doesn't require public officials to disclose what companies they hold large amounts of stock in, something that Teague wants to see changed, and something that was stripped from the 2016 reform to the law.

Ultimately, she and Kurlowski both said, the strength of the state's ethics law comes down to how well it's enforced, and largely that's left up to the filer.

"You've heard the phrase, 'garbage in garbage out,' Kurlowski said. "The law is only as good as people are following it."

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