South Carolina needs new anti-embezzlement law

By John V. Crangle
Common Cause of South Carolina

Embezzlement and theft of taxpayers’ money is rampant in this state. Research provided to the Senate at the request of Sen. Jake Knotts shows that in the past 10 years, the attorney general and solicitors have convicted people of embezzling $22 million from state and local government, in more than 600 cases.

The problem is actually worse, because law enforcement records are not organized in a way to make it easy to count all the cases. Beyond that, this doesn’t count undiscovered fraud that may never be brought to light.

False-claims bills in the Senate (S.100, S.1018) would encourage government employees and citizens to report crime to authorities, by protecting them against retaliation at work and rewarding them financially if stolen funds are recovered. Oftentimes, non-participants become aware of stealing by fellow employees but don’t report it. The Paul Moore scandal at the Department of Social Services, which involved some 200 people within and outside of the agency, was exposed when one of the conspirators went to authorities after falling out with Moore in a quarrel over the money. But this was only after $5 million had been stolen and squandered beyond recovery over several years. The false-claims legislation is designed to interrupt the stealing while the money still can be recovered.

The legislation, which complements the newly created office of inspector general, is a bipartisan effort by Sen. Knotts, Gerald Malloy, Vincent Sheheen and Mike Rose. At that first hearing on the bill, the attorney general’s office testified that South Carolina has been forfeiting 10 percent of the millions recovered by the federal government in Medicaid fraud in recent years because we do not have a federally approved false-claims law; this has cost the state $7.8 million in the past five years alone.

The Legislature needs to pass this law as soon as possible in order to cut short the losses, punish the embezzlers and fraudsters, recover stolen money and obtain South Carolina’s fair amount of the stolen Medicaid funds recovered by federal prosecutors. As Sen. Rose noted: “Either we are going to get serious about fraud in South Carolina, or we are not.” Taxpayers have the right to know that their tax money is not going to be stolen by crooked government employees and fraudsters and spent on drugs, alcohol, foreign vacations and strip clubs.

John V. Crangle is Executive Director of Common Cause of South Carolina, a member of the SC Progressive Network.

Public financing needed to avoid AG conflicts

This op-ed appeared in The State today. It was written by John Crangle, a longtime member of the SC Progressive Network and advocate for our clean elections initiatives.

By John Crangle
Common Cause of South Carolina

The controversy over Attorney General Henry McMaster’s acceptance and later return of $32,000 of campaign contributions from lawyers he hired to represent the state of South Carolina in a lawsuit against drug companies is yet another episode in a continuing chronicle of attorneys general taking campaign money from lawyers and parties having legal business with the state.
The problem arose when Attorney General Travis Medlock was running for governor, when Attorney General Charlie Condon was running for governor and U.S. Senate and now with McMaster running for governor.

The danger of conflict of interest, favoritism, abuse of office and corruption ia very real for attorneys general, who have in their jurisdiction great discretionary power. The attorney general can decide which lawyers are retained to represent the state in multimillion-dollar lawsuits, which in some cases produce huge attorney fees. Furthermore, the attorney general is in a position to file civil suits and to favorably settle suits benefiting an adverse party. In criminal matters, the attorney general has the power to decide whether to seek an indictment, whether to prosecute, whether to plead a case down or even dismiss.

All of these decisions can have catastrophic or highly beneficial consequences to the lawyers and parties involved. Many lawyers and clients would pay dearly for favored treatment by the attorney general in such cases.

It is all too easy for campaign contributions to influence the decision-making of attorneys general, especially in close cases where great civil or prosecutorial discretion is in play. Given the extensive history of public corruption in South Carolina over the years, it is not far-fetched to envision a future attorney general trading favors for campaign contributions.

Public financing of races for attorney general would be the best cure for the problem of corrupting campaign contributions. As a member of Gov. Jim Hodges’ Commission on Campaign Finance Reform in 2000-01, I argued that the danger of pay-to-play corruption was most acute in the office of attorney general due to the great discretionary power of the office and the enormous stakes involved in major civil and criminal cases. It also seemed that the cost of public financing for the attorney general race would be modest since at the time candidates were spending relatively small sums

The big objection to public financing is always that the taxpayers should not have to pay for the cost of election campaigns. Of course, the taxpayers already pay many costs of elections, including the expense of the S.C Election Commission, the county election commissions and all of the related costs of providing polling places, buying multimillion-dollar voting equipment and hiring poll workers. In case of election appeals and litigation, the taxpayers pay much of these costs too.

My proposal is to have an unprecedented public financing system for attorneys general whereby the ordinary taxpayers pay nothing, but the necessary money would be raised by a tax on campaign contributions to political candidates. As candidates for state and local office raise well over $20 million every four years, a tax of 10 percent would generate enough money to provide candidates for attorney general with public funds sufficient to communicate their positions and qualifications to the voters.

Supreme Court rulings give candidates the right to raise money for their own campaigns, so the state can only offer to give them public financing in exchange for voluntarily not raising money. So public financing alone wouldn’t accomplish our goals. But if we retain the existing laws that limit campaign contributions by source, amount and use, ban contributions from special counsel as suggested in a recent editorial column by Cindi Ross Scoppe and also add my proposal for public financing, we could deter conflicts of interest and abuse of office and inhibit corruption in the position of attorney general.

Finally, an especially and difficult manifestation of the problem is incumbent attorneys general raising funds for another office such as Congress or governor. Although we can’t prohibit an attorney general from raising money, for re-election or election to another office, we can prohibit an incumbent from transferring funds from an attorney general account to a campaign for another office. And we should.

Public financing for the attorney general’s race can serve as a pilot project. If voters and legislators conclude after a trial run that public financing has worked well for attorney general candidates, then public financing could next be tried for another office, such as governor or treasurer.