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Attorney General Alan Wilson's 2010 campaign loan, ties to Quinns draw scrutiny as probe lingers

  • 6 min to read

A hefty, well-timed loan from a bank with ties to his boss helped propel Alan Wilson past his opponents in a hotly contested Republican primary to become South Carolina’s attorney general in 2010. His former employer then made millions representing the state in a lawsuit against a New York bank.

Wilson, a relative unknown at the time, received the $250,000 loan from First Community Bank of Lexington just five days before the filing deadline for candidates that year, drastically inflating his campaign war chest, election records show. That allowed him to come out of the gate showing strength and a clear financial edge over his two opponents when all were struggling for wider name recognition and support.

One of those GOP challengers, former Nexsen Pruet managing partner Leighton Lord, said the maneuver made a difference in the race. Lord said his campaign had taken in more money from actual donors, but the loan made it appear like Wilson had more financial support than his opponents. Wilson built steam from there and won the primary in June. 

“It was effective,” Lord said. “It worked.”

Few realized it at the time, but Wilson had quietly paid back the loan just two weeks after receiving it, leaving him with far less cash on hand that it initially appeared. But Wilson didn’t report that fact until July 2010 when he filed required campaign disclosure documents with the state. The primary was in Wilson's rear-view mirror by that point, and he would go on to win the general election. 

If that scenario sounds familiar it’s because his campaign strategist, Richard Quinn, employed a similar financial shell game in 2000 to help Henry McMaster retain his hold on the chairmanship of the state Republican Party, according to a recently unearthed GOP audit. With Quinn’s help, McMaster went on to become attorney general two years later. He is now South Carolina’s governor.

These political maneuvers go back several years, but some details have only recently come to light as a result of renewed scrutiny of Quinn’s dealings as the Statehouse corruption probe rolls on. Investigators are said to be interested in the mechanics of Wilson's timely loan, though the special prosecutor in charge of the probe, 1st Circuit Solicitor David Pascoe, refused to discuss the matter when contacted by The Post and Courier.

Wilson, now in his second term of office, would not speak directly with a reporter, but he did agree to answer some questions about the episode in writing. He maintained his campaign "fully complied with all legal reporting requirements" in regard to the transaction in question and a second loan also taken out that year.

"All bank and loan information was publicly disclosed when both loans were made and they were publicly disclosed when both loans were paid off," he stated.

Wilson, however, sidestepped specific questions about whether he received assistance in securing the $250,000 loan from his former boss at a Columbia law firm who served as chairman of the First Community Bank's board of directors. He also didn't respond to questions about his motivation for seeking the loan and whether Quinn was involved in those decisions.

A number of questions remain. But a Post and Courier examination opens a window into the murky ways candidates raise money, the cozy relationships with operatives and financiers, and how these relationships can fuel political ambitions and success.

Making a name

Wilson was hardly a household name when he set his sights on the Attorney General’s Office in 2010 at age 36. His stepfather, Republican U.S. Rep. Joe Wilson, had achieved national notoriety after yelling “You lie!” at President Barack Obama during a 2009 speech to Congress. But the younger Wilson, who had served with the National Guard in Iraq, was a little-known commodity outside of legal circles, much like his opponents. In addition to Lord in the GOP primary, he faced Robert Bolchoz, a former prosecutor working in private practice.

A report in The (Columbia) State newspaper at the time noted that there were no obvious favorites in the contest “but money and name recognition win political races. Who will amass the most of both among these candidates remains to be seen.”

A Post and Courier article stated Wilson had taken the lead in the money category by entering the race with $459,198 in donations raised, edging out Lord by about $32,000 and amassing nearly double what Bolchoz had taken in. Slightly more than half of Wilson’s take, however, had come from the First Community Bank loan, campaign filings show.

Wilson secured the one-month, short-term loan on March 26, 2010 — five days before the deadline for candidates to report their cash on-hand, campaign records show. The interest rate was listed at 5.75 percent.

A subsequent filing showed Wilson paid back that principal, plus $559, two weeks later. The Post and Courier could not determine what Wilson had put up as collateral to secure the loan.

Fellow Quinn client McMaster had been aided by a similar money shuffle in 2000 while trying to fend off attempts to unseat him as chair of the state GOP.

The companies of Quinn and his son Rick, a Republican state representative from Lexington, provided the lion’s share of an $85,000 donation to the cash-strapped party in May of that year. The infusion came just before members were to vote on a new chairman, masking sagging finances that had left the GOP in the red. McMaster was re-elected, and the party quietly refunded the Quinns' donations.

Richard Quinn has not answered questions about those timely donations to the GOP in 2000, but he told The Post and Courier on Friday he had no knowledge of the $250,000 loan that boosted Wilson's profile a decade later.

“It’s all news to me," he said. "It’s the first time I’ve heard about it.”

Quinn added that most every candidate he knows of borrows money to launch an election bid. “It’s not unusual for candidates to borrow money to seed their campaigns,” he said.

The actions of Quinn and his clients have been under increasing scrutiny since his name surfaced last month in indictments accusing veteran state Sen. John Courson, R-Columbia, of improperly funneling campaign money through the consultant for personal gain. Courson is one of three lawmakers netted so far in Pascoe's investigation, which is said to be honing in on Quinn’s activities.

Wilson continues to stand by Quinn, and he said Friday that the consultant's firm "will continue to provide my campaign the same services which they have provided through two successful statewide campaigns."

Quinn, who has not been charged with a crime, has tentacles throughout state government and the many firms that feed off it. He also has ties to Wilson’s former boss, Mitch Willoughby, who was chairman of First Community Bank's board of directors when Wilson received his quarter-million dollar campaign loan. 

Willoughby did not return phone calls or emails Thursday and Friday seeking comment on the 2010 loan or the lawsuit he would later spearhead for the state that would earn him a multi-million dollar payday.

Big payday

Willoughby, in practice since 1977, has long been recognized as one of the state’s leading attorneys for administrative and regulatory law. His firm has done ample work for the state, including some $1.6 million in legal work for the State Ports Authority — another Quinn client — between 2012 and 2015, SPA records show.

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With that experience in mind, the veteran litigator was tapped during McMaster's tenure as attorney general to represent then-S.C. Treasurer Converse Chellis in a lawsuit they planned to file against the Bank of New York Mellon, which had been accused of losing $200 million of retirees’ money through bad investments. The lawsuit was eventually filed in January 2011, the same month that Wilson took office, along with a new state treasurer, Curtis Loftis. 

Wilson said he had no involvement with the case while he worked for Willoughby's firm and knew nothing about it until after he was elected attorney general. Even then, his involvement was limited, and his chief deputy was tasked with managing the case, he said. 

The bank case remained on the docket for two years before a settlement was reached in 2013. The pact called for the bank to credit $25 million to South Carolina’s accounts and provide discounts on future fees under a new 10-year contract with the state.

Willoughby walked away with $7 million in attorney fees for his work. Another $2 million went to attorney Michael Montgomery, who was added to the case after Loftis took office.

Retirees howled about the settlement, but Loftis said Thursday he still considers it a significant win because the state’s case had suffered setbacks and “every day we stayed in this it was getting weaker.” He said he had no role in Willoughby’s selection, but felt the attorney had done a commendable job.

“Mitch does excellent work,” he said. “We use him now on other things.”

The case, however, got Loftis ensnared in an ethics investigation after news surfaced that Montgomery was a longtime friend and former fraternity brother of the treasurer. He'd also served as his private attorney and on the board of a charity Loftis had founded.

Loftis has maintained he did nothing wrong and that he had received assurances there was no problem in hiring Montgomery — a move he said was made at Willoughby’s request. He also insists the investigation was payback for his staunch criticism of the state’s retirement investment commission. Still, the state Ethics Commission reprimanded Loftis last year for his actions and ordered him to pay a $500 administrative fee.

Willoughby’s payday for the case received less attention at the time, and it doesn't appear to have affected his relationship with his former employee. Since Wilson took office in 2011, Willoughby’s firm and its attorneys have earned nearly $1.2 million representing the attorney’s general’s office in three other matters — making the firm the second highest earner among outside counsels hired for hourly-fee cases, according to figures provided by Wilson's office.

Wilson, Willoughby and Quinn also are centrally involved in the Cayce-based Conservative Leadership Project, a nonprofit started by Wilson and his allies in 2012. Quinn is listed in IRS filings as the group’s president. His daughter, Rebecca Mustian, and Willoughby serve as directors. Mustian is married to Ben Mustian, an attorney with Willoughby’s firm. 

The nonprofit gave Wilson some high-profile exposure in 2015 hosting a series of forums with the 16 Republican presidential contenders ahead of South Carolina’s first-in-the South GOP primary. At the time, Wilson was heavily rumored to be mulling a run for governor in 2018. He has said little about his prospects, but told The Post and Courier that he has every intention of continuing his work with the nonprofit. 

"I hope to continue working with the Conservative Leadership Project in the future, especially on educating the public on conservative solutions to problems facing our state," he said.

Schuyler Kropf contributed to this report.

Reach Glenn Smith at 843-937-5556 or follow him on Twitter @glennsmith5.

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