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Forensic audit of Allendale County finds severe mishandling of finances

Allendale County (copy)

A forensic audit of Allendale County revealed numerous accounting shortfalls that left it open to fraud. File/Staff

ALLENDALE — The sheriff of Allendale County withdrew thousands in cash with no explanation. The clerk of court paid thousands in Christmas bonuses to staff, and to herself, without reporting them to the IRS. And the tiny, rural county has at least 45 bank accounts, some in individuals’ names, according to findings in a new forensic audit. 

The audit, by Burkett Burkett & Burkett of West Columbia, examined several years of financial records and cited a range of severe accounting deficiencies that left the county at serious risk of fraud. County Council members heard details of the new report on June 29.

The county lacks checks and balances in its accounting practices, has issued payments without invoices and hasn't kept a general ledger — one of the most basic of accounting tools — for the past 13 years, the auditors found.

Council members and the county administrator pledged to make improvements and cited changes already underway. They sought the audit after complaining that the county treasurer, who is elected, was not providing them basic information about revenue, among other concerns. The treasurer, Gerzell Chaney, resigned two weeks ago, just days after state lawmakers wrote to Gov. Henry McMaster urging him to take action.

William Goodson, who took over as county administrator in late 2019, has been working to address the escalating crisis since. "This is not a complicated county to run. This is a small business. We do not need 45 bank accounts," he said.

Ronald Burkett, the auditing firm's president, presented the audit to council. He said he couldn’t determine if employees had committed financial crimes but pointed to inept accounting that diminished hope of detecting it.

Among top concerns: Sheriff Tom Carter took out a “drug fund” account in his personal name and did not disclose it to the county administrator.

"I can't imagine why you would have an account (for county funds) in an individual's name," Burkett said.

In 2020, more than $11,000 was deposited into sheriff's "drug fund" account, including one deposit for $10,565 labeled simply “drug money.” Yet, the deposit wasn’t linked to any court proceedings, the audit says.

Carter also personally withdrew thousands of dollars from the account, the audit says. He took out nine cash withdrawals totaling $5,095 but provided no explanation of why he was withdrawing $3,695 of that money, the audit says. 

“There was no approval process for these cash withdrawals, no dual control, and no reporting to the County Administrator,” the audit says. “This is a material weakness and creates the potential for fraud.”

Carter did not immediately respond to a request for comment. 

The audit’s revelations come amid a decadelong parade of scandals involving South Carolina sheriffs. Roughly one in three South Carolina counties have seen their sheriffs run afoul of the law.

All told, 14 sheriffs have been accused of violating laws they were sworn to uphold. A fifteenth, this one in Orangeburg, funneled public funds into a bogus credit union to buy a $72,000 mobile home. 

The audit is also another blow to a county that has long struggled with soaring poverty, failing schools and government mismanagement. In the past five years, the state took over the county’s low-performing school district for the second time while three of Allendale’s public officials went to jail on embezzlement charges.

All this occurred after the county lost its lone newspaper, the weekly Allendale Sun, in 2015 — depriving residents of a key agent to scrutinize the actions of government officials.

Time and again in South Carolina, a lack of scrutiny and financial controls has led to allegations of mismanagement or worse, The Post and Courier has detailed this year in its Uncovered series. The newspaper has partnered with 16 news outlets to expose misconduct and questionable government actions across the Palmetto State, and explore the roots of those problems.

Beyond the Sheriff's Office, the Allendale County audit shows far-reaching risks given a lack of checks and balances and a serious lack of accounting across departments:

• Officials have kept no master list of capital assets.

• Payments for women's jail renovations were made without invoices.

• The county clerk alone has nine bank accounts and is the sole person receiving and distributing money in them. She paid $13,195 in Christmas bonuses to her staff, including herself, out of a discretionary fund in 2020 but didn’t account for them in the county payroll system or report them to the IRS on W-2s. The clerk, Elaine Sabb, did not immediately respond to a request for comment.

“It’s been going on and going on,” Burkett said. “All of this leads to potential for fraud.”

Tony Bartelme and Glenn Smith contributed to this report from Charleston.

Contact Jennifer Hawes at 843-937-5563. Follow her on Twitter @jenberryhawes.

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