Judge Cancels Criminal Investigation of House Speaker

May 12, 2014

Investigative Reports

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Bobby HarrellS.C. Attorney General Alan Wilson or the state grand jury can’t investigate whether House Speaker Bobby Harrell broke any criminal ethics laws – at least for now, Circuit Judge Casey Manning said in a highly anticipated ruling issued late this afternoon.

Ruling that the Harrell case is a “matter solely within the purview” of the state House Ethics Committee, Manning ordered that an earlier court order convening the state grand jury in Harrell’s case is “hereby rescinded and revoked.”

Continuing, Manning ordered that “neither the Grand Jury nor any other investigative agency shall take any further action concerning the ethics violations allegations discussed herein until such time as a final determination is made by the House of Representatives Legislative Ethics Committee and/or referred by the House of Representatives Legislative Ethics Committee to the Attorney General” as outlined under the state ethics law.

“Thus, until the South Carolina House of Representatives Ethics Committee has either referred the matter to Attorney General Wilson or has otherwise acted on the complaint, exclusive jurisdiction resides solely within the South Carolina House of Representatives Ethics Committee,” Manning said.

Manning dismissed Wilson’s position that the case “rises to the level of criminal activity under his jurisdiction,” citing a 1994 state Supreme Court ruling that he said “provides that Ethics Act violations are civil in nature, not criminal.” The state ethics law, however, provides for criminal penalties, Wilson and others have pointed out.

In a footnote in his ruling, Manning, citing an affidavit of Wilson, which has not been released publicly along with other court documents requested by The Nerve, said Wilson “continued to characterize the complaint as an ethics complaint even after the matter was referred to SLED (State Law Enforcement Division).”

Manning’s five-page ruling was released at 6 p.m. through James Parks, the state grand jury clerk. It followed two court hearings – March 21 and May 2 – before Manning in the Richland County Courthouse.

Reaction by Wilson to Manning’s ruling was swift.

“We believe today’s order of Judge Manning is without any foundation or support in the law,” Wilson said in a prepared statement released this afternoon. “This Office will vigorously pursue all appellate remedies and will seek to continue this investigation.”

Manning’s ruling contradicted the position of three former S.C. attorneys general – Travis Medlock, Charlie Condon and Henry McMaster – who appeared in support of Wilson at the May 2 hearing.

“Over the past thirty years, not one of us ever imagined the Attorney General needed authorization from a legislative committee or political body in order to investigate or prosecute alleged criminal behavior by an elected official,” Medlock, Condon and McMaster said in a joint statement released the day of the hearing. “Such a restriction would undercut the core Constitutional authority of the Attorney General. And even more importantly, it would violate the fundamental basis of our system of government that all people should be treated equally under the law.”

Harrell, R-Charleston, who has elected to the House in 1992 and became the House speaker in 2005, has repeatedly denied he has done anything wrong, and he has not been charged with any crimes. He attended both hearings before Manning, though he issued no in-court statements.

The South Carolina Policy Council – the parent organization of The Nerve – in February 2013 submitted a public-corruption complaint against Harrell to Wilson, who referred it to SLED. After a 10-month investigation, SLED submitted its report to Wilson, who announced in January that the case had been referred to the state grand jury, a division of the Attorney General’s Office, for further investigation. Under state law, both the attorney general and SLED chief have to agree to a state grand jury investigation, and the chief administrative judge of the state grand jury must impanel the jurors.

Harrell’s state grand jury case normally would have been assigned to Richland County Circuit Judge Robert Hood for administrative purposes, but for still-unexplained reasons, Manning announced at the initial March 21 court hearing that he had been assigned to the case. Manning also revealed at the May 2 hearing that he had previously asked both sides to argue the question of whether the case belonged with the House Ethics Committee.

Ashley Landess, the Policy Council president, last month publicly warned what could happen if Manning ruled that Harrell’s case was non-criminal and belonged solely with the House Ethics Committee.

“Public corruption is a crime that is separate and apart from the ethics committee,” Landess said then. “If the attorney general is not allowed to investigate all public corruption, then that has ramifications for every politician.”

Attorney General’s Authority

In a Feb. 14, 2013, letter to Wilson that accompanied the Policy Council’s complaint, Landess wrote that the “apparent ethics violations, if proven, could be plausibly seen as a pattern of public corruption that would be out of the jurisdiction of the House Ethics Committee to investigate.”

Although the House and Senate Ethics committees have the legal authority to investigate lawmakers for ethics violations, any alleged criminal violations of state ethics laws must be referred to the state attorney general (Section 8-13-540 (3) (d) of the S.C. Code of Laws). The S.C. Constitution designates the attorney general as the “chief prosecuting officer of the State with authority to supervise the prosecution of all criminal cases in courts of records.”

In his ruling this afternoon, Manning cited a 2013 state Supreme Court ruling that dismissed a lawsuit brought by John Rainey, who sought a court declaration that Gov. Nikki Haley violated state ethics laws when she was a House member. In that ruling, the high court, which upheld an earlier ruling by Manning, said that generally, “ethics investigations concerning members and staff of the Legislature are intended to be solely within the Legislature’s purview, to the exclusion of the courts.”

But although agreeing with the majority of justices in the result, Justice Donald Beatty, who was joined by Justice Kaye Hearn, noted in a separate opinion that the attorney general could have investigated Haley on his own, as The Nerve reported last month.

“Although (Rainey) was not the proper party to pursue the criminal action, his concern for the public was not without recourse as the Attorney General’s office, either on its own initiative or via referral from the House of Representatives Legislative Ethics Committee, could have sought a criminal determination of the alleged misconduct,” Beatty wrote.

How the five-member Supreme Court will rule in an expected appeal of Manning’s latest ruling is anybody’s guess. The Nerve in February asked Chief Justice Jean Toal, who was re-elected that month to another term to her seat, whether she would recuse herself from the Harrell case if the grand jury indicted him, given that under a 2000 administrative order issued by the Supreme Court, including Toal, the chief justice would assign the trial judge in his case. Toal didn’t directly respond; her longtime clerk of court, Daniel Shearouse, in a written statement said only, “It is simply inappropriate for the Chief Justice to consider or respond to your hypothetical questions.”

If House Ethics Committee takes up the Harrell case, it couldn’t consider ethics violations more than four years old under a longstanding loophole in state law, The Nerve reported last month.

The 2013 Policy Council complaint asked that Wilson’s office investigate whether Harrell:

  • Used his office for his financial benefit or that of his family business;
  • Used campaign funds for personal purposes;
  • Failed to maintain required records documenting his campaign expenditures;
  • Adequately itemized campaign reimbursements as required by state law; and
  • Violated state law by appointing his brother to a state judicial screening panel.

“We have limited our complaint to the five issues for which there seems to us little question that the Speaker was not in compliance with the law,” Landess wrote in the accompanying letter to Wilson. “We believe a thorough investigation is warranted to determine if that is the case, and also to determine if there were/are other violations which have not yet been brought to light.”

Landess publicly announced in January 2013 that the Policy Council was considering filing a complaint against Harrell with the 10-member House Ethics Committee, though she expressed concerns then about the committee’s objectivity, pointing out inherent conflicts of interest under state law.

The way the law (Section 8-13-540 of the S.C. Code of Laws) is written, for example, the speaker would not be required to recuse himself from an Ethics Committee investigation if he were the subject of a probe. However, committee members could not participate “in any matter” if they faced an ethics complaint.

The law also would require the committee to report its findings on the speaker, which would include an order of punishment, in writing to the speaker. And if the speaker decided to appeal the recommended sanctions against him, he would be required, under the law, to convene the entire House to either uphold or reject the committee’s action.

Given that the speaker controls the appointments to most House committees, though not the Ethics Committee, and thus has considerable influence over legislation, many House members likely would be pressured to side with the speaker.

One of the main problems, Landess has said, is that because the House speaker has ultimate authority over all House employees, the House Ethics Committee staff could not be objective in investigating allegations against Harrell, much of which involved his use of campaign funds.

Allegations against Harrell

Harrell’s use of campaign funds came under fire after The Post and Courier reported in September 2012 that Harrell had offered no details to the Charleston newspaper regarding more than $325,000 that he had reimbursed himself from his campaign account since 2008. Citing an email response from Harrell, the newspaper reported that many of the reimbursements he made to himself covered the cost of flying his private plane to political or legislative events.

The Associated Press later reported that Harrell returned about $23,000 to his campaign account after informing the State Ethics Commission in a letter that he didn’t have records supporting that expense amount. Harrell at the time said he believed all of those expenses were legitimate and later said those records were lost in an office move.

State law allows campaign funds to be used to cover “reasonable and necessary travel expenses,” and that those funds cannot be “converted to personal use.” Another section of the law requires that candidates for public office “maintain and preserve all receipted bills and amounts” required under the law for four years.

The Nerve in October 2012 reported, citing flight and House records, that in 2008, Harrell took at least nine weekly round trips with his private plane between Charleston and Columbia when the Legislature was in session, and also received car-mileage reimbursements for 21 weekly round trips.

The House was in session 23 weeks that year – seven fewer weeks than the combined total of Harrell’s weekly car and plane trips for the period – raising questions about his flying and driving patterns during that session.

The Nerve reported in January of this year that Harrell listed no specific travel reimbursements to himself on his campaign expenditure forms for all of 2013. Harrell has declined repeated requests by media outlets, including The Nerve, to release copies of records detailing his campaign expenses.

In January 2013, The Nerve revealed that Harrell in 2006 asked that state Board of Pharmacy, a division of the S.C. Department of Labor, Licensing and Regulation, in a handwritten note on his official House speaker letterhead for “urgent attention” to his request for a “new non-dispensing drug outlet permit.”

Harrell in recent years had been the president of a Charleston-based repackaging pharmaceutical company called Palmetto State Pharmaceuticals, which also went by the name of PrimaryRX. The permit sought by Harrell in 2006 would have allowed his company to administer and store pharmaceutical drugs.

The Nerve’s January 2013 story also revealed that in a 2010 letter to hospitals statewide, Harrell pushed to expand his pharmaceutical business to emergency rooms, pointing out in the first sentence of his letter that he was “writing you today not in the capacity as Speaker of the House of South Carolina, but as a business owner.” The Nerve reported in January of this year, citing Secretary of State records, that Palmetto State Pharmaceuticals had dissolved in December 2013.

State law bans public officials from using their office to “obtain an economic interest for himself, a family member, an individual with whom he is associated, or a business with which he is associated.”

Under another state law, a public official cannot “cause the employment, appointment, promotion, transfer or advancement of a family member to a state or local office or position” supervised or managed by the public official. The same law bans public officials from participating in “an action relating to the discipline” of their relatives.

As House speaker, Harrell appointed his brother, John Harrell, a Charleston attorney, to the state Judicial Merit Selection Commission, which nominates judicial candidates for election by the General Assembly. By law, the speaker appoints half of the 10-member panel.

State law says non-legislative commission members are “subject to a right of removal at any time by the person appointing him,” which would mean the House speaker would have the authority to remove his brother from the panel in contradiction to the other law banning public officials from disciplining their relatives.

Although he didn’t cite the Policy Council by name, Manning in his ruling this afternoon said the “allegations of the citizen’s complaint giving rise to this investigation were conclusively within the Ethics Code.”

“Despite multiple requests, the Attorney General has failed to offer or present to the Court any evidence or allegations which are criminal in nature,” Manning said.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thnerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.