Reality Doesn’t Match Hype in Eco-Devo Projects

September 8, 2014

Investigative Reports

Print Friendly, PDF & Email

SC Eco-development mapIn August 2011, state and local officials were beaming about the planned location of 5-STAR USA’s “global” headquarters in Marlboro County.

“5-STAR is a unique and innovative concept,” S.C. Commerce Secretary Bobby Hitt said at the time. “Their decision to locate here shows South Carolina’s business climate provides solid ground for innovative companies.”

“We are excited that 5-STAR has chosen Marlboro County,” Ron Munnerlyn, the Marlboro County Council chairman, said in a prepared statement. “We believe their expertise and vision will be a huge asset in developing businesses in our community and ultimately creating jobs and capital investment.”

The project, described vaguely then as a “venture capital start up investing in a manufacturing campus that will finance and manage vertically integrated businesses,” was supposed to involve a $25 million investment and create 1,000 jobs over five years, according to a Commerce release.

At the time, it was the second-largest job-creation announcement in South Carolina behind an announced, 4,000-job statewide expansion by Wal-Mart. The 5-STAR project was expected to be a godsend to rural Marlboro County, which in the summer of 2011 had the state’s third-highest unemployment rate at 18 percent.

But state and local officials aren’t talking about 5-STAR these days. That’s because the project never got off the ground.

“The 5-STAR thing did not materialize due to a lack of funding in the end,” Ron King, executive director of the Marlboro County Economic Development Partnership, confirmed Friday in a phone message left with The Nerve.

It’s not the first economic development project in the state’s Pee Dee area that didn’t live up to officials’ expectations. The Nerve in January reported about the financial struggles of the Softee Supreme Diaper Corporation, which faced a Sept. 3 deadline to create 262 jobs and invest $6 million in its Marion County production plant or face possible repayment of a $1 million state grant.

The project came nowhere close to creating 262 jobs, Marion County officials earlier told The Nerve.Contacted Friday by The Nerve, company president Collin Brown III said his company is “in the process of winding down,” but that another company plans to produce custom-order diapers at the same plant.

“Right now, I’m giving advice in the transition,” Brown said.

As in Marlboro County, the unemployment rate in Marion County has been among the highest in the state in recent years. In July, for example, Marion County’s unemployment rate was 11.3 percent – the fourth-highest rate behind Allendale (11.4 percent), Orangeburg (11.8 percent) and Bamberg (12.1 percent) counties, state records show.

Asked whether the state plans to seek repayment of the $1 million grant for the Softee Supreme project, Brown told The Nerve he plans to meet with Commerce officials this month, though no meeting date has been set, adding, “I have a lot of topics to discuss with them.”

Commerce spokeswoman Allison Skipper did not immediately respond Friday to written questions fromThe Nerve about Softee Supreme, including whether the grant has to be repaid.

Softee Supreme recently made news in another arena. Jonathan Pinson, a partner in the diaper company and former chairman of the S.C. State University Board of Trustees, was indicted last November by a federal grand jury on racketeering and other charges, including allegations that after the $1 million grant was awarded for the diaper plant project, he and others “devised a plan to submit false invoices to Marion County for engineering services supposedly provided to the diaper plant, illegally billing Marion County at grossly inflated rates for work which was not always completed,” according to the indictment.

A federal jury in Columbia in July convicted Pinson on 29 of 45 counts, including charges involving the diaper plant project. He is awaiting sentencing.

As for the failed 5-STAR project, King, of the Marlboro County Economic Development Partnership, said Friday there were “some state and county incentives” offered, though he added that “they were all performance-based, so the company did not receive any actual cash or property inducements.”

King didn’t provide any specifics in his phone message about the incentives and didn’t respond to a follow-up request from The Nerve seeking more details. Skipper didn’t immediately respond Friday to written questions from The Nerve about 5-STAR.

In an October 2011 written response to a request by The Nerve under the S.C. Freedom of Information Act for the state incentives agreement for the 5-STAR project, Commerce lawyer Karen Manning said the project had been approved for state job-development credits, which are refunds of a portion of employee state withholding taxes, though the company had “not finalized its revitalization agreement.” A Commerce press release at the time said the company also would receive “training funds.”

In an interview in September 2011 with The Nerve, Aubrey Crosland, who identified himself then as the interim CEO of the 5-STAR company and also the CEO of the Florence-based Pee Dee Community Development Corporation, said about half of the announced 1,000 jobs would come with a planned textile operation that would involve developing a brand of South Carolina cotton.

The other announced 500 jobs, he explained, would be generated by various small businesses that would locate in 5-STAR’s “incubator,” which would “provide services that normally a small business can’t afford,” ranging from payroll to child-care programs.

At the time, 5-STAR on its website listed the Pee Dee CDC as a “public partner” in the project, noting that the nonprofit organization “utilizes private and public funding to create jobs, stimulate local economies, help expand existing businesses and recruit new businesses” in the Pee Dee area.

But Crosland denied then there was any partnership between his company and the Pee Dee CDC, despite his dual positions and information on 5-STAR’s website in 2011 linking the two entities.

The 5-STAR website in existence in 2011 was no longer active as of Friday. Efforts Friday by The Nerveto reach Crosland for comment were unsuccessful.

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