Sen. Leatherman Doles out Campaign Money for ‘Charity’

February 24, 2014

Investigative Reports

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By RICK BRUNDRETT

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In six years, Finance chairman spend $90,000 on Christmas gifts with campaign money

Over the past six years, longtime S.C. Sen. Hugh Leatherman – the Senate’s most powerful lawmaker – spent more than $600,000 from his campaign account, though he faced no opposition in either the 2008 or 2012 elections.

A review by The Nerve of the Florence County Republican’s campaign expenditures filed with the State Ethics Commission show that he spent more than $200,000 from 2008 through last year on donations to various nonprofit organizations and churches; membership dues to two Florence economic-development organizations; office expenses for the Florence County Republican Party and Senate GOP Caucus; and flowers, frames, Christmas gifts and meals for mostly unnamed constituents and staff.

Leatherman’s generosity with campaign donors’ money over the six-year period included:

  • $2,050 to the Senior Citizens Association in Florence County, which operates a senior center named after Leatherman;
  • $16,569 on “staff,” “teacher” and “constituent” meals and receptions at the swank, members-only Capital City, Palmetto and former Summit clubs, located within walking distance of the State House. No attendees are identified in those listings;
  • $17,500 to The School Foundation in Florence, a nonprofit organization that supports Florence County School District 1. Leatherman’s wife, Jean Leatherman, president of ERA Leatherman Realty, is listed on the foundation’s website as a member of the organization’s board of directors; and
  • $90,061 for ornaments and gifts – mainly Christmas ornaments – for unnamed constituents. The items were purchased from the Texas-based Ne’Qwa Co., which was acquired in 2012 by Missouri-based Precious Moments, according to online records. The number or types of ornaments aren’t described in Leatherman’s disclosure forms. An online collectibles site describes the Ne’Qwa ornaments as a “centuries-old tradition of painting on the inside of glass”; one price listing showed individual ornaments ranging from $31 to $85.

During the six-year period, Leatherman spent all but $24,220 of the $625,890 in campaign contributions he received, The Nerve’s review found. Last year, which is part of the 2016 election cycle, he spent more than $62,000, though he took in less than $7,000, records show.

Still, Leatherman, who is chairman of the Senate Finance Committee and sits on the five-member S.C. Budget and Control Board, had more than $626,000 in contributions on hand as of Jan. 8, according to his most recent campaign-disclosure filing.

The Nerve last week left multiple phone and written messages for Leatherman seeking comment but received no response.

In April last year, The Nerve reported that a concrete company with ties to Leatherman received more than $30 million in state funding, mainly through the S.C. Department of Transportation, since 1993. Leatherman was the longtime president of Florence Concrete Products, though he didn’t publicly reveal his current stock ownership in the firm until after The Nerve submitted an open-records request for the April story.

No one has accused Leatherman, who joined the Senate in 1981 and serves on the Senate Ethics Committee, of breaking any state ethics laws. The law (Section 8-13-1348 of the S.C. Code of Laws) bans the use of campaign funds for personal expenses, but allows those funds to be used for “any ordinary expenses incurred in connection with an individual’s duties as a holder of elective office.”

A 1997 advisory opinion by the Senate Ethics Committee, which has the authority to police senators for ethical violations, allows senators to donate campaign funds to churches, community organizations, schools, political parties and “families in dire situations,” contending that those expenditures are a “longstanding function” of the lawmakers.

In contrast, the State Ethics Commission, which has jurisdiction over other elected officials other than state lawmakers, in a 2003 advisory opinion said charitable donations and contributions to political parties “may only be made at final disbursement,” noting that the state law in question does not “provide a laundry list of acceptable expenditures to be made from campaign funds and prohibited expenditures.”

That opinion cites a 1996 memorandum by the House Ethics Committee, which generally bans House members from using campaign funds for charitable contributions.

But the vagueness of the “ordinary expenses” language in state law has left plenty of room for interpretation by state lawmakers. For example, House Speaker Bobby Harrell, R-Charleston and a licensed pilot, in recent years reimbursed himself several hundred thousand dollars from his campaign account for travel expenses, much of it for the use of his private plane for legislative trips, as initially reported in 2012 by the (Charleston) Post and Courier.

Harrell currently is under investigation by the state grand jury, following a complaint filed last year by the South Carolina Policy Council – The Nerve’s parent organization. Harrell has denied any wrongdoing, and he has not been charged with any criminal or administrative violations.

The Senate this week is expected to continue debate on an ethics bill (H. 3945), though the legislation leaves intact the undefined “ordinary expenses” language.

Another state law (Section 8-13-1370) allows retiring politicians to donate their surplus campaign funds to nonprofit organizations when closing out their campaign accounts, though there’s nothing in the law that specifically allows current officeholders to use their campaign contributions for charitable purposes.

Leatherman’s “charitable” contributions from his campaign account even included a fellow senator. In July 2008, Leatherman donated $1,000 to then-Sen. Robert Ford, D-Charleston, for “fire expenses,” according to Leatherman’s campaign-disclosure report for that period.

Contacted Saturday by The Nerve, Ford confirmed he received the donation, noting that his home was destroyed by fire that year.

“I had a total loss,” Ford recalled. “I lost over $400,000.”

Ford, who had been in the Senate since 1993, resigned his legislative position in May amid a Senate Ethics Committee investigation that his misused campaign funds for personal expenses, including for such things as car payments, gym memberships, adult superstore items and a male-enhancement drug. The committee found that there was “overwhelming” and “substantial” evidence to support the panel’s eight-count complaint, and forwarded the complaint to the S.C. Attorney General’s Office, which turned it over to the State Law Enforcement Division for further investigation.

No criminal charges have been filed against Ford, who has denied any wrongdoing. He described himself in an October Nerve story as a “sacrificial lamb.”

“I was just so shocked,” Ford said Saturday when asked about Leatherman’s position in his ethics case. “Leatherman supported all my projects.”

“There were 11 projects, and he supported every one of them,” Ford continued, noting that Leatherman made donations in support of homeless veterans, “Operation Cool Breeze” and “Law Enforcement Day.”

Ford, however, couldn’t recall whether Leatherman made those donations out of Leatherman’s personal or campaign accounts.

When it comes to campaign expenditures, Ford described Leatherman as one of the Senate’s “big spenders.” The Nerve’s review of Leatherman’s campaign-disclosure forms from 2008 through last year found, though, that he had enough unspent campaign funds in the bank during the period to earn more than $86,000 in interest.

Leatherman paid more than the $18,000 in annual income taxes and another $9,500 in quarterly tax payments and tax deposits from his campaign account, records show. Interest earned on campaign accounts is taxable under federal law, according to information from the Internal Revenue Service.

Leatherman also paid a total of $8,745 over the six-year period to the Florence-based accounting firm of Webster Rogers LLP to prepare his campaign’s tax returns, records show.

Contacted last week by The Nerve, former longtime Sen. John Land, D-Clarendon, who retired in 2012, said while he was in the Senate, he and Leatherman were among a handful of senators who paid income taxes on their campaign accounts.

“Not all of us did it,” Land recalled. “Sometime I had to pay taxes because that is money that is coming to you that is not deductible.”

“It’s kind of like a business,” Land added.

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