501(c)(3) funds no programs to help students, IRS forms inconsistent and incomplete
By RON AIKEN
(Editor’s Note: On Tuesday, Nov. 29, the day after this story appeared the South Carolina Attorney General’s Office asked the South Carolina Law Enforcement Division (SLED) to open an investigation into SCALE, Inc., which it has.)
A charity with one employee and a mission to help at-risk children and the homeless has received $221,000 in hospitality-tax money from Richland County since 2014 and will receive another $75,000 this year despite providing no correct addresses to the S.C. Secretary of State and IRS and having no accomplishments related to its mission, documents obtained through the Freedom of Information Act show.
Besides the support of the hospitality tax over the years, Second Chance Afterschool Learning Environment, Incorporated (SCALE) also has received:
- A donation of 32.7 acres of land the county did not buy as part of the $1 million Pinewood Lake Park purchase in 2012, including the dam the county did not want for liability reasons. The most-recent valuation of the two parcels at 1217 and 1150 Old Garners Ferry Rd. by the Richland County Assessor’s office was a combined $472,700;
- A $24,000 easement paid to SCALE by Richland County for right-of-way on the dam to construct a walking trail around the pond. Because of damage not repaired by SCALE since the October 2015 flooding, that portion of the walking trail is still closed to the public; and
- Has doled out $130,000 of the $296,000 it will have collected through FY 2016-17 to a local restaurant, Mobay Caribbean Restaurant & Bar at 7314 Parklane Rd., to run the Carolina Sun Splash Festival, a reggae concert that takes place in May at the Richland County Recreation Department’s Garners Ferry Road complex.
That means that in total, a nonprofit whose registered agent’s official address is an abandoned school, whose business address is a hair salon whose owner has no knowledge of SCALE and whose address on file with the IRS is a foreclosed home last owned by an Arkansas widow will have received $296,000 in funds meant to attract tourists, $472,000 in a donation of land at county councilman Norm Jackson’s recommendation and another $24,000 from Richland County for a dam easement it cannot use.
Such wealth — $792,000 in cash and land since 2014 — would be great if any of it went toward SCALE’s mission of helping Lower Richland County’s poorest students and homeless succeed, but records show it has not.
Instead, it has gone directly to SCALE, Inc. CEO Pat Ford, who oversees its disbursement for an annual Horrell Hill parade and reunion banquet, and indirectly to Mobay restaurant principals Michelle Edwards and Nigel Sandiford (aka “Butta”) to organize the Caribbean-themed Carolina Sun Splash festival, which began in 2014.
SCALE has refused to comply with Freedom of Information Act requests for receipts to corroborate its spending of hospitality-tax dollars. Its reports both to the IRS and to Richland County are absent any detailed information whatsoever.
When reached for comment for this story, Ford refused to answer questions about her group’s finances, name board members, name a current address or provide a list of any activities that the group has done to fulfill its mission of helping at-risk students. Instead, Ford asked why the reporter was being “so nosy” and hung up before sending an email minutes later accusing the questions as having been racially motivated.
An analysis of SCALE’s IRS Form 990s shows significant reporting irregularities that a spokesperson for the South Carolina Association of Non-Profits (SCANPO) called “disturbing.”
The IRS requires nonprofits to submit Form 990s, which require charities to list their total income, how they spent it, their board members, their employees/CEO and related compensation, their assets and their financial position at the beginning and end of the year.
On no Form 990 obtained for SCALE from 2010 to the present does it fulfill those IRS requirements. Nowhere are board members identified and listed, nowhere is the annual compensation received by Ford listed and nowhere are any activities listed that support the charity’s mission.
The forms also are replete with financial irregularities.
On SCALE’s 2013 filing, it lists income of $70,050 in gifts and $42,050 in expenses: $33,000 in professional fees, $8,050 in rent (without a business address) and $1,000 on printing. That left a net asset or fund balance of $28,000.
In the following year’s filing, the IRS asks for the amount of money carried over from the previous year (specifying it must agree with last year’s amount). The amount claimed is $2,000, or $26,000 less than SCALE said it had at the end of 2013.
That’s just one example.
There are many more, including gift amounts for particular years that change and vague mission statements that change (in 2012, SCALE said it exists to “enhance and develop communities in rural areas by promoting the implementation of knowledge and skills essential to economic development,” while in 2013 it claimed to exist to promote family oriented activities “like an uplifting gospel concert or much-needed family/community activity to infuse some vitality into local markets.”)
While having a brick-and-mortar business address is not required for a non-profit, keeping one’s mailing address up-to-date with the IRS and Secretary of State’s office is, as is:
* having a board that meets at least once a year and takes minutes;
* keeping accurate records of financial information;
* providing accurate information to the IRS via the Form 990;
* providing the public with its Form 990s and board minutes if asked;
* providing the public and the IRS with the names of board members; and
* serving its stated mission of being a charity.
SCALE has met none of the above criteria expected of a 501(c)(3) classification, a review of its forms shows. When brought to the attention of SCANPO operations manager Ben Bullock, Bullock said clearly their files are “mixed-up.”
“It’s hard to tell what’s malfeasance and what’s incompetence,” Bullock said. “Personally, I try never to assume malice when incompetence will explain it.
“These forms have a lot of problems that aren’t easily explained; they’re kind of all over the place. I imagine the IRS would have some questions about them if they ever looked at them, but the reality is they get so many every year that the IRS just does not have the capability to review and check every single thing.”
One thing Bullock said SCALE definitely is doing wrong is not listing the compensation amounts for its CEO, not listing board members and not making such information available when requested.
“They are required by law to do those things,” Bullock said. “SCANPO does not support decisions made to hide what nonprofits do.
“I would invite them to come to our office for training anytime.”
WHAT DOES SCALE DO?
SCALE’s website lists no programming, and it’s “Education” page is blank. Its home page consists of 11 scanned pictures, some of which appear to be at least a decade old. They include a picture of children in a classroom, a child walking with an older man in a field, children swimming, a banquet with the “Original Drifters” and a picture of a Horrell Hill parade float.
According to its website, the stated mission of SCALE is to “provide mentoring images (sic) through community service activities and developing older participants to become active mentors of younger participants; provide educational counseling and ability to benefits testing (sic) for achievement (sic) a higher level of education; provide tutorial assistance to improve academic accountability; provide employment readiness skills; provide job placement information; provide youth with knowledge and skills; provide assistance to homeless people; and increase tourism.”
Quorum could find no evidence of any academic, tutorial or homeless-support work by SCALE, only the management of a Horrell Hill community parade/reunion banquet and the distribution of money to the Carolina Sun Splash Festival, which is organized and run by Mobay Caribbean Restaurant, according to invoices and contact information available on fliers for the event on Facebook and online.
A call to Richland School District One Spokesperson Karen York revealed no educational or after-school partnerships with SCALE now or within anyone’s memory at the district. Richland County Recreation Commission records show no relationship with SCALE whatsoever for the purposes of tutoring, mentoring, summer camps or after-school activities.
Of the $75,000 SCALE was awarded in hospitality-tax dollars for FY 2016-17, all of it came solely from Norman Jackson. This was made possible because when District 10 councilman Kelvin Washington was removed from his seat by Gov. Nikki Haley in March following his indictment on tax evasion, each council member received an additional $164,000 to divvy out as they saw fit. Only Jackson gave to SCALE, allocating $28,000 to SCALE itself and $47,000 to the Sun Splash event.
In its plans for that $47,000, Mobay included securing entertainment ($20,000), security ($2,000), accommodations ($3,000), marketing ($3,000), billboard advertising ($5,000), a DJ ($6,000) and event food ($4,000) despite Mobay selling its own food and alcohol at the event for profit.
The budget also lists $4,000 for the rental of the field from the Richland County Recreation Commission; however, a 2015 field-rental bill obtained from the commission for the “Sunsplash Festival” paid by Mobay’s Michelle Edwards on March 23 shows a cost of only $580 — a $3,400 discrepancy.
In fact, in records dating back to 2013 SCALE spends exactly the amount of hospitality-tax money it receives to the penny, regardless of the amount disbursed, without providing any receipts from vendor to justify costs.
According to the Hospitality Tax Grant Payment Request Forms submitted by SCALE to Richland County dating back to 2014, SCALE claims:
FY 2013-14: Contributions: Hospitality tax $50,000. Expense: Tourism events $50,000.
FY 2014-15: Contributions: Hospitality tax $50,000. Expense: Tourism Events $50,000 (a “reunion banquet” for $33,800 and a “gospel festival” for $16,200).
FY 2015-16: Contributions: Hospitality tax $18,000. Expense: Tourism event: $18,000 (“Horrell Hill parade & festival events”)
FY 2016-17: Contributions: Hospitality tax $25,000. Expense: Tourism events $25,000 (“reunion banquet” for $13,650 and “Horrell festival” for $11,350).
Of note: The figures claimed by SCALE on these forms for hospitality tax money received do not match the figures provided by Richland County through a Freedom of Information Act request. Documents provided by Richland County Grants Manager Natashia Dozier show disbursements of $60,000, not $50,000, for both 2014 and 2015 – a $20,000 discrepancy.
SCALE uses three separate addresses with the government, none of which are current.
According to the SC Secretary of State’s website, Ford is listed as the agent of record with an address of 500 Vanboklen St. in Eastover. That is the location of the former Eastover Grammar School, now a dilapidated, dangerous structure overgrown with weeds and featuring a collapsed roof and mold-filled rooms strewn with beer cans.
That address is important because as the registered agent’s address, that is where any legal documents, such as when served with a lawsuit, would be delivered. While the state requires a physical address to issue a business license, it does not police them once entered nor have any enforcement authority to punish those in violation of its policy.
“We do our best to keep accurate records, but if no one lets us know we have no way of knowing (if an address is accurate or not),” said Renee Daggerhart, media relations director for the SC Secretary of State. “We have no way of enforcing that and can’t penalize companies for not keeping information up to date.
“It’s kind of an honor system.”
The business address on file with the Secretary of State’s office also isn’t valid. SCALE lists the official business address as 1701 Leesburg Rd., which records show is a 5,000 square-foot commercial building that currently houses the Agape Hair Salon. Reached by phone, owner Michelle Gibson said “Oh God, no,” when asked if SCALE has an office at her business.
“SCALE who?,” she said.
The official business address SCALE uses with the IRS is 151 Spreading Branch Dr. That address is a three-bedroom, 1,456-square foot home in Hopkins owned by Edgle Marie Williams White of Arkansas, who co-owned it with her husband, Michael, until his death in 2013 when she moved back to Arkansas. The home was officially foreclosed upon in mid-October and an auction to sell the home took place at the Richland County Courthouse on Nov. 7.
When visited by a reporter in October, a man calling himself Joe Brown answered the door and said he had worked with the late Michael White at Defender Services and had been staying at the home after being displaced from the 2015 flooding. Brown said he knew of Ford and had done some work for her in the past – what, he wouldn’t say – and would give her any mail that she received at the address.
Before ending her call abruptly, Ford said she was “in between locations” and that she intended to “build on the land we own” at 1151 Old Garners Ferry Rd. As far as the county is concerned, officials hope she first fixes the property damage on the dam SCALE owns to make the walkway the county paid $24,000 to use usable.
GIVING A DAM
In 2012, council refused to include the dam in its $1 million purchase (even though it paid the same price without the dam as it would have with it) because of liability concerns. In a July 31, 2013 article in the (Columbia) Free Times, Council member Greg Pearce said his only concern was that if a problem arose, the county may not be able to force the property owner to fix it, which is precisely what has happened.
“We do not own the dam, and we cannot force the property owner to do anything to improve the property,” said Pearce, who admitted he knew “very little” about SCALE other than it being a charity in District 11 Jackson has argued in favor of in hospitality-tax discussions, he said.
“I understand it’s been damaged, but there’s not a thing we can do about it because we don’t own it.”
SCALE came by the three lots totaling 32.7 acres when owner John C. Gwinn Jr. couldn’t sell it to the county and created an entity called Caughman Pond LLC in March 2012. Less than a month later he donated the parcels to SCALE, Inc.
The choice of SCALE as the beneficiary of a gift of land valued by the county at a combined $472,700 that was not part of the county’s $1 million purchase of Pinewood Lake came at the recommendation of Jackson and others, Gwinn Jr. said when reached at his Hopkins farm.
“Their name came up, among others, as being somebody in this area I could donate the land to,” said Gwinn, who confirmed that Jackson was among those recommending SCALE. “I understood that they helped children from disadvantaged areas.
When told of SCALE’s listed activities, Gwinn was genuinely disappointed.
“I’m sorry to hear that,” he said. “Maybe I could have looked a little harder to find someone to give it to.
“I was going on everybody’s honesty when they told me what SCALE did. So I said, ‘Oh, sounds like a good thing.”
When it comes to accepting land with dams on it as gifts, Bullock said as a general rule he cautions nonprofits against it because they quickly can become expensive liabilities rather than valuable property.
“People think they’re doing a nonprofit a favor by leaving them a piece of land with a dam or spillway on it, but what they’re really doing is tying them legally to that dam’s upkeep and repair, and few nonprofits, especially small ones, are prepared to deal with those kinds of challenges,” he said. “When I come across people in those situations, I always urge them to sell them as quickly as possible.”
It is unlikely that the dam or two wooded lots SCALE owns will be bought anytime soon, at least by Richland County.
“I think the mood on council about Pinewood Lake Park is different now than it was before,” he said. “We’re going to proceed very cautiously in the future.”
What also is unlikely now is the kind of carte-blanche approval to individually recommended charities without a measure of due diligence by council as to their affairs and their verified success in bringing tourism to Richland County rather than serving local communities.
“I voted against these expenditures (at Pinewood Lake Park) from the start because I didn’t believe they were wise uses of taxpayer dollars and I was concerned about accountability.
“The law governing how h-tax dollars can be spent needs to be changed. Under the current statute it is extremely vague and general as to what h-tax dollars can be used for.
“The result is abuse and poor financial allocations to entities that are providing no accountability. This is unacceptable.
For councilman Bill Malinowski, SCALE is yet another example of events with a local flavor getting money meant to bring tourists to Richland County.
“When you’re in Hopkins and 99 percent of the people at the event are from Hopkins, that does not deserve h-tax money,” Malinowski said. “That’s not tourism.
“With SCALE, I don’t know anything about them other than Pat Ford asking for money to help kids. What you’ve explained doesn’t seem to have anything to do with learning or helping kids. How can they justify h-tax for a reggae concert or small-town parade and reunion?
“But honestly, I’m not real shocked about that group.”
For Further Reading: