SCALE Financial Reports Reveal Evidence of Fraud, Self-Dealing
By RON AIKEN
In a review of more than 60 pages of financial documents provided by the embattled charity SCALE (Second Chance Aftershcool Learning Environment), Inc., Quorum has found multiple instances of fraudulent invoices close to $9,000 from fictitious businesses whose beneficiaries all were members of SCALE CEO Patricia Ford’s family; misrepresented spending on advertising; inaccurately reported both attendance figures and overall impact and provided receipts proving only $12,859 in legitimate expenses for an event SCALE claims it spent $21,859 on.
For putting on the Horrell Hill Parade and festival in May and a “reunion banquet” in November and acting as a financial pass-through for Mobay Restaurant’s Carolina Sun Splash Festival, SCALE has received more than $160,000 of hospitality-tax money since 2014 and will receive $122,000 this year alone. With SCALE already under investigation by the FBI, the Attorney General and the Secretary of State’s office for questionable use of hospitality-tax dollars, being off-mission and operating under several phony addresses, the new findings raise questions about how thoroughly staff review the numerous financial reports the county requires those receiving hospitality-tax money to submit.
For fiscal year 2016-17, 72 entities in the Midlands received $4 million in hospitality-tax dollars, and each one of those entities is required to submit both mid-year and final financial reports accounting for their spending with attached receipts to verify that expenditures meet the goal of increasing tourism to Richland County.
With so much information — anywhere from 4,000-5,000 pages of documentation — it’s easy to see how not every page, every expense or even every organization undergoes rigorous scrutiny.
But when the errors include payments to family members totaling $8,700 in SCALE’s case for FY 2015-16 using fictitious businesses whose invoices don’t bother to include complete or accurate addresses or phone numbers (if at all) and which a simple search of county business license records and S.C. Secretary of State records can confirm are illegitimate, it’s harder to understand how something so blatant could fall through the cracks and who, if anyone, is holding non-profits that receive hospitality-tax money accountable?
TIPPING THE SCALES
As funding levels go, 2016 was a down year for SCALE.
Having received $60,000 from the county in 2014 and $125,000 in 2015, because of the last-minute changes to the award process prior to FY 2016 detailed above, SCALE only got $36,000 — $18,000 for its Horrel Hill parade/banquet and another $18,000 to turn over to the organizers of the Carolina Sun Splash Festival, which debuted in 2015 with $65,000 of SCALE’s $125,000 award dedicated solely to it.
FY 2016 is also the only year Quorum has been able to review SCALE’s documents, as Freedom of Information Act requests for the same documentation from FY 2014, FY 2015 and FY 2017 have yet to be delivered.
Even in a down year for SCALE, however, Quorum’s exhaustive examination of every one of SCALE’s receipts, invoices and supporting documentation for FY 2016 show a charity that appears to be meeting the definition of fraud in the legal sense of the word, meaning (1) false information (addresses, phone numbers) was presented as a statement of fact; (2) the actor, in this case SCALE’s CEO, knew the addresses and businesses on the invoices did not exist; (3) there was intent to deceive so that family members could be paid large sums of money through business names that did not identify them; (4) the county had a “justifiable reliance” on the information presented by SCALE to be truthful; and (5) there was injury to the victim (the county and its taxpayers) as a result (money meant to attract tourists appears to have been misspent, at best).
In its month-long review of SCALEs expenditures and accompanying documentation, Quorum found four businesses with no city or county business licenses, no state certificates of existence, no online presences whatsoever and with missing and incorrect addresses and phone numbers plus another contract on which knowingly wrong addresses were used and no work claimed could be verified.
In each case, the invoices benefited a family member of the CEO including herself, her daughter, two grandchildren and a cousin, according to sources familiar with Ford’s family.
In no particular order, the businesses are:
In its accounting of how it spent hospitality-tax money on the Horrell Hill parade, which took place May 14, 2016, receipts confirm legitimate expenses totaling $10,697 to include $10,084 in entertainment (a small ferris wheel, a parade float, a sound stage/system and multiple performers) and $613 in tent rentals.
What could not be confirmed was a $1,000 invoice for “Ward’s Copy/Design,” which the invoice says is located at 1701 Leesburg Rd in Hopkins with a phone number of (803) 542-7742. The invoice is for 400 posters and 3,000 flyers.
A visit to 1701 Leesburg Rd. last week revealed there is no “Ward’s Copy/Design” at that location, only the Agape Hair Salon. The address, it also bears noting, is one SCALE previously has used as its official business address on its articles of incorporation filed with the S.C. Secretary of State. , An adult male answering the phone number listed said he hadn’t heard of Ward’s Design and hung up before adding that “this is a private number.”
Both checks to Ward’s Copy/Design, written two days apart on May 16 and 17 (just after the parade) are made out specifically to “Mary Ward. The proprietor of Agape Hair Salon, Latonya Michelle Gibson, said she knew Mary Ward well and that Ward was Ford’s “cousin” who lived nearby.
A search of Richland County public records confirms an address for Mary Ward of 1018 Crossing Creek Drive, which is just six houses down from Ford’s home at 1033 Crossing Creek Road.
Gibson said Ford used to have a hair business at the 1701 Leesburg Road location but was evicted for non-payment of rent around 2012. Richland County court records confirm Ford was sued by the owner of the building at 1701 Leesburg Rd., Frances Goff, in 2012 with judge Michael Ronald Davis issuing a writ of ejectment in favor of Goff.
Efforts to reach Ford with questions for this story were unsuccessful.
While Ward’s invoice was the only questionable expense submitted for the May parade, on the November banquet side of the ledger SCALE claims it spent $9,962 for what a single one-page flyer with no pictures claims it an annual “community” banquet (which by definition seems to excludes tourists), the majority of which — $7,800 — cannot be verified. Of that amount, the largest expense in it is one for “Pat’s Catering,” the “Pat” in question being SCALE CEO Pat Ford.
The invoice has no address or phone number, only a generic, clip-art picture of a covered dish held by a waiter with the word “CATERING” in a block at the bottom. The quantity says “300” people, the description is just “catered event” and on the following page the food choices are hand-written with the words “Cash only” handwritten at the bottom. In the ensuing “Catering Agreement” itself, which also omits an address, phone or email, the head-count is reduced to 200 guests as a cost of $25 per person.
One of the “duties of the caterer” is that “Caterer represents to the Client that Pat’s Catering is licensed and in compliance with county health department rules and regulations.”
A search of DHECs’ licensed caterers in South Carolina reveals no business named Pat’s Catering has been permitted/licensed or inspected in its records going back to 2013, nor does a business license in Richland County or a Secretary of State certificate of existence exist for Pat’s Catering.
But the deception doesn’t stop there.
Included at the end of the contract is a typed list of fully described appetizers (5), Salads (3), entrees (6) and desserts (2). On the page, a bubble sits to the left of each offering, and someone has put “Xs” over what was chosen: one appetizer (Variety Cheese tray with Crackers); one salad (Garden Salad with onions, tomatoes and cucumbers with house-made Ranch or Vinaigrette Dressing), three entrees (Turkey with Dressing and Gravy and Vegetable Medley, Country Fried Southern Chicken with Yellow Rice and Corn on the Cob, and sliced Honey Glazed Ham with Scalloped Potatoes and Cabbage) and one dessert (Sweets table with assorted Cakes and Pastries).”
Since no iteration of Pat’s Catering could be found online, a careful Google search of the menu, which included such non country-sounding items as “Raspberry Mousse Cake served over a Coulis of Fresh Fruit garnished with Fresh Raspberries,” “Tri-colored Pasta and Sun-Dried Tomatoes tossed in a Champagne Cream Sauce” and “Chicken Celestine: Sauteed Chicken Breast with Fresh Mushrooms, diced Tomatoes, Shallots and Garlic mixed with Rice Pilaf and Carrots,” returned a surprising result — 10 of the 15 items on Pat’s Catering List came word-for-word from a menu published online by a New Jersey caterer who runs “Lakeside Manor” a wedding and special-event destination in Gibbsboro, N.J.
In fact, the only items not on McFadden’s menu were the ones Ford “selected” to make.
In a call Monday to McFadden Catering owner Kevin McFadden, McFadden said he had never heard of Pat’s Catering in South Carolina and was not aware of items lifted from his menu until emailed a picture.
“The farthest south we’ve ever worked is Delaware,” he said. “I don’t have any relatives down there.”
The plagiarism of someone else’s intellectual property by SCALE isn’t limited to Lakeside Manor’s menu. On its website, SCALE’s only recent photo shows classroom work with students was stolen from a 2010 Ventura (California) County Star.
Like Ward’s Copy/Design, Jasmine has no physical address listed — just Mt. Elon Church Road — and claims poster, flyer and printing work done at a cost of $800. When Quorum called the phone number listed, (803) 206-1518, and asked for Jasmine’s printing, a woman on the other line said she had never heard of that business name and doesn’t do that kind of work.
The caller then identified herself as Patrice Anderson before further questions about SCALE and identification as a reporter ended the call. According to Gibson, Jasmine Anderson is a granddaughter of Ford and daughter of Anderson. As with the parade and festival, only a single flyer exists (no pictures) as evidence the event was promoted in print in addition to the $274 radio buy, and no evidence of the invoice’s claimed 200 posters, 500 flyers and 50 signs posted in three counties is verifiable.
Like Pat’s Catering’s request, the invoice also was paid in “cash by Pat Ford,” though it does not say to whom the money was given. Further calls to (803) 206-1518 have not been returned.
Neither Richland County nor the S.C. Secretary of State have a record of a license from “Jasmine’s” on the street given. While a “Jasmine’s Parties and Creations” does exist with a business license from Richland County and a website, a woman who answered the phone said Jasmine’s only rents bounce houses and does not do any printing of posters, signs or flyers.
ANDERSON RENTAL/SET UP EVENTS
The fourth and final invoice Quorum found from a non-existent business that profited a family member was Anderson Rental/Set Up Events. On an invoice with no date, the same phone number as Ward’s Copy/Design and an address of 1208 Congaree Rd. (a residential home Richland County property tax records show was bought on Nov. 30, 2015, then transferred to the Mary Roberts Belton Estate on Feb. 3, 2016. Further calls to the same number as “Ward’s” were not answered nor messages returned.
The invoice is for $2,000 — second in dollar amount only to Pat’s Catering — and claims to cover the rental of 300 chair covers, 20 tables with white table cloth and 25 center placements for the event. A check from SCALE’s account is written directly to “Kevin Anderson,” with the “for” line containing the words “work for Event.”
Like the rest, there is no S.C. Secretary of State listing for an “Anderson Rental” in Columbia. An “Anderson Rental Management” and an “Anderson Rentals, LLC” both exist but are located in the Greenville area. Kevin Anderson was identified by Gibson as Ford’s grandson and brother to Jasmine.
Further complicating the $2,000 payment for event set up is that fact that it was held at the Richland County Recreation Department’s Adult Activity Center at 8620 Garner’s Ferry Rd. (In a curious twist, the leasing contract for the event obtained by Quorum shows that council member Norman Jackson himself signed the contract to hold the facility for the banquet). According to the contract, tables and chairs are provided by the recreation commission, and while the room SCALE chose could accommodate 200 people, the calendar entry for the event at the Recreation Commission headquarters showed an expected guest count of “75 to 100,” a source at the commission who did not wish to be identified told Quorum.
Recreation commission records also show that while SCALE did pay the $88 security fee that Jackson’s name was attached to, it never paid a bill that would have run upwards of $860, according to pricing on the form. For a four-hour event running from 7 to 11 p.m., the banquet hall and dining area would cost $140 for the first hour and $160/hour for the remaining three hours ($620) plus $20/hour for security ($80), a $20 after-hours fee, an $80 fee for a Recreation Department staff member to be present and a fee of $30/hour for set-up before the event.
With those guidelines, all SCALE would have to provide would be tablecloths, centerpieces and chair covers for its expected guest list of between 75-100 people.
A source inside the recreation commission said the only way for a bill to have not been issued and pursued was “for (former executive director James) Brown (III) to have made it free for them,” the source said.
“That’s the only way that happens.”
CASH FOR COORDINATION
In contrast to SCALE’s error-riddled, incomplete and often suspicious invoices, the accounting documents for the Carolinas Sun Splash reggae concert coordinated by Mobay Restaurant’s Michelle Edwards is impeccable, save one contract.
While every other expense claimed and invoice submitted is verifiable and reconciles with projections, one document does not — the payment of an $1,800 charge that on one page is called an “administration fee” and on another a contract between SCALE and Patrice Anderson to provide “Marketing & Events Coordinator” services that “shall be payable in a lump sum, in Cash.”
The contract, drawn up and signed July 29, 2015 between Ford and her daughter, Anderson, repeats the use of false addresses. Ford uses 151 Spreading Branch Dr. in Hopkins, a home she does not own nor rent and which was just put up for a foreclosure sale in October. That address also is the one Ford has and continues to uses for her IRS Form 990 filings dating back to at least 2011. Anderson used the 1701 Leesburg Rd. address.
In every online advertisement, flyer and invoice for the event submitted by vendors, Edwards alone is the sole contact for the event. She handled the media buy ($1,500 in radio advertising with AlphaMedia, thousands in contracts with performers, the scheduling and payment of flights and hotel stays for artists, etc.). Nowhere in the 28 pages of receipts and contracts does Anderson’s name once appear, and nothing more than the contract between mother and daughter exists to prove any such marketing or event coordination work was performed.
People often expect advertisements to exaggerate, however slightly, their product’s usefulness.
People do not often expect, however, event promoters to exaggerate the amount of advertising bought when such advertising is the most direct way to attract and engage tourists from other towns, counties and states to visit events funded specifically to generate out-of-town visitors.
And yet SCALE provided documentation for only one ad purchase — a $274 invoice from the BIG DM for a 15-day local run promoting the community banquet for which some flyers, presumably, also were distributed.
For a charity set to receive $75,000 in FY 2016-17 (up $57,000 from FY 2016), the effort fell far short of the $3,000 SCALE told the county it would spend in its budget for the event and far short of the county’s own guidelines on how hospitality tax advertising dollars must be spent. By county ordinance, 70 percent of the advertising budget must be spent to advertise outside of Richland County. Besides the BIG DM ads running on local radio (and for a local event), the $274 is $2,726 less than SCALE told the county it would spend to advertise the event.
DEAF EARS, EMPTY BEDS
Given the small amount spent on advertising, it is little wonder that SCALE reported a total of just two overnight stays booked as a result of its events. Its’ also telling that those two overnight stays were paid for by SCALE to fly in entertainment from New York for the reggae concert. In its estimate of all attendees from outside Richland County who attended either the Horrell Hill Parade or the Community Banquet, SCALE estimated 25.
Asked to describe in its own words “the marketing efforts to promote your program” on a required county form, SCALE wrote, “It brought together the ‘beginnings’, and served as a mechanism to establish the foundation.”
As to how this program “increased tourism and visitation to unincorporated Richland County,” SCALE had a bit more to say.
“One on (sic) the senior citizen (sic) was crying for joy because they (sic) never see (sic) so many people come together and to have a pride (sic) to ride (sic) made he felt (sic) like it was heaven.”
SCALE’s tracking of attendance figures also left room for improvement.
“A survey was given to those in attendance at the banquet which displayed good results,” the form read.
Despite its 2016 issues with $36,000 to manage, what is certain is that $86,000 more hospitality-tax dollars are set to pass through SCALE’s hands this year.
Editor’s Note: Following this story, SCALE CEO Patricia Ford was indicted by a state grand jury on 11 counts of felony fraud relating to the conversion of hospitality-tax dollars for personal use.
Reach Aiken at (803) 200-8809. Email him at email@example.com. Follow him on Twitter @RonAiken and @QuorumColumbia.