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Where did $1.8 billion go? A South Carolina senator says the state treasurer breached public trust

South Carolina Treasurer Curtis Loftis, left, points to a figure on a report he is showing reporters during a state Senate hearing into how $1.8 billion ended up in an account without anyone knowing where it came from or where it went on Tuesday, April 2, 2024, in Columbia, S.C. (AP Photo/Jeffrey Collins)
Jeffrey Collins/AP
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AP
South Carolina Treasurer Curtis Loftis, left, points to a figure on a report he is showing reporters during a state Senate hearing into how $1.8 billion ended up in an account without anyone knowing where it came from or where it went on Tuesday, April 2, 2024, in Columbia, S.C. (AP Photo/Jeffrey Collins)

COLUMBIA, S.C. (AP) — A South Carolina senator said the elected state treasurer has breached the public trust after lawmakers didn't get much clarity Tuesday about how $1.8 billion moved through a state bank account over the past decade — without anyone knowing where it came from or was supposed to go.

For six hours, Republican Treasurer Curtis Loftis answered questions, sometimes yelling at senators, and other times saying he didn't have the answers. He told the chamber he wasn't given information he requested to try to untangle the mess that started as the state shifted accounting systems in the mid-2010s.

But he left before Republican Sen. Larry Grooms summed up the day by saying, “Apparently Mr. Loftis has lost control of the state treasury,” and the General Assembly can't rely on him to solve the problems he created.

“Mr. Loftis has abrogated his responsibility as a state treasurer. He has breached the public trust,” said Grooms, a powerful Republican elected in 1997.

Accountants are still trying to untangle the $1.8 billion mess, but it appears that every time the state’s books were out of whack, money was shifted from somewhere into an account that helped balance it out, state Senate leaders have said. In a different problem, the state was double-counting higher education money to the tune of almost $4 billion.

Comptroller General Brian Gaines, who took over for the elected Republican director after he resigned when the accounting errors started to emerge last year, opened the meeting speaking for about 10 minutes. He promised to continue to help senators in any way to unravel the mess and said the account in question where the $1.8 billion went was created by the treasurer's office.

Loftis followed, telling the senators repeatedly that it isn't his responsibility to balance the books and that he can't get any information out of the comptroller general's office.

Loftis asked for more time to find answers and then yelled at senators for suggesting he wasn't telling the truth. He argued against the chair's claim that there were identical reports with the same numbers and begged the Democrats on the subcommittee to come to his rescue.

“I have no power here,” Loftis said. “All I've had is six or seven hours of ‘Gotcha, gotcha, gotcha.’”

Grooms said lawmakers are still trying to figure out the scope of the problems. He suggested the state's accounts were out of balance in the negative when the past fiscal year ended — and billions of dollars of mistakes have been made both for and against the state's favor.

Loftis angrily denied that, pounding the lectern and saying he was being ganged up on.

“Senators, I’m at a bit of a disadvantage. Six people can ask me any question about the last 14 years," he said.

At one point, Loftis insisted his report was right and the Senate's report, which lawmakers said had identical numbers, was wrong.

“Senator from Colleton, I submit the treasurer might have trouble with addition,” Grooms told a colleague.

Loftis said that his job is to be the state's banker and investment chief and that the comptroller general reconciles the books. Loftis said the comptroller general also refused to share key information, an allegation the other agency denies.

“If we weren't arguing, we could solve this problem. I’ve been given the responsibility without the authority,” Loftis said.

There were some hints of new information at the meeting.

Senators perked up when Loftis briefly suggested there might be a criminal investigation into the money, which Loftis quickly shot down, saying they misunderstood him.

The $1.8 billion may not be sitting around waiting to be spent on things like teacher salaries or prison improvements, and could actually end up taking cash from those things.

Republican Sen. Stephen Goldfinch said there are indications the money may belong to other entities, such as the state Department of Transportation, the federal government or an environmental trust fund. If the money is accounted for, the state may have to pay back the interest it earned investing the $1.8 billion.

And Loftis said the money doesn't remain in one account since the investments are pulled from multiple other places.

Grooms said the investigation into the problems continue. He wouldn't say at this time whether he might suggest impeachment or some other legislative remedy.

Under law, Loftis said his agency is the one tasked with untangling the accounts and figuring out where the $1.8 billion was supposed to go.

That power needs to be taken from the Treasurer's Office as soon as possible and perhaps put into the hands of forensic accounts, Grooms said.

“He began to lose control in 2016 and he has not done a darn thing to try and correct those unresolved errors,” Grooms said.