York County’s Culture and Heritage Foundation

Norman asks state attorney general to freeze museum foundation assets

Lawmaker questions museum group’s finances

jself@heraldonline.com April 25, 2012 

Rock Hill developer and state Rep. Ralph Norman has asked the state Attorney General’s Office to freeze the assets of a foundation created to support York County’s museums while sharing his questions about the foundation’s financial history with investigators.

“I’m going to continue to raise questions about (the foundation),” Norman said Wednesday when asked about a letter he wrote to the attorney general obtained by The Herald. “That is my duty as an elected official.”

Norman said he’s sent several letters to Secretary of State Mark Hammond’s office and to state Attorney General Alan Wilson’s office and has more letters planned.

In a Feb. 28 letter, Norman raises questions about figures detailed on the foundation’s IRS form 990s and says there are “many other items that warrant a full accounting/explanation.” He asks the attorney general to “consider immediately freezing” the foundation’s remaining funds and expense accounts until the state receives “a full accounting.”

Again in March, he asked the same.

In a March 22 letter, however, Norman makes a mistake when, in raising questions about the foundation’s finances, he points to the York County museum’s most recent financial review and a “material weakness” the auditor flagged.

The weakness actually referred to an accounting error in the museum’s books, not the foundation’s, the audit shows and county finance staff confirmed.

Norman said he wasn’t concerned about his letter to the attorney general containing a factual error “because that’s not the only question I raised. I’ve been raising questions since August.”

The Culture and Heritage Foundation, formed to support the county museums, has been under investigation by the secretary of state since August, when Norman said he first contacted the agency.

The case has been referred to the attorney general because the investigation no longer falls under the Solicitation of Charitable Funds Act – the scope of the office’s authority, Renee Daggerhart of the Secretary of State’s Office said Tuesday.

No other details about the investigation have been released.

Failed plans

Norman is one of several parties who have sought details about the foundation’s involvement in a failed plan to develop 400 acres along the Catawba River.

The land was donated to the foundation in 1998 for green space and a new county museum.

The plan was to build an environmentally “green” mixed-use community and sell real estate to help pay for a new county museum, but the project stalled in 2008 when a development partner left the deal after buying controlling interest in the land. Foundation and museum leaders blamed the economy.

The foundation was left owing $3.8 million to the development partner to regain control of the land, and former museum and County Council leaders started asking questions about what happened.

Representatives of the foundation, and the private corporation it created to manage the development project, gave presentations to museum leaders and the council, which provided project timelines and financial summaries.

Foundation leaders have resisted sharing specific financial information about the project, including payouts, claiming a right to privacy.

Foundation leaders also have maintained that they don’t have access to many financial records, which the development partner, Cherokee Investment Partners, had control over.

To pay back most of the debt, the foundation sold a portion of the land to Charlotte-based Carolinas HealthCare System which has plans to build a hospital there. The foundation is working on settling the remainder.

Smaller donation

On Tuesday, Bill Easley, foundation chairman, said now isn’t the time to ask the public to support the foundation, with all the questions being raised publicly about the foundation.

The most recent questions have come from museum commissioners appointed by the County Council last year to look into the museum’s finances and operations.

Commissioner Dennis Getter has asked Gary Williams, a York County Council candidate and member of the foundation board, about the foundation’s fundraising expenses.

Foundation leaders, claiming political motivations are driving the inquiry, have refused commissioners’ requests to discuss the foundation.

The scrutiny of the foundation has hurt volunteer efforts and will mean a smaller donation for the commission this year than planned, Easley said.

The foundation decided Tuesday to donate $13,350 to the museums, down from $50,000 it pledged for this year, Easley said.

More than $37,000, he said, was “money we’ve had to spend dealing with allegations” against the foundation.

“We want to make clear to the museum commission and the public that we can’t give away money that is being eroded because of the spurious, unfounded allegations,” he said.

Accounting error

In the letter dated March 22, Norman points investigators to the recent audit of the Culture and Heritage Commission.

The audit notes a “material weakness” related to a “prior period adjustment.”

The commission had on its books a capital asset from prior years of $1,001,487 related to building improvements on county-owned property. The property was Hightower Hall, a historic home located near the county-owned Historic Brattonsville in McConnells, county finance director Beth Latham said.

The county and commission were splitting the cost of renovating the building. The county would handle all expenses related to the project, and the commission would reimburse the county, Latham said.

The $1 million was the money that the commission invested in the project, which the museum’s finance staff shouldn’t have counted as an asset. It was the county’s property to claim as an asset on its financial statements, she said.

The auditor recommended that the asset be removed from the museum’s books, which shows up as a loss.

Latham said the error amounts to an accounting oversight that has no impact on the commission’s cash flows.

But in the letter to the state attorney general, Norman ties the asset to the foundation and says it “comes with very little detailed documentation on where the money was spent and where the ‘capital asset’ is currently located.

“I assume this is the reason for the ‘material weakness’ as described by the accountants.”

On Wednesday, Norman said the explanation likely makes sense and “clears that one question up,” adding that his goal has been to get answers to what he sees as lingering questions about the foundation.

Norman said he’s not “after a witch hunt.”

“The other questions that were raised, I think need to be answered,” he said. “They (state investigators) may come out in the end and say everything is fine.”

Jamie Self 803-329-4062

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