Newsbrief: North Carolina Congressman in Drug Treatment Slush Fund Scandal 10/31/03

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US Rep. Frank Ballance (D-NC) used his position as a powerful state senator to garner funds for a foundation he operated for the last ten years, a state auditor's report has found. Much of that money went to relatives and political allies on the foundation's payroll, the report concluded. The John A. Hyman Foundation was "riddled with apparent conflicts of interest" and no formal structure for awarding grants, State Auditor Ralph Campbell reported on October 22.

The foundation, whose ostensible purpose was to provide drug treatment services, was founded by then state Sen. Ballance in 1993. When state funds starting flowing his way, Ballance was vice chairman of the Senate Finance Committee. Since then, the Hyman Foundation has collected more than $2 million from the state. It has indeed provided drug treatment services, auditors found, but they also questioned numerous expenditures and described a foundation rife with political cronyism and nepotism:

  • Ballance was chairman of the foundation's board of directors and controlled the checkbooks.
  • Over the last three years (the scope of this investigation), Ballance hired a political ally, the pastor of the Greenwood Baptist Church, as his executive director, the treasurer of the Frank Ballance Senate Campaign as an administrative assistant, and the campaign manager of the Frank Ballance Senate Campaign as director of one treatment program.
  • Ballance's mother served on the foundation board and was employed by a nonprofit agency that received grants from the foundation.
  • Ballance paid a company owned by his daughter $5,000 for work that was not done. Valerie Ballance's Consultech firm got the money for "consulting" on the installation of a new computer system, but auditors found the system was installed by other contractors who never spoke with Consultech.
  • The "mini-grants" doled out by the foundation for "substance abuse prevention and treatment" were often spent on other items. From fixing roofs to buying new DVD players to paying for trips to ball games, "it is not apparent that many of the funded activities and expenditures were directly related to substance abuse treatment and prevention."
  • Ballance signed checks for more than $11,000 in the last three years for items "outside the scope of substance abuse treatment and prevention." These included $2,500 for an appreciation dinner for political ally Pastor Joyner of the First Baptist Church and $2,500 for a membership in the Warren County High School Boosters Club, as well as lesser amounts for high school trophies, senior citizen dinner photography, and Subway sandwiches.
  • The foundation failed to comply with state and federal reporting regulations.
It was the Hyman Foundation's failure to report spending to the state Corrections Department, which budgeted the funds, for the last three years that triggered the auditor's investigation. Now State Auditor Campbell is demanding that the foundation, which shut down after the Corrections Department cut off its funds this year, immediately return some $339,000 still in its accounts to the state. And the FBI and US Attorney's Office in Raleigh have begun an investigation.

No comment yet from Rep. Ballance.

Visit http://www.osa.state.nc.us/EPSWeb/Reports/Investigative/INV-2003-0264.pdf to read the State Auditor's report online.

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Issue #307, 10/17/03 Editorial: It's Time to Rejoin the Free World | Presenting "BUSTED: The Citizen's Guide to Surviving Police Encounters" | Decriminalization Comes to Britain: House of Commons Passes Cannabis Rescheduling Bill | Leftist Legalizer Elected Mayor of Bogota in Voter Rebuke of Colombian President | Dutch Government Seeks Ban on Foreigners in Coffee Shops | One and a Half Million Drug Arrests Last Year, Nearly 700,000 for Marijuana, FBI Reports | Media Scan: David Borden on Cultural Baggage, Forbes, Alternet, Pot TV | This Week in History | Newsbrief: MAPS/UMass Marijuana Grow Proposal Gets Backing from Senators Kennedy and Kerry | Newsbrief: This Week's Corrupt Cops Story | Newsbrief: Campaign Comments -- Lieberman on Drug War Racial Disparities | Newsbrief: Federal Appeals Court Says Nervousness Not Enough to Prompt Driver Search | Newsbrief: More Death Squad Drug Killings in the Philippines | Newsbrief: Retrograde Drug Politics in Kentucky Governor's Race | Newsbrief: North Carolina Congressman in Drug Treatment Slush Fund Scandal | DRCNet Temporarily Suspending Our Web-Based Write-to-Congress Service Due to Funding Shortfalls -- Your Help Can Bring It Back -- Keep Contacting Congress in the Meantime | Perry Fund Accepting Applications for 2003-2004 and 2004-2005 School Years, Providing Scholarships for Students Losing Aid Because of Drug Convictions | The Reformer's Calendar
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