Senate panel accuses SC treasurer of violating federal, state law in scathing $1.8B report

Joseph Bustos, The State (Columbia, S.C.) on Mar 25, 2025

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In a scathing report into the $1.8 billion accounting error where a Senate Finance panel recommended removal of Treasurer Curtis Loftis, senators alleged the treasurer is in violation of federal law.

The report, as expected, recommended the removal of Loftis for willful neglect of duty. It is a move that would requires a two-thirds vote of each chamber.

The report, which details investigation into the $1.8 billion accounting error, where most of that money did not exist, also says Loftis has breached his fiduciary duty to the state.

In a statement released by treasurer’s office after the report was issued Tuesday, Loftis reiterated no money was ever missing. He invited the inspector general to review the office’s operations and books and said the South Carolina Law Enforcement Division could even investigate.

“Sen. Larry Grooms and his fellow senators continued their attack against me by making countless false accusations. Because they operate under the protection of legislative immunity, there is little I can do to put an end to their baseless attacks,” Loftis said in a statement. “However, I will continue to respond with the truth, and trust that any objective person will see their accusations for what they are: politically motivated grandstanding.”

But deep in the report is an accusation that Loftis is in violation of federal law.

In September, the state Housing Development Authority wrote to governor’s office, House Ways & Means office and Senate Finance office that interest earned on COVID-relief money sent to the state for housing payment assistance was sent to the state’s general fund. The money earned about $5.9 million in interest.

Instead, that interest should have been sent back to the federal government, but the treasurer has refused to move the money to the appropriate housing program fund so money can be sent to the U.S. Treasury, “asserting that he does not have the statutory authority to do so,” the report says.

“This flies in the face of countless other instances that the state has returned unspent funds and interest to the federal government and demonstrates that the Treasurer is not custodying funds with care,” the report said.

A letter from the state Housing Authority says the treasurer’s office’s transfer must be approved by an external source.

On March 18, the U.S. Treasury issued a Notice of Noncompliance related to Housing Assistance money that were incorrectly directed to the state general fund by the treasurer.

“We’ve got a letter the state’s about to be sanctioned,” state Sen. Larry Grooms, R-Berkeley, said in an interview. “There’s been a demand letter. (Loftis) incorrectly deposited Federal Housing Authority money, and the US Treasury has sent letters demanding it be returned.”

The treasurer’s office said the housing money wasn’t appropriately flagged in 2021 by the comptroller general’s office to keep the interest separate from the general fund. The interest went to the general fund instead for the state to use.

In 2021, the comptroller general’s office was under the leadership of Richard Eckstrom, who resigned in 2023.

Any interest earned on the housing money needed be sent back to the federal government.

“We don’t have unilateral authority to transfer funds,” said Karen Ingram, a spokeswoman for the treasurer’s office told The State. “We need a warrant from comptroller general to transfer the funds.”

The treasurer’s office last week received permission to release the money back so it could be remitted to the federal government.

Most of the report details information previously disclosed by AlixPartners, the state’s outside forensic auditor, and the Senate panel investigating the state’s accounting issues.

The report also says Loftis did not make financial decisions in the best interest of the state, which includes not issuing long-term debt and not notifying members of the state fiscal accountability authority and joint bond review committee.

It cites how Loftis’ office also paid on outside firm for crisis communications assistance and how Loftis also threatened to release sensitive financial information before he was stopped.

A removal resolution is expected to be introduced this week in the Senate with the aim of taking it up next month before the Senate debates the budget and to give time for the House to consider it.