State costs grow to $12.5M related to probes of disputed $1.8B

The state-funded tab for investigations of and other matters related to the disputed $1.8 billion has grown to more than $12.5 million, according to the latest records reviewed by The Nerve.

The new tally, which is based on records obtained under the S.C. Freedom of Information Act, is nearly $1.3 million, or 11%, more than the total revealed by The Nerve in August.

To put the $12.52 million into perspective, it’s more than the entire current budgets of at least 19 state agencies or major divisions. That includes, for example, the State Ethics and Public Service commissions, Inspector General’s and Secretary of State’s offices, and the Legislative Audit Council – the General Assembly’s investigative arm.

It’s also more than the overall budgets of the State Auditor’s and Comptroller General’s offices – two of the six agencies that have racked up legal fees or other costs in connection with the disputed $1.8 billion or related issues.

Of the $12.52 million spent through mid-November, more than $8.8 million, or 70% of the total, were legal fees and costs paid by four of the six state agencies to six outside law firms in connection with an ongoing U.S. Securities and Exchange Commission (SEC) investigation – which started more than two years ago – into the $1.8 billion and related issues.

“We have gotten no official notice that the investigation is closed,” said Cindy Hoogenboom, director of administration for the State Auditor’s Office, in a written response last week to The Nerve. “I do know it was quiet during the federal shutdown.”

In an email response Monday, Kim Corley McLeod, spokeswoman for the Comptroller General’s Office, told The Nerve that the SEC investigation is “still ongoing.”

The SEC repeatedly has told The Nerve in written responses that it doesn’t acknowledge whether it’s doing an investigation. The S.C. Attorney General’s Office earlier this year told The Nerve that the matter is a civil investigation, though it repeatedly has declined to discuss details.

The Nerve in January requested, under the state’s open-records law, that the Attorney General’s, Auditor’s, Comptroller General’s and Treasurer’s offices provide all emails and letters between the respective agencies and the SEC, though the agencies at the time either declined to do so or say whether they had such records.

The Nerve’s latest review found that the Attorney General’s Office as of Oct. 28 had paid the Atlanta-based King & Spalding law firm, which, according to its website, has more than 1,300 lawyers in 26 offices worldwide, a total of $4.8 million in legal fees for invoices submitted from February 2024 through July this year.

And that total, which was the highest among the six agencies in The Nerve’s review, is expected to continue to increase for the fiscal year that started July 1.

In the adopted $41 billion total state budget for fiscal 2025-26, lawmakers designated $6 million in legal fees to the Attorney General’s Office, approximately $5 million of which, according to an office spokesman, would be used to pay additional expected legal fees and costs to the King & Spalding firm, which was hired to represent the state in the SEC investigation.

The Nerve last week asked Robert Kittle, spokesman for Republican Attorney General Alan Wilson, about whether King & Spalding was still doing work in connection with the investigation but did not receive a response by publication of this story.

Pricey consulting fees

In a related move, lawmakers also appropriated $1.8 million for this fiscal year to the S.C. Department of Administration for an “independent compliance consultant.” The agency in April awarded a “potential” $1.2 million contract through June 2029 to the Greenville office of the national consulting firm Forvis Mazars LLP to ensure – as required by the Legislature – that that the recommendations of a related forensic accounting report published in January are carried out.

Through Nov. 19, the department paid a total of $437,978.82 to Forvis Mazars, according to agency records provided to The Nerve. That’s on top of the $3 million that the department paid earlier to the New York-based consulting firm AlixPartners, which, according to its website, has 26 offices worldwide, for its forensic accounting report.

Among its conclusions, the AlixPartners report said about $1.6 billion of the disputed $1.8 billion didn’t actually exist – contradicting last year’s testimony by Treasurer Curtis Loftis to a Senate Finance subcommittee that the money was real.

The report said the Treasurer’s and Comptroller General’s offices were “both aware of the (what we now know to be an incorrect) decision to exclude” a specially created fund that listed the $1.8 billion from the state’s Annual Comprehensive Financial Report for fiscal year 2016 and “the years thereafter.” 

The report also noted that the $1.8 billion was part of a $3.5 billion accounting error connected to the years-long conversion to a different state accounting system and made during former longtime Comptroller General Richard Eckstrom’s tenure, which led to his 2023 resignation.

A state law, which was passed by the Legislature in February and took effect in March, requires that the Comptroller General’s, Treasurer’s and Auditor’s offices provide monthly reports on the “status of implementation of the recommendations made to their individual agencies,” as contained in the AlixPartners report and “other relevant studies” conducted over the past two fiscal years and which “do not require statutory change.”

In its final report on the $1.8 billion, which was released in March this year, the Senate Finance subcommittee, chaired by Sen. Larry Grooms, R-Berkeley, recommended that Loftis, a Republican who was first elected in 2010, be removed from office, as allowed under the S.C. Constitution, for “willful neglect of duty, or other reasonable cause” upon a two-thirds vote of each chamber.

Loftis unsuccessfully in April tried to convince the S.C. Supreme Court to stop a Senate hearing to remove him from office, and after an hours-long debate on April 21, the Senate voted 33-8 in favor of removal. The removal resolution went to the S.C. House, though it took no immediate action on it.

Loftis, whose annual salary is $164,000, is not accused of any criminal wrongdoing and has repeatedly denied allegations made in reports issued by the Senate Finance subcommittee, publishing lengthy defenses of himself and his office on the agency’s website.

Loftis told The Nerve for an August story that he personally spent about $100,000 to defend himself in the removal hearing after the Attorney General’s Office denied his agency’s request to use public funds to hire outside lawyers. Kittle, who is Wilson’s spokesman, said then that if Loftis is “exonerated,” the Attorney General’s Office would authorize reimbursement of “reasonable legal fees.”

The Senate chamber paid $16,165 in legal fees to the Alabama-based Burr & Forman law firm to respond to Loftis’ Supreme Court petition, according to Senate records provided at the time. In a written response last month to The Nerve, Senate clerk attorney Cassidy Murphy said there have been “no additional legal fees and costs accrued or paid related” to the removal hearing.

Other big bills

As for other outside legal fees, the State Auditor’s Office paid a total of $1.9 million from January 2024 through September this year to the New York-based Milbank law firm in connection with the SEC investigation, The Nerve’s latest review found. Then-state Auditor George Kennedy resigned in January this year, just eight days after the release of the AlixPartners report. 

The Milbank firm has a total of more than 1,000 attorneys in 11 offices in the U.S. and internationally, online records show.

From August 2023 through September this year, the S.C. Comptroller General’s Office paid the Columbia office of the Wyche law firm and the Atlanta-based Robbins Alloy Belinfante Littlefield law firm a total of $1.16 million in fees and costs related to the SEC investigation, plus another $171,580 for a 2024 audit report produced by the Atlanta-based Mauldin & Jenkins accounting firm, The Nerve’s review found.

Over roughly the same period, the state Treasurer’s Office paid a total of $946,446 in legal fees and costs to two Washington, D.C-based law firms – BakerHostetler and Wiley Rein – in connection with the SEC investigation, The Nerve’s review found. Another $68,967 was spent by the office from March 2024 through March this year on “crisis communication” services provided by Infinity Marketing of Greenville, records show.

Following is a breakdown of the total $12.52 million spent so far on investigations of and other matters related to the disputed $1.8 billion, according to records provided to The Nerve:

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow The Nerve on Facebook, Instagram and X (formerlyTwitter) @thenervesc.