The September 2009 announcement that the Softee Supreme Diaper Corporation would locate a $6 million plant in Marion County and create 262 jobs was heralded then by state and local officials as a godsend to an area with historically one of the highest unemployment rates in South Carolina.
“Softee Supreme’s investment represents one of the largest single job creation efforts to be recruited in Marion County,” then-S.C. Department of Commerce Secretary Joe Taylor said in a press release. “We welcome Softee Supreme to South Carolina and look forward to a long and prosperous relationship with them in the years ahead.”
“Marion County has a wonderful workforce that is eager to get back to work, and we appreciate Softee Supreme Diaper Corporation giving us that opportunity,” said former S.C. Rep. Jim Battle, D-Marion, in the press release.
“Today represents an aggressive, cooperative spirit between many entities,” added Rodney Barry, Marion County’s then-economic development director. “We look forward to supporting Softee Supreme and believe their leadership and product has the company poised to grow and prosper in the great county of Marion.”
The Sept. 29, 2009, Commerce release described the Georgia-based company as being “dedicated to manufacturing and marketing quality disposable baby diapers at the most competitive price in the market,” noting it had “grown to be a major supplier of disposable baby diapers to grocery outlets, inner city markets and export markets.”
But federal court documents reviewed last week by The Nerve painted a very different picture of the company at the time. Those documents reveal a company in financial trouble before moving from Georgia to South Carolina, and the involvement of two former S.C. State University board members and others in the alleged embezzlement of grant money awarded for the diaper plant project.
The Nerve last week sent written questions to Commerce asking for details on the state and local incentives for the diaper plant project, whether the state planned to recoup stolen public funds through “claw back” provisions in incentives agreements, and specifics on the federal criminal case.
In a written response Friday, Commerce spokeswoman Allison Skipper didn’t directly answer any of the questions but issued the following general statement: “The Department of Commerce only recently became aware of this issue and is working cooperatively with the appropriate authorities. In regard to clawback provisions, the company’s deadline to perform has not yet passed.”
The Nerve last week left phone messages for various Marion County officials seeking comment but received no response. They included Kent Williams, the county’s deputy administrator and a Democratic state senator.
“Softee Supreme will be employing 262 of our friends and neighbors over the next four years,” Williams said in the September 2009 Commerce press release announcing the project. “This is the result of much cooperation, team work and hard work with partners throughout the state and the federal congressional delegation.”
Efforts Friday by The Nerve to contact Softee Supreme president Collin Brown were unsuccessful. Listed phone numbers for him and the diaper plant in Mullins were disconnected or no longer in service.
In a WPDE News Channel 15 story last week, Brown said the Mullins plant currently employs between 25 and 90 workers, depending on the number of operating shifts. That’s a far lower job-creation number than the 262 jobs announced in September 2009.
The diaper plant project raises questions about whether Commerce and other state and local government agencies do serious background checks on companies that receive incentives. The Nerve in August and last month, for example, reported that the president of Minnesota-based Element Electronics, which is projected to receive millions in state and local incentives over 15 years to locate a television manufacturing plant in Fairfield County, is accused in federal lawsuits of receiving millions in bonuses through a massive Ponzi scheme.
The Criminal Case
In a 51-count criminal indictment released last week in Columbia, federal prosecutors said the diaper company’s original owner was “struggling financially and agreed to partner with members of the enterprise, hoping to obtain financial backing and government assistance for relocation of the business to Marion County, South Carolina.”
The indictment alleged that defendant Jonathan Pinson, a Greenville businessman and former chairman of the S.C. State University Board of Trustees, became a partner in the diaper company around 2009 and used the company to “execute a scheme and artifice to defraud and to illegally obtain money and property through the use of false and fraudulent pretenses, representations, and promises.”
The indictment also alleges that co-defendant Eric Robinson, a Greenville businessman and close friend of Pinson, “introduced Pinson and others to the owner of the diaper plant which subsequently located to Marion County and which was used by the enterprise detailed herein to convert government funds.”
Neither state nor local government officials publicly mentioned Pinson’s connection to company in their September 2009 announcement.
The indictment said the state Department of Commerce awarded a $1 million grant to Marion County for “up-fitting” of a building where the diaper plant would be located, and that during in 2009 and 2010, Marion County received more than $10,000 each year in federal funds “through various grant programs and otherwise.” The initial Commerce press release didn’t mention the grants.
After the $1 million grant was awarded by Commerce, Pinson and others “devised a plan to submit falsified invoices to Marion County for engineering services supposedly provided to the diaper plant, illegally billing Marion County at grossly inflated rates for work which was not always completed,” according to the indictment.
In a related criminal case, federal prosecutors alleged that Lancelot Wright, a part-owner of the diaper company and a former S.C. State board member, illegally received part of a $62,100 payment from Marion County to another company owned by Pinson, known as the Noel Group LLC.
Two other co-defendants – Robert A. “Tony” Williams, a Columbia businessman identified in court records as a co-owner of the diaper plant, and Phillip D. Mims, a businessman described in court papers as being given the “authority to direct the expenditure of county funds” for the diaper plant project – were accused by federal prosecutors in court papers of using Pinson’s Noel Group to “illegally convert funds from Marion County in an aggregate amount exceeding” $5,000 in a calendar year “to and for their own use.”
State or local officials made no mention of the connection of Wright, Williams or Mims to the diaper company in their September 2009 announcement.
Pinson and Robinson have pleaded not guilty to various federal charges, and trials are scheduled for late January, according to media reports. Besides the Marion County case, the indictment also details alleged schemes involving S.C. State University and a housing development in Columbia known as the Village at River’s Edge.
The indictment seeks reimbursement from Pinson and Robinson of a “minimum of” $850,000, “traceable thereto as a result of their violations” of federal law.
Wright, Williams and Mims pleaded guilty last week in U.S. District Court in Charleston to various federal charges in connection with their roles in the Marion County case and and another unrelated case. They will be sentenced later after federal pre-sentencing reports are completed.
Earlier Warning Signs
Long before the federal criminal case against Pinson and the other defendants first became public, the diaper company’s current and former owners were facing legal problems in federal courts in Georgia.
On Sept. 10, 2009 – less than three weeks before the announcement of the diaper plant project in South Carolina – a related company known as McDiapers Inc., which had owned the diaper facility in Decatur, Georgia, that moved to Marion County, filed for bankruptcy in Atlanta, listing Collin Brown as the new owner of the company’s inventory of approximately $2 million.
The bankruptcy papers listed $0 in gross revenues in 2008 and 2009 for McDiapers Inc., noting that the company was closed those years; and more than $68,000 in outstanding liabilities, including claims from several pending lawsuits.
In a separate federal lawsuit filed in March 2010 in Atlanta, Wisconsin-based adhesive supplier Bostik Inc. alleged that Brown and his Georgia diaper company, known as Softee Supreme LLC, which was the successor to McDiapers Inc., owed nearly $132,000 for Bostik products that the diaper company purchased but never paid for.
The suit said Softee Supreme moved all of its equipment from its Decatur, Georgia, location to Mullins, S.C., in December 2009 under the company name of Supremes LLC, noting that Brown was one of “four organizing members” of the S.C. company. The federal indictment against Pinson identified the company that owns the Mullins plant as Supremes LLC, which the indictment said was “formed to purchase the assets of Softee Supreme LLC.”
“As Collin Brown previously attempted to shift all assets of McDiapers to Softee Supreme LLC, while avoiding any liabilities of McDiapers through a scheme to deceive and defraud Bostik, there is a substantial, significant, and imminent possibility that Collin Brown will again do so with regards to Defendant Softee Supreme LLC and the South Carolina company, Supremes, LLC,” the 2010 Bostik suit alleged.
On May 14 of this year, Brown filed for bankruptcy in federal court in Charleston, listing Bostik Inc. as one of his creditors, records show. The case was dismissed in July; in August, Bostik filed a motion in the federal court in Atlanta to reopen its lawsuit against Brown, citing the dismissal of his bankruptcy case, so that it could “continue its collection efforts” on two judgments entered earlier against Brown.
Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.