June 12, 2024

The Nerve Archive

Where Government Gets Exposed

Do Ethics Fines Fit the Crimes?

Gavel on Money

How election losers get punished by South Carolina’s system of “ethics” fines

Arnold Karr started his bid for superintendent of education in 2006 with $600 in his campaign war chest, thanks to two $250 donations from friends and $100 of his own money.

He ended with 9,000 votes, a fifth-place finish and a $110,000 bill for multiple violations of ethics commission filing deadlines.

“The way these enormous penalties rack up with the ethics commission is you miss the initial report date and you’re assessed a penalty of $100 a day for every day you’re late,” Arnold told The Nerve on Tuesday in his first interview since 2006.

“Where it really racks up is when you miss the next one, then it’s $200 a day because it’s two reports you haven’t filed. You miss the next one and it’s $300 a day and so on.”

“It multiplies, and that was the situation I got myself into.”

Karr’s situation isn’t unique. He is among six individuals owing more than $100,000 in fines to the S.C. Ethics Commission and one of 36 owing $20,000 or more, according to the Ethics Commission website.

Together, they and others combine to owe the state more than $3 million in unpaid fines resulting from “ethics violations” mostly centering around failures to file quarterly campaign expense reports properly or on time.

Karr said his issues meeting the Ethics Commission’s requirements illustrated the difficulties facing many third-party or independent candidates in South Carolina.

“Being a third-party candidate, you were on your own,” Karr said. “You had no help with guidance for the filing process or what was required.

“There was no legal counsel I could talk to, no staff to guide me on reporting or anything. I mean, I had $600. It wasn’t like I was getting money from the Koch brothers. Then during the year they changed their method of reporting twice, transitioning from paper reporting to electronic reporting. It was confusing, and with my low budget I thought I shouldn’t have to fool with this – and I didn’t.”

“Somebody who doesn’t have a lot of money really can’t afford to run for office and still have to work for a living, which is what I was having to do.”

Not long after the election Karr retired from his job as an educator with the Department of Corrections.

According to Ethics Commission executive director Herb Hayden, in a given year the Ethics Commission collects approximately $200,000 in fines.

“Most people pay when notified,” Hayden said.

And yet, many big-ticket offenders have had little reason to comply until now: the Ethics Commission’s efforts have largely been comprised of letters and phone calls and the referral of those who have reached bad debt status to the Department of Revenue for collection.

Having no property or assets the state could seize, Karr, a retired educator with the Department of Corrections who lives off his pension, said he simply ignored requests to satisfy the debt.

“If I’d had any real assets, they could have stuck it to me,” Karr said. “But I don’t own a house, I don’t own a car, all I have is my income for them to go after, and they never did.”

“I figured the reason the Ethics Commission kept sending me letters and not doing anything was because they didn’t have the authority to do anything. My thinking was, ‘I’m not going to give you money if you don’t have the power to take it.’”

Partnering with the Deptartment of Revenue through new improvements to DOR’s Setoff Debt and Governmental Enterprise Accounts Receivable (GEAR) setoff programs, the Ethics Commission launched a new initiative in September to bolster collections that finally is getting results.

DOR director Rick Reames III said the efforts reduce bureaucratic requirements and emphasize a commitment to bringing ethics violators to justice by targeting assets.

“The Department will use all available methods to hold ethics violators responsible for unpaid debts,” Reames said. “This joint effort with the South Carolina Ethics Commission makes government more accountable to the public.”

The renewed commitment to debt collection was welcome news for Jim Warren, chair of the Ethics Commission

“We applaud the Department of Revenue’s increased efforts and attention,” Warren said. “This initiative reinforces to the public that both agencies and the State of South Carolina take the enforcement of good ethics in government seriously.”

Karr got wind of those efforts the hard way last month when his debit card was declined at the grocery store.

“They froze my bank account,” he said. “I’m in the checkout line and all of a sudden my card is declined when I know I have money in my account. That got my attention.”

A quick call to his bank and then the Department of Revenue led to Karr establishing a payment plan he can live with. In terms of the staggering overall amount, he says he hopes to hire a lawyer to plead the amount down, if possible.

“I don’t expect it to go away, but I do think it would be reasonable to say, look, this was a $600 campaign almost 10 years ago,” Karr said.

Karr isn’t alone in having fallen through the cracks of a collection system that for years didn’t touch people who didn’t want to pay and/or were judgment-proof, meaning those with no property or assets to seize or bank account to levy.

And so with DOR seemingly powerless to affect their quality of life, many simply chose to live either out of state or under the radar.

Of the other top-five violators owing $100,000 or more, one served 18 months in federal prison for embezzlement (Torlando Childress, $214,258), two others moved out of state (Louin Poston, last known residence Atlantic Beach, N.C.; and Paul Rivers, last known address Savannah, Ga.), one has dropped off the grid entirely (Richard E.R. Johnson, no tax return filed for years according to a 2011 Post and Courier story) and the final one is hiding in plain sight, currently serving on the Florence City Council (Ed Robinson).

Exorbitant fines no longer are possible thanks to a 2011 change to the law capping fines at $5,000 per violation. But for those still carrying potentially life-crippling ethics debt, the message is clear: We’re coming, and we haven’t forgotten.

“The only reason I ignored them for this long was I didn’t think they had any teeth,” Karr said. “Apparently they got hungry.”

Reach Aiken at 803-254-4411 or email him at ron@thenerve.org. Follow him on Twitter @RonAiken. Follow The Nerve on Facebook and on Twitter @thenervesc.

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