Mystery $1.8B task force advised by firm with Trump ties

Mystery $1.8B task force advised by firm with Trump ties


Update 7/3/24: Four days after we published this story on a global law firm with experience in federal securities investigations that has advised a state task force on the mystery $1.8 billion, the state issued a formal request for proposals – due by July 9 – to hire an “independent forensic accounting firm” to review “all cash and investments held in the State Treasury,” according to S.C. Department of Administration records. The final state budget version for fiscal 2024-25, which started July 1, designates $3 million to the department for “audit contracting.”

The task force created by Gov. Henry McMaster to investigate an unclaimed $1.8 billion is getting advice from an international law firm that specializes in defending clients facing possible or actual federal investigations, records show.

The Atlanta-based King & Spalding firm also has ties to former President Donald Trump’s 2020 re-election campaign, according to media reports and court records.

At the June 4 meeting of the “working group,” which McMaster created on April 11, King & Spalding attorneys “provided legal advice” to the group, which included representatives from the governor’s and attorney general’s offices; S.C. Treasurer Curtis Loftis, state Comptroller General Brian Gaines, state Auditor George Kennedy and S.C. Department of Administration Executive Director Marcia Adams, as well as staff members from those agencies, according to written meeting notes.

The meeting notes, which were provided last week to The Nerve by the Department of Administration, described the King & Spalding firm as “Counsel for the State engaged by the Attorney General’s Office.”

The document gave no details of the legal advice provided to the task force.

The three King & Spalding lawyers identified in the meeting notes handle legal matters for the firm’s “Special Matters and Government Investigations” section, according to the firm’s website. The site also notes that two of the lawyers – listed as partners in the 1,300-plus attorney firm, which has 24 offices in the U.S., Europe, Asia and the Middle East – work in the “Securities Enforcement and Regulation” section.

The firm’s “Special Matters and Government Investigations” team is “dedicated to advising entities and individuals across sectors who are facing the reality or threat of a government investigation,” according to the site.

“Collectively, we have handled investigations before 73 of the 93 U.S. Attorney’s Offices and every litigating division of the Justice Department,” the site says. “We likewise have represented clients in investigations conducted by all 12 of the SEC's (U.S. Securities and Exchange Commission) offices and all of the SEC’s specialized enforcement units.”

Two of the three attorneys listed in the June 4 meeting notes – firm partners Aaron Lipson and Carmen Lawrence – are former regional SEC officials, according to the website. Lipson led the enforcement program at the SEC’s Atlanta regional office; Lawrence was the director of the SEC’s Northeast regional office.

King & Spalding's “Securities Enforcement and Regulation” section “advises leading public companies, financial institutions, regulated entities, boards of directors, auditors and senior executives, officers and directors in all types of securities law enforcement matters,” according to the website.

On its website, the SEC says its mission is to “protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.”

Written notes from the June 11 task force meeting, which were provided Wednesday to The Nerve by the Department of Administration, listed Lawrence and the other King & Spalding attorney, Kimberly Wade, who is a senior associate in the firm, as attending the meeting remotely. Both lawyers work in the firm’s New York office; Lipson is based in Atlanta, according to the firm’s website.

The site says Wade “focuses on white-collar criminal defense litigation, internal and government investigations, corporate compliance, and regulatory matters,” noting, among other things, that she “works with clients facing government investigations conducted by various divisions” of federal or state agencies, including the SEC.

Asked last week if the Securities and Exchange Commission has opened an investigation into the disputed $1.8 billion, a spokesman in the agency’s Washington, D.C. office said in a written response to The Nerve, “The SEC does not comment on the existence or nonexistence of a possible investigation.”

In April, the FitsNews site reported, citing “multiple sources familiar with the status of the inquiry,”  that SEC investigators were conducting a “non-public review” of South Carolina’s finances, including the $1.8 billion.

No one has accused any S.C. officials of any criminal wrongdoing.

The Nerve this week sent written questions to Loftis, Gaines and Kennedy about whether they or their staff members have been interviewed by SEC investigators; and, if so, what was the nature of the inquiries. 

Kennedy referred The Nerve’s questions to the state Attorney General’s Office, as did comptroller general spokeswoman Kimberly McLeod, Department of Administration spokeswoman Brooke Bailey and King & Spalding spokesman Timothy Vaughn, who works in the firm’s New York office. Loftis didn’t respond.

Robert Kittle, spokesman for Attorney General Alan Wilson, in a written response Tuesday to The Nerve said that “we don’t comment on ongoing investigations.” The Nerve’s unanswered questions to Wilson’s office included why the King & Spalding firm was hired, and the taxpayer costs of retaining the firm.

The Nerve’s request for the formal retention agreement with the firm, which likely would include details of any attorneys’ fees to be paid, was forwarded to the office’s Freedom of Information Act section, Kittle said.

As for ties to Trump, the King & Spalding firm was one of three major law firms hired by Trump’s re-election campaign in 2020, according to an article in Politico. King & Spalding represented the campaign in a North Carolina pre-election appellate case challenging the extension of a deadline to count absentee ballots in the 2020 election, according to media reports and court records.

The U.S. 4th Circuit Court of Appeals in Richmond, Va., rejected the appeal, records show, though Trump won the presidential election that year in North Carolina, as he did in 2016.

Last month, the Republican Wilson visited Trump’s criminal hush-money trial in New York, publicly describing the proceedings as a “sham,” according to media reports. Trump, who is the presumptive GOP nominee in the upcoming November presidential election, was convicted by a jury of 34 counts of falsifying business records to influence the outcome of the 2016 election – the first former U.S. president to be convicted of a felony, though he has denied any wrongdoing and is expected to appeal the verdict.

McMaster, a Republican who is a former U.S. attorney for South Carolina and state attorney general, was one of Trump’s earliest supporters in 2016 and was named by Trump in January 2023 to lead his 2024 re-election campaign in South Carolina, according to media reports. Trump won the Palmetto State’s 2016 and 2020 elections.

McMaster, Wilson and Loftis were among a group of South Carolina Republicans who appeared at a Trump rally in New Hampshire in January this year ahead of the presidential primary there, according to a Washington Post story.

Many questions, few answers

Meanwhile, in her written response last week to The Nerve, Department of Administration spokeswoman Bailey again didn’t directly answer whether the disputed $1.8 billion actually exists and didn’t respond to a question about whether there is a deadline for the task force to complete its work, though she reiterated her response in a Nerve story earlier this month that the group was “not aware” of any state agency claims to the money.

McMaster gave the task force a July 1 deadline to find answers, according to media reports.

The Nerve has repeatedly pointed out the secrecy of the task force meetings – which now total at least nine since mid-April – citing a South Carolina Press Association attorney’s concerns about compliance with the state’s open-records law. The Nerve, through its parent organization, the South Carolina Policy Council, is an associate member of the association.

As with previous meeting records, the June 11 meeting notes provided to The Nerve offered no specific findings.

It’s unclear whether the $1.8 billion, if it exists, is made up of state, federal or “other” funds, which include such things as state gasoline taxes, lottery proceeds, college tuition, part of the state sales tax earmarked for K-12 education, and court fees and fines. The Nerve in May revealed that as of mid-April, the state had a total of more than $9 billion in other fund reserves.

The $1.8 billion represents more than $300 for every man, woman and child in the state; or, according to the Policy Council, up to $1,440 per taxpayer, based on a formula similar to the one used for state taxpayer rebates in 2022.

The Policy Council in April recommended rebating the full amount to taxpayers if no state agencies claim the money by June 30 or if agencies can’t provide evidence by then of their share of the funds.

The $1.8 billion was the subject of a critical 116-page interim report released in April following several months of investigation by a Senate Finance subcommittee chaired by Sen. Larry Grooms, R-Berkeley. The report accused Loftis of failing to disclose the fund for seven years “despite his explicit statutory duty to do so.” Grooms has said publicly that Loftis, a Republican who was first elected in 2010, should resign.

In a lengthy response posted on the Treasurer’s Office website, Loftis denied the allegations, contending the money was “not missing or recently discovered,” and that his office has been “fully transparent about the matter.”

After Gaines last October asked Loftis to investigate a cash balance in the disputed fund, the Senate Finance Committee researched the matter and determined the fund had a balance of about $1.8 billion, according to the subcommittee’s report.

Grooms in an opinion column published last month by the (Charleston) Post and Courier newspaper said he “increasingly” believes that “this supposed money does not exist.”

Brundrett is the news editor of The Nerve ( Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc.

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