State treasurer, attorney general spar over outside legal fees

Editor’s note: This story is part of a two-article package published today. The other story can be found here.

By RICK BRUNDRETT

S.C. Treasurer Curtis Loftis says he personally spent about $100,000 to defend himself in connection with the state Senate’s recent vote to remove him from office after the Attorney General’s Office denied his agency’s request to use public funds to hire outside lawyers.

In a written response this month to The Nerve, the longtime treasurer said that “despite a statute that says the State should defend me, reimbursement for those legal fees now appears to depend not on the law, but on the whims of another elected official – the Attorney General.”

“That kind of political gatekeeping, where one official has discretionary financial power over another, is unacceptable,” Loftis, a Republican whose annual salary as state treasurer is $164,000, said in his Aug. 6 statement, which he provided in a Word document that was not on standard letterhead of the Treasurer’s Office.

Loftis said he doesn’t accept political action committee (PAC) donations, “dark money,” or “contributions from the financial industry, corporations, or individuals,” adding, “I will not allow anyone – either explicitly or implicitly – to hold influence over the Treasury. That responsibility belongs solely to your elected State Treasurer.”

In an Aug. 7 email response to The Nerve, Robert Kittle, spokesman for Republican Attorney General Alan Wilson, said, citing a longstanding policy of the Attorney General’s Office, that if an elected official is “charged with something that’s disciplinary in nature, we do not authorize the payment of outside legal fees up front.”

“If that official is exonerated,” Kittle continued, “our office will then authorize him to be reimbursed for reasonable legal fees.”

State law generally requires the Attorney General's Office to approve outside lawyers for state agencies, including fees to be paid.

“Taxpayers should not have to pay for the defense of elected officials who are charged with a crime or any behavior that could result in their removal from office,” Kittle said. “This has nothing to do with anyone’s whims; this is to protect the taxpayers. Public funds can’t be used for a private purpose.”

Since Loftis’ unsuccessful attempt to convince the S.C. Supreme Court in April to stop a historic Senate hearing to remove him from office and the chamber’s subsequent 33-8 vote on April 21 supporting the removal, The Nerve sought, through multiple requests under the S.C. Freedom of Information Act, payment and other related records from the Treasurer’s and Attorney General’s offices for all outside lawyers hired by Loftis in connection with the Senate hearing.

The Nerve sought a direct statement from Loftis after his office repeatedly said in writing over the past several months that the Attorney General’s Office had not approved the hiring of outside attorneys to represent him in his removal hearing.

In a companion story published today, The Nerve detailed the multimillion-dollar public costs for investigations of and other matters related to a disputed $1.8 billion, which was the subject of two Senate subcommittee reports and a forensic accounting report by a global consulting firm. Those reports ultimately led to Loftis’ removal hearing.

Loftis, who was first elected in 2010, told the FITSNews outlet in an April story that he will seek re-election next year to another four-year term as the state’s chief banker. Wilson, who was first elected in 2010 to a four-term term as the state’s top prosecutor, announced in June that was entering the 2026 race for governor.

No exoneration, no reimbursement

Under a state constitutional provision, Loftis can be removed from office only with a two-thirds vote from both the Senate and House, though it’s unclear whether the House will take up the matter either this year or next.

House Speaker Murrell Smith, R-Sumter, didn’t respond to a written request this month from The Nerve seeking comment.

“The current matter is still pending before the South Carolina House,” Kittle said in his written response to The Nerve. “Until it is concluded, and he’s (Loftis) exonerated, he cannot be reimbursed.”

The Senate vote to remove Loftis, who is not charged with or accused of any criminal wrongdoing, was based on the constitutional provision allowing removal for “willful neglect of duty, or other reasonable cause,” which is separate from another provision allowing impeachment for “serious crimes or serious misconduct in office.”

Sen. Larry Grooms, R-Berkeley, who chairs the Senate Finance Constitutional Budget Subcommittee, which produced two reports on the $1.8 billion, has repeatedly called for Loftis’ resignation. The subcommittee in March this year released its final report, which, among other recommendations, called for the removal of Loftis from office under the S.C. Constitution.

The report noted that no elected constitutional officer has been removed since the state’s formation in 1776.

“The level of ineptitude which has imbued this Treasurer’s time in office is not worthy of the citizens of our state, and his volatile temperament and angry demeanor degrade those who are charged to work with him to secure the financial standing of South Carolina,” the report concluded. “In sum: if the treasurer cannot keep track of the treasury, then he should not remain treasurer.”

A forensic accounting report, which was released in January this year by the New York-based consulting firm AlixPartners, determined that approximately $1.6 billion of the disputed $1.8 billion didn’t actually exist, noting that accounting errors occurred during a years-long conversion to a different state accounting system involving several state agencies, including the Treasurer’s Office.

Loftis has refused Grooms’ calls to resign and repeatedly has denied any wrongdoing, though he dodged answering key questions from The Nerve in January regarding his Senate testimony last year about the $1.8 billion. Since last year, Loftis has published two lengthy reports on his agency’s website defending the actions of himself and his office.

Loftis also published a statement on the website in March rejecting the subcommittee’s call for his removal from office and recommending that the state Inspector General’s Office review his agency’s “books and operations.”

“To be clear, there was no mysterious bank account, no missing money, no stolen money, and no taxpayer funds were lost,” the statement said. “At no point did this accounting error affect the Treasurer’s actual bank balances. South Carolinians can rest assured that their money is safe and secure.”

‘Clear warning’

In his written reply this month to The Nerve, Kittle said the decision by the Attorney General’s Office not to authorize the hiring of outside attorneys for Loftis in connection with his Senate removal hearing was based on an office policy “going back at least to the 1990s, over three attorneys general, based on written opinions.”

“Treasurer Loftis is well aware this is not a political whim and is a policy,” Kittle said, providing The Nerve with copies of a 2014 formal opinion by the office on a reimbursement matter and two 2014 related letters from Loftis to the S.C. Retirement System Investment Commission (RSIC), on which Loftis formerly served.

In one of the letters, Loftis requested reimbursement from the RSIC for $10,000 in legal fees that he said he paid to defend himself against alleged but ultimately unfounded “pay to play” claims made in 2011 against him as a commission member.

The Attorney General’s Office said in its August 2014 formal opinion that a “court would likely conclude” that if an investigation of an accused RSIC member “ends in no criminal charges, the member is entitled to reimbursement for reasonable attorney fees” under the RSIC law.

“I can’t see how this law applies,” Loftis said in a written response Thursday to The Nerve, noting that the RSIC “is not involved with this issue.”

In written requests in April this year to the Attorney General’s Office to hire attorneys from three outside law firms to defend Loftis in connection with his Senate removal hearing, the Treasurer’s Office sought approval for estimated maximum legal fees totaling $500,000, according to records provided by the agencies to The Nerve under the S.C. Freedom of Information Act.

Requests to authorize the hiring of outside lawyers are known as “Form 1” requests. State law says a state agency “may not engage on a fee basis an attorney at law except upon the written approval of the Attorney General and upon a fee as must be approved by him.”

In an April 8 email, which was included with the Form 1 requests by the Treasurer’s Office to approve the hiring of outside attorneys to defend Loftis in his removal hearing, Chief Deputy Attorney General Jeff Young told Shelly Kelly, the then-general counsel for the Treasurer’s Office, that the Attorney General’s Office’s “long-standing policy is that we cannot authorize present payment as you have requested.”

“Should the removal action (by the Senate) be unsuccessful or dismissed, the Treasurer may request reimbursement at the reasonable rate requested in the Form 1 you submitted,” Young said.

In an email to The Nerve on Aug. 6, Loftis confirmed that the approximately $100,000 he personally spent on outside attorneys was the total for Deborah Barbier of Deborah B. Barbier LLC in Columbia, Johnny Gasser of Harris & Gasser LLC in Columbia; and the Barnwell Whaley Patterson & Helms LLC firm in Charleston. Barbier and Gasser, who are former veteran prosecutors, defended Loftis during his April 21 hearing; the Barnwell Whaley firm represented him in his April 10 petition to the Supreme Court. 

Although it denied the requests for those law firms, the Attorney General’s Office approved earlier requests by the Treasurer’s Office to hire outside attorneys with the Washington, D.C.-based BakerHostetler and Wiley Rein law firms in connection with a related, ongoing investigation by the U.S. Securities and Exchange Commission (SEC) into the $1.8 billion and related matters, records show.

In a Feb. 5 email, Deputy Attorney General Steve Lynch told Kelly that the approval to hire the BakerHostetler firm “does not extend to any other matters, including impeachment proceedings or any legislative hearings other than those related to the SEC investigation.”

“Thankfully, the Senate has failed in its efforts to remove me from office,” Loftis said in his Aug. 6 written statement to The Nerve, noting, “Despite not one penny missing from the state treasury, the Senate has spent millions of dollars trying to remove a popularly elected State Treasurer from office over a seven-year-old accounting determination made amongst professionals from four state agencies.”

“The Senate’s actions send a clear warning,” Loftis continued, “to anyone considering public service: If you challenge the political establishment, you may be risking your family’s financial wellbeing – using your own tax dollars against you – while their proceedings are shielded by legal immunity. And you may be left to beg for reimbursement, and in doing so, appear compromised.”

Loftis concluded, “Let me be clear: I serve the people of South Carolina, not other elected officials.”

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

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