The South Carolina State Law Enforcement Division (SLED) has released a copy of a redacted report prepared in connection with its “preliminary investigation” into allegations of embezzlement leveled against former South Carolina Republican Party (SCGOP) chairman Chad Connelly.
The report – which investigated allegations that Connelly stole money from the Palmetto State’s fledgling school choice program – was requested by FITSNews under the Palmetto State’s Freedom of Information Act (FOIA).
Connelly was cleared in connection with this inquiry in mid-December, however the controversy surrounding payments he received from the fund – which was intended to subsidize scholarships for special needs children – has endured.
According to the report (.pdf), the enduring controversy would appear to be warranted …
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To recap: Connelly was accused of embezzlement in connection with an ongoing battle over control of this choice program – a battle first reported by this news outlet back in January 2020.
Connelly was executive director of the Exceptional SC organization – a 501(c)(3) ostensibly “dedicated to supporting exceptional needs students and families in South Carolina.”
Since assuming the reins of the program in late 2017, Connelly has been at war with Palmetto Kids FIRST – a scholarship funding organization run by Greenville, S.C. attorney Jeff Davis and his wife Olga Lisinska. Davis and Lisinska are leaders of the mySCGOP.com movement – a grassroots push to oust liberal “Republicans” from party offices.
The group hasn’t encountered much in the way of success at the statewide level, however it has backed numerous successful local “coups” – including a takeover of the Greenville County GOP. In the process, though, the organization’s aggressive tactics have angered many rank-and-file leaders within the party establishment – prompting more than a few unforced errors from SCGOP leaders.
Nearly two years ago, Davis and Lisinska claimed the S.C. Department of Revenue (SCDOR) had uncovered more than $183,500 allegedly “taken” from scholarship funds administered by Exceptional SC. Of that total, nearly $100,000 was alleged to have been “misappropriated.”
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Lisinska (above) told me this week the money is “still missing.”
Connelly has consistently denied the allegations – and threatened to sue Davis and Lisinska for defamation. In fact, their ongoing battle has sparked a major rift within the SCGOP’s executive committee.
The problem? Whether he bears any direct accountability for the expenditures or not, money routed to Connelly from Exceptional SC was definitionally misappropriated under the law.
Documents contained in the SLED report reveal that SCDOR issued a memorandum on July 30, 2020 informing Exceptional SC’s board of directors that it had “exceeded the two percent cap for administrative expenditures” allowed under state law.
The SCDOR memo – authored by director Hartley Powell – instructed the organization’s board of directors to “take immediate, corrective measures to bring Exceptional SC spending into compliance with the law.”
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Within two weeks of this memo being sent, Connelly was out as executive director – and Exceptional SC board chairman Tom Persons was ousted from his position, as well. In fact, a severance agreement between the organization and Connelly – a copy of which was included in SLED’s report – specifically referenced Exceptional SC’s need to start following state law as its reason for “separating” with Connelly.
“Exceptional SC cannot continue to exceed spending above a two percent cap on operating expensive prescribed by (state law),” a line from the preamble to the agreement noted.
As a result, the organization’s board “voted to discontinue various contracts, including that of (Connelly) to decrease spending to levels prescribed by (state law).”
Pretty cut and dried, correct?
Curiously, though, Exceptional SC claimed in the document that it did not “violate any law or obligation” and “specifically denie(d) that it has violated any law or obligation related to its contract with (Connelly).”
How much money was Connelly making off of this fund? More than $11,000 per month.
According to a 2017 memorandum of understanding between Connelly and Exceptional SC – a copy of which was contained in the SLED report – the organization “agrees to pay Chad Connelly the sum of $11,300 per month for the duration of the memorandum of understanding.”
“This payment shall continue until such time when either party chooses to terminate the agreement,” the memo continued.
Connelly was paid by Exceptional SC through a Prosperity, S.C.-based company called Contend Strategies LLC – which he incorporated in 2018. Connelly was the only “organizer” listed on the paperwork filed by this firm with the S.C. Secretary of State.
To be clear: I am not saying Connelly broke the law. In fact, based on the facts contained in the SLED report – which was prepared by lieutenant Pete Logan – I can understand why the office of S.C. attorney general Alan Wilson declined to press charges against him.
As the executive director of this fund, Connelly should have known the laws governing its administration.
Ultimately, though, accountability for any alleged misappropriation lies with the board of directors of Exceptional SC. They clearly violated the law related to the disbursement of funds for administrative purposes – and deserve to be held accountable for their actions.
Seriously: You don’t get to say “our bad” and just walk away …
Accordingly, I would call on SLED to reopen this investigation and identify those who did knowingly approve administrative payouts over and above the amounts prescribed by law.
More importantly, I would call on leaders of the S.C. General Assembly to stop paying lip service to parental choice and (at long last) get serious about implementing it on a broad scale. South Carolina is never going to turn around its increasingly costly, chronically abysmal academic achievement until it fully engages the power of the marketplace – i.e. broad-based, universal parental choice. And yes, that choice must be run by the private sector, not politically appointed boards which reward their cronies with handsome payouts.
THE REPORT …
ABOUT THE AUTHOR …
Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina. He lives in the Midlands region of the state with his wife and seven children. And yes, he has LOTS of hats – including that Charleston RiverDogs’ “Perros Santos” lid pictured above.
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