July 19, 2014

Village at River’s Edge: Unfinished site built with $12 million in tax dollars; first plagued by violent crime, then white-collar crime

A recent public corruption trial demonstrated the depth of misconduct by some of its developers and shed new light on Mayor Steve Benjamin’s involvement in the 28-acre site, tucked into rolling hills in north Columbia overlooking the Broad River.

The site where the Village at River’s Edge complex sits has seesawed between being under the control of violent criminals to serving as a cash cow for white-collar criminals.

A recent public corruption trial demonstrated the depth of misconduct by some of its developers and shed new light on Mayor Steve Benjamin’s involvement in the 28-acre site, tucked into rolling hills in north Columbia overlooking the Broad River.

For example, testimony in the trial of Benjamin’s friend and business partner Jonathan Pinson that ended July 3 showed that Benjamin only finished paying off a boyhood friend’s 2007 loan intended for the complex in the weeks leading up to the start of the trial in federal court.

Columbia’s two-term mayor is not accused of a crime. Yet disclosures during Pinson’s three-week trial likely clouded Benjamin’s reputation.

Pinson’s orchestrated plots involved shorting the company he hired to build River's Edge out of almost a half-million dollars. The trial showed Pinson illegally diverted construction grant money to himself, his wife, Benjamin and others.

Pinson and other schemers also borrowed nearly $900,000 that should have gone toward homes at River's Edge – but he spent the money on personal expenses, prosecutors argued successfully at trial.

Despite behind-the-scenes plots that taint the housing complex, residents live in 60 new, energy-efficient townhouses that stand where one of the county’s most notorious apartment complexes, Roosevelt Village, once was a center of drugs, shootings and prostitution. Some 10 or more acres remain vacant lots, despite pledges by developers who said they would build homes there.

Four years ago, Pinson appeared to be riding high and was poised as the man who finally would redeem the blighted complex. He was one of South Carolina’s elite – chairman of S.C. State University’s board of trustees, a multimillionaire businessman. Like Benjamin, Pinson had been a Liberty Fellow, a recognition extended to only a few state and political business leaders chosen each year for a fellowship worth many tens of thousands of dollars.

Pinson, of Greenville, began to plan the future of the complex in 2006 with his friend and the future mayor. Together they would work to gain almost $12 million in federal and city money. With Benjamin as the face of the project, they would persuade City Council to install water and sewer lines and other utilities as well as to annex the property from Richland County.

In fact, the trial showed, Pinson illegally used tens of thousands of public dollars to profit personally from housing that was intended to benefit low- to moderate-income families. It is one of four schemes on which a federal jury convicted him. Pinson faces up to 20 years in prison when he is sentenced later this summer or fall.

That isn’t the face Pinson or Benjamin had presented before federal agents secretly tapped Pinson’s cellphone during the summer and fall of 2011.

“We think it will be a project where everyone that’s involved will be happy in the years to come,” Pinson told The State newspaper in August 2010. By that time, Benjamin had cut his ties with River’s Edge because he had just completed his successful campaign to become mayor.

The FBI and federal prosecutors soon would peel away Pinson’s respectable veneer.

The dealings involving Pinson and Benjamin at River’s Edge are just part of a long history of crimes, promises, dreams, dashed hopes — and now big money – associated with that property.

For years, since its founding as a low-income community in 1950, the site had been a magnet for crimes – mostly drug dealers, prostitutes and thieves.

Its approximately 150 cinderblock apartments were roach infested and lacked central air conditioning. Syringes and broken liquor bottles spilled over into the playground at adjacent E.E. Taylor Elementary School.

In nearby Riverview Terrace neighborhood, middle-class African-American homeowners worried about their safety as well as their property values.

Jasper Salmond, a longtime Richland 1 school board member and a Riverview Terrace resident, said in 2010 that he was “trusting in the integrity of the developers” to deliver on their promise of building a quality community.

Anatomy of the scheme

Pinson’s trial highlighted a kind of crime that involved plying political influence and diverting public money among bank accounts rather than offenses using guns or drugs.

One of the reasons prosecutors invoked Benjamin’s name so much during the trial was to show that Pinson had a pattern of getting close to public officials and using that relationship to give his money-making schemes a respectable appearance.

Testimony and the intercepted phone calls cast a searing light on how Pinson manipulated federal money he was supposed to use to pay a contractor at River’s Edge to build homes for families that could not afford conventional mortgages.

Although Benjamin was not charged with any crime, his name came up repeatedly during the trial as prosecutors elicited testimony from witnesses detailing Benjamin’s role in other Pinson schemes. Among the testimony was that he and Pinson had a young woman from an Orlando strip club in their hotel room during a 2010 trip paid for by a Florida developer interested in doing business in Columbia.

Demond Pearson, who grew up a couple doors from the Benjamin household in Queens, N.Y., testified that a $50,000 loan Benjamin requested in 2007 for River’s Edge was finally repaid just before the trial began. Pearson said Benjamin and Pinson told him initially that he would double his investment in three years.

Instead, the money went into the account of Benjamin’s law firm, Pearson testified.

Trial evidence and testimony showed that Pinson shorted the general contractor, SK Builders, out of $456,000 by transferring money to himself, his wife Pamela, Benjamin and to corporate accounts for a company he owns with Benjamin, Third Way Hospitality, among other financial transactions.

The trial also showed:

• A maze of activity involving misuse of at least $235,000 in federal grants intended for the construction of the housing complex, as well as bank and corporate loans totaling $875,000. All of that was in addition to millions in federal and city money that flowed to the project.
• The money moved in and out of accounts for Pinson’s use that included trips to the Ritz Carlton and Hard Rock Cafe in Atlanta, local restaurants such as Liberty Tap Room, gasoline, $4,700 in ATM withdrawals and other expenditures the government said were criminal. This money was intended for River’s Edge, prosecutors said.
• Pinson’s money laundering conviction involved transferring $46,500 from the River’s Edge account at Bank of America into his Wachovia personal account.
• Pinson illegally used federal money to pay for expenses during 2011 that range from a single, $18,500 transfer to everyday spending that included an $880 payment on his BMW.
• The misuse of a $500,000 loan from First Community Bank intended for the complex. Pinson transferred at least $95,000 to his wife in August 2009; $95,000 to Benjamin in August and September 2009, among other movements of money that prosecutors’ questioned.
• Pinson also elicited a $375,000 loan from SK Builders of Taylors, in the Upstate, to support his company’s hiring of SK as the general contractor to build the housing complex.

SK co-owner Tim Kalliainen testified he agreed to the loan, with the stipulation that the limited liability corporation Pinson and Benjamin once owned together would repay the loan with money from each lot sold on the property.

Ultimately, Kalliainen said, he got back $185,000 of the loan. He said he also was shorted about $265,000 in construction costs because Pinson was taking larger and larger shares of the federal money intended for construction.

• Pinson told investigators that he bought Benjamin out of Village at River’s Edge, LLC for more than $400,000 through an interest-free loan.

Phil Mims, a former banker who became a project manager for the complex, testified that he and Pinson diverted some of the payments that should have gone to SK. They were taking sums that ranged from 10 percent to perhaps as high as 23 percent of the money that was due to SK, Mims said during the trial.

Mims had no experience in managing the construction of public housing.

As an accused conspirator turned government witness, Mims said about $103,000 intended for the complex went into a separate corporate account for a company Mims owned.

Good intentions tainted

Redevelopment of Roosevelt Village stumbled repeatedly and then would regain its footing.

At one point in 1990, the Richland County sheriff and the 5th Circuit solicitor’s office teamed in an effort to seize the property as a public nuisance.

Early investors, such as Village of Hope Community Development Corp., found their dreams of a new lease on life for residents thwarted by too little money to realize the ambitions.

During the early stages of getting the project off the ground, the city considered designating River’s Edge a TIF, or tax increment finance district. That would have meant property taxes or fees from homes built on the property would be reinvested there, rather than go into Columbia’s general operating revenue.

The TIF plan died, but the city still invested $1.6 million in public money to install water and sewer lines among other public utilities.

River’s Edge became a political football because of Benjamin’s involvement and his role as the project’s early, primary pitchman.

Then, in August 2009, he separated himself financially just days before he announced his candidacy for the 2010 mayoral race.

Mayor Bob Coble raised questions in August 2009 about the financing of the project before Coble decided not to seek his sixth term.

Benjamin shot back that Coble was laying the groundwork to kill the project.

“It is the nature of politics to mischaracterize and vilify each other and create clouds of suspicion,” Benjamin said at the time. “I hope council wouldn’t play politics with taxpayer dollars.”

No one knows what the future holds for the Village of River’s Edge, whose new townhomes are owned and overseen by the Columbia Housing Authority.

New developers, who include a Carolina Panthers football player and the former head of Aiken’s housing authority, now own some 10-plus acres of the undeveloped property.

Whether they will succeed where others failed remains to be seen.

The new owners might remember Benjamin’s words to the newspaper in 2006. “We can do this, and we can do it well.”

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