South Carolina

August 27, 2013

Criminal investigation into MB chamber-related donations continues

An Internal Revenue Service agent has confirmed that a federal criminal investigation into political donations linked to the Myrtle Beach Area Chamber of Commerce is continuing.

An Internal Revenue Service agent has confirmed that a federal criminal investigation into political donations linked to the Myrtle Beach Area Chamber of Commerce is continuing. Ellen Burrows, with the IRS' criminal investigations division, told The Sun News last week that her agency is investigating donations made in 2009 to state and local politicians by a group of limited liability corporations with ties to the chamber. This is the first time that a person directly involved in the investigation has confirmed its existence. The joint investigation with the FBI is now in its third year.

Burrows contacted The Sun News last week seeking documents the newspaper obtained regarding the political donations. The Sun News has declined to provide investigators with copies of the documents to protect the newspaper's sources and maintain its independence from the investigation.

Brad Dean, the chamber's president and chief executive officer, did not respond to a request for comments.

The $324,500 in campaign donations purportedly were given by 14 corporations, all of which listed Myrtle Beach lawyer Robert ``Shep'' Guyton -- a former chairman of the chamber's board of directors -- as their registered agent. The donations were given to members of Horry County's legislative delegation and to incumbents running for Myrtle Beach City Council, all of whom helped pass a 1 percent local-option sales tax which sends millions of dollars each year to the chamber for out-of-state tourism marketing.

Guyton did not return a telephone call on Monday seeking comment.

Guyton's partners in the corporations, including Horry County Council Chairman Mark Lazarus, have told The Sun News they do not know where the money came from for the campaign donations. The corporations were land-holding groups that had no income and at least one of the corporations was defunct at the time the donations were made. Several of the corporations lost their property to foreclosure in the months after they had purportedly given money to politicians for their re-election campaigns, court records show.

One of the corporations -- Beach Paralegal Services LLC -- had been dissolved for more than a year before it purportedly made $24,000 in campaign donations. The company was dissolved in October 2007 because it failed to pay its taxes, according to the S.C. Secretary of State's website.

The political donations also were not reported on the corporations' tax returns.

Critics of the chamber say the donations were payback for politicians' support of the controversial sales tax increase, which the City Council passed in May 2009 without a voter referendum. The donations -- all in the form of sequentially numbered cashier's checks purchased on a single day at South Atlantic Bank, where Guyton was a board member -- are dated June 8, 2009, and were delivered to candidates in the weeks after the tax was passed.

Three of the Myrtle Beach City Council members who received contributions are running for re-election this year -- Wayne Gray, Randal Wallace and Mayor John Rhodes. Also receiving donations were: former City Councilman Chuck Martino; and area state legislators Sen. Ray Cleary, R-Murrells Inlet; Rep. Alan Clemmons, R-Myrtle Beach; Rep. Liston Barfield, R-Aynor; Rep. Nelson Hardwick, R-Surfside Beach; and former Rep. George Hearn, R-Conway. Failed gubernatorial candidate Gresham Barrett also received campaign donations purportedly from the corporations.

Edge was the only legislator who received contributions to ultimately reject them, saying he suspected the donors listed on the cashier's checks weren't legitimate.

Dean has said no chamber or public money was used for the donations.

Initially, Brant Branham -- the chamber's board chairman at the time the donations were made -- said he helped raise the campaign contributions from "like-minded businessmen and women." Branham did not identify those individuals. Branham later became chief of staff for former Lt. Gov. Ken Ard, who resigned last year after an investigation by a state Grand Jury into ethics violations, including allegations Ard used campaign money to buy personal items such as iPads, clothes, football tickets and a TV.

The chamber has received nearly $69.5 million from the local-option sales tax since its inception to pay for advertisements that promote Myrtle Beach to out-of-state visitors. The chamber's receipts for fiscal 2013, which ended June 30, were up less than 1 percent from the previous fiscal year. The chamber has said the tax has led to an increase in out-of-state visitors and about 8.5 million visits to its vacation planning website in 2012. Contact DAVID WREN at 626-0281.

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