The following columns and editorial were published on Sunday, July 18, 2010, the 20th anniversary of Operation Lost Trust
OPERATION LOST TRUST — 20 YEARS LATER
Twenty years ago today, federal agents arrived at the offices of 17 state legislators with subpoenas and questions about the wads of crisp $100 bills they had accepted from a shady lobbyist hawking horse gambling.
Over the next 17 months, prosecutors would roll out grainy black-and-white videos that showed legislators selling their votes; a tenth of the members of the General Assembly would be convicted on corruption and drug charges, along with another 10 lobbyists and top government officials; the Legislature would pass one of the toughest ethics laws in the nation; and Gov. Carroll Campbell would use the scandal as a launching pad for his campaign to restructure the government. The massive corruption sting dubbed Operation Lost Trust would change our state forever.
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Or so it seemed at the time.
The lost (trust) year
I SLID DOWN the wall into a cross-legged position on my kitchen floor, my head spinning with the implications of the news I was hearing. It was July 18, 1990, I was on vacation, and a friend in the Legislature had called to find out what was going on. He ended up telling me what little anyone knew at the moment: Federal agents were serving subpoenas on legislators and impounding House campaign disclosure reports.
It might have something to do with Ron Cobb, my friend said.
"Ron who?" I asked. Like most South Carolinians, I had never heard of the flamboyant, cigar chomping lobbyist who already had years’ of experience buying legislators’ votes when the feds lured him into a drug deal and then flipped him into its mole to sting the Legislature.
It was a brief period of innocence. In the month before a federal grand jury handed down the first of its 28 indictments and federal prosecutors gave their investigation a name and acknowledged that their case would be bolstered by videotapes — showing Mr. Cobb counting out crisp new $100 bills and telling legislators whose votes he had just purchased, "It’s a bidness doing pleasure with you" — we would get a largely unobstructed view of the seamy underside of the Legislature.
As a South Carolinian, it was distressing to learn that "you can buy South Carolina politicians at Kmart," as one disgusted woman told The Miami Herald. (One went for "a couple of suits and five or six shirts.") As a reporter, it was exciting to chase down the rumors. A legislator caught on videotape dancing on tabletops clad in nothing but high heels and pearls (not true, as far as we ever learned). Another bragging to the cameras about waking up to find a fellow legislator and two strange women in a strange hotel room (true). And who would fall next.
Lobbyists and legislators became paradoxically paranoid fonts of information. A few would only return my calls from pay phones; one insisted in talking only in person, in places he felt certain federal agents couldn’t have bugged. Lobbyists told me of legislators blocking their clients’ bills and then waiting to be taken to dinner to discuss the matter. They ratted out fellow lobbyists who got friendly legislators to introduce bills aimed at a particular business, and then suggest the business hire that lobbyist to work things out.
One legislator recalled trying to pay for dinner only to be told by a waitress that it had been covered; the legislator he was dining with explained to him that "legislators don’t pay for anything here; lobbyists cover it." Others described the night club within a stone’s throw of the State House where lawmakers went to get lucky and lobbyists went to pick up their bar tabs.
Insiders recounted the deals that got worked out over high-stakes poker games in Sen. Jack Lindsay’s room at The Town House hotel. They suggested I take a look at the relationship between the Lost Trust targets and the old Fat and Ugly Caucus, which junior House members formed in 1980 to coerce lobbyists to spend money on them; the correlation was stunning, and the lunch club turned out to be one of the geneses of the sting.
These details, interspersed with the grainy black-and-white videos, helped reformers push through ethics, lobbying and campaign finance reforms that had languished for years, ending the inadvertent seduction of corruption that occurred when the perfectly legal free lunch turned into the free dinner and the free evening’s entertainment and then free resort vacation — and the now-easy agreement to vote however the patron asked.
If anything happened in the next year that wasn’t related to the sting, I can’t remember it. While I dissected the ethics proposals, my editor Brad Warthen led the newsroom on a yearlong examination of how the Legislative State produced not only corruption but a hapless government that answered to no one — laying the groundwork for one of the primary focuses of our later work on this editorial board.
Pushed along by Lost Trust, Gov. Carroll Campbell and Brad’s "Power Failure" series, the Legislature voted two years later to hand a third of the government over to the governor. Lawmakers unleashed the powerful State Grand Jury to investigate political corruption cases. They passed a reporter shield law after a judge ordered me and three other reporters held in federal custody for two days for refusing to testify in a corruption trial.
And after a target of an earlier vote-buying scandal was elected to replace Sen. Lindsay, whose death had prevented him from becoming the biggest fish stung, lawmakers amended the constitution to bar felons from holding office until 15 years after they completed their sentences. Which, for the still-living members of the Lost Trust 27, would be any day now.
And a silver-plated lining
IT IS THE HUMAN imperative to seek silver linings, to make lemonade from lemons. And that is how we approached Operation Lost Trust. Did we succeed? To help me assess that, I called Bob McAlister, then Gov. Carroll Campbell’s communications director and now president of a public relations company, and attorney Dwight Drake, the erstwhile Democratic gubernatorial candidate who was dubbed “the one honest lobbyist” in South Carolina on national TV.
Mr. McAlister believes Lost Trust had a profoundly positive impact on our state, by putting ethical rules in place and, even more, giving life to Mr. Campbell’s plan to take on a system in which “unaccountable, unelected bureaucrats were running state government.”
“I don’t look back upon it with any idea that we just got a shadow of what we should have gotten with restructuring,” he said. “At the time that was an historical achievement. Lost Trust gave him more than a philosophical argument; it gave him exhibit A, because if you’ll remember, state government was frozen in its tracks during the Lost Trust investigation. People were seeing ghosts in their closets.”
Unfortunately, after Govs. David Beasley and Jim Hodges did little with their new executive authority and less to win more, Gov. Mark Sanford so infuriated lawmakers with his eight-year attack on the Legislature that he will leave the office arguably weaker than he found it.
“I think there was a hope and belief that the result was a government that people could have more confidence in and a government that was more efficient,” Mr. Drake said. “I can’t say that it’s achieved either one of those. If anything, the public has less confidence in its government officials. I don’t think there was the good that came of it that many thought would come of it.”
Mr. Drake notes that “you can pass laws and enact rules and people can abide by the rules, (but) that doesn’t necessary make for a more honest or less corrupt government.” And although justice demanded the vote-sellers be prosecuted, there are days when I would even argue that our state was no worse off with selfdealing legislators whose No. 1 priority was lining their own pockets than we are today with rigid ideologues whose No. 1 priority is lining the Legislature with clones of themselves. But we probably would have ended up with the latter even if we had not purged the former.
From our vantage point two decades removed, what seems clear is that the earth did not actually move beneath our feet on July 18, 1990. The way of doing business at the State House changed, but South Carolina was not transformed. We had deep and abiding problems and great potential then; we still do today. In some ways our political culture is more open and honest; in some ways it is less so.
In the end, Lost Trust was a police action, which resulted in the punishment of some petty and pathetic criminals. It also resulted in new laws to make it less likely that others would accidentally wander into unacceptable behavior because there were no guardrails in place. And it helped us nudge our government toward the 20th century. While it was important to try to produce it, it probably was unrealistic to expect anything more than that.
Editorial: Reinvigorate campaign law
LOOKING BACK FIVE years after the federal government took out a tenth of the General Assembly in the Operation Lost Trust corruption sting, Senate Ethics Chairman Wes Hayes expressed satisfaction with the state’s new ethics law but told The State, “I just hope we never think that we’re completely through with reform.”
Mr. Hayes, the only one of the chief architects of the 2001 law who remains in the Legislature, might have been prescient. He certainly has been disappointed.
When federal agents zeroed in on a cozy State House culture that encouraged corruption, South Carolina had an anemic campaign finance law and no ethics law. The one direct legislative result of Lost Trust was a respectable campaign finance law and one of the toughest ethics laws in the nation. Legislators, accustomed to having their meals paid for and even taking lavish vacations at the expense of the people paid to influence their votes, no longer could accept anything from those lobbyists — not dinner, not a campaign donation, not even a cup of coffee. Gifts from lobbyists’ employers also were restricted. Candidates no longer could pocket campaign donations. And for the first time, donations were limited — $3,500 per election for statewide candidates and $1,000 for everyone else.
The “rules of conduct” side of the law has withstood the test of time, and achieved the desired result of putting some distance between legislators and lobbyists. The campaign finance law has atrophied through nearly two decades of legislative neglect. The ink had barely dried before loopholes were discovered, exploited and expanded:
Lobbyists got around the ban on campaign activities by “unregistering” when the legislative session ended, making donations and volunteering in political campaigns and then re-registering before the next session to lobby the officials they had helped elect.
Donors got around the donation cap by funneling money through paper corporations whose sole purpose can be to evade the law.
Candidates got around the disclosure law by encouraging controversial donors to wait until the final days before an election to deliver their checks, so voters wouldn’t know to whom they were indebted until it was too late.
Special interests got around pretty much the entire law by claiming their attack ads were part of “issue” campaigns that weren’t subject to any restrictions or reporting requirements.
This system resulted in the election of every member of the Legislature. And whichever party or faction benefits from the loopholes at the moment doesn’t want to give them up. So the Legislature has done precious little to close these and many other well-documented loopholes. When it has tried, it has ended up opening new loopholes.
The result is that today the money any one can give to a candidate is limited only if the donor wants it to be limited. The voters can find out who is bankrolling candidates only if the candidates and the donors want them to. And the role of money in our politics is greater than ever.
Donors and candidates who are determined to hide their activities from the public have always found a way. People who are determined to use their money to drown out the will of the voters, and candidates willing to indebt themselves to such people, have always found a way. That is inevitable. What is not inevitable is that the government will wink at such deception. Yet that is what our Legislature has done — before Lost Trust and since. And that is what it will continue to do until we demand better — or until the federal government decides to conduct another experiment to see how many of our lawmakers are willing to be bought outright.