The state Attorney General’s Office has cleared State Treasurer Curtis Loftis of any wrongdoing in an alleged “pay-to-play” scheme involving the state’s $24.5 billion retirement fund.
In a press release, Loftis, the first-term Republican treasurer, hailed the decision as “a major victory for transparency and accountability” while calling the investigation “shameful.”
In November, at least one company complained that Mallory Factor, a Charleston businessman and ally of Loftis, had told that firm that it would have a better chance of winning a lucrative contract to manage part of the state’s retirement fund if it would pay Factor a fee.
The company said Factor claimed to be representing an elected official on the commission. The commission only has one elected official — Loftis.
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The Investment Commission, including Loftis, voted unanimously that same month to refer the allegations to the state Attorney General’s Office.
Documents and emails obtained by The State newspaper, via the state’s Freedom of Information Act, showed Factor represented two financial management companies, that he recommended the companies to Loftis and, in turn, Loftis recommended the companies for contracts with the commission.
Factor would have been paid if the commission had selected one of the firms to manage some of its investments. But, after the investigation was launched, he announced he had ended his relationship with the companies — Driehaus Capital Management and 300 North Capital.
Nothing in the documents indicated any financial relationship between Factor and Loftis, and both vehemently denied any impropriety.
The state Attorney General’s Office, following an investigation by the State Law Enforcement Division, agreed with them.
“Based upon review of the report by SLED and its attachments, this Office has concluded that there was no activity which warrants action by this office,” Chief Deputy Attorney General John McIntosh wrote to SLED Chief Mark Keel on Thursday.
Loftis announced the finding Friday.
Loftis has been a critic of the Investment Commission.
In January, he testified before a Senate Finance Subcommittee, criticizing the commission for investing half of its money in alternative investments — including hedge funds and real estate — that charge high fees. It was a tense meeting, with Loftis trading barbs with state Sen. Greg Ryberg, R-Aiken.
A few days after that meeting, news leaked the State Law Enforcement Division was investigating an alleged “pay-to-play” scheme at the Investment Commission.
Loftis has said the timing of that leak was not an accident.
“This effort by my political opponents to inject the legal process into a political battle over how public funds are invested was shameful,” Loftis said in a news release Friday. “Their scheme to involve the state’s legal system in an effort to halt my demands has now been laid to rest even though their scheme has cost me more than $10,000 in personal funds for legal representation.”
Factor, the Charleston businessman and Loftis ally, said he was never a target of the investigation but was interviewed as a witness. He blamed the media for not reporting the whole story.
“People read the stuff and think you did something wrong. It’s like I’m denying beating my wife. I mean, come on,” Factor said. “My reputation has been forever tarnished by innuendo and slander that’s totally not true.”
A spokesman for the Attorney General’s Office declined comment on the “pay-for-play” investigation Friday. A SLED spokeswoman said that agency’s report will be made public sometime next week.
Allen Gillespie, chairman of the Investment Commission, also declined comment Friday.
But commission vice chairman Reynolds Williams, who publicly has criticized Loftis in the past, said he was not surprised by the investigation’s findings.
“We knew it looked like something worth investigating, but I never really expected them to get any meaningful evidence,” he said. “I’ve been practicing law a long time. I know a little bit about evaluating a case.”
Williams, who has expressed concern about the politicization of the pension system, repeated his wish that Loftis be removed from the commission and forced to appoint someone to represent him on the panel — as the governor, comptroller general and chairmen of the House and Senate budget committees do.
Earlier this year, however, the state Senate voted overwhelmingly to keep Loftis on the commission.