COLUMBIA, S.C. (AP) — It turns out that $1.8 billion in South Carolina state funds weren't just sitting in a bank account waiting to be spent. Instead, it was an accounting error compounded over years instead of being reconciled, an independent forensic audit determined.
The announcement Wednesday dashed ideas like returning the money to taxpayers or using the windfall on roads. But it also led to more questions: why wasn't the error reported when it was first discovered back around 2018, and should the elected state treasurer, Curtis Loftis, step down or be impeached.
"In the private sector, if anybody had made a blunder of $1.8 billion -- whether it was an error, negligence, misfeasance, malfeasance, fraud or a cover-up, they would lose their job,” said Republican state Sen. Larry Grooms, who leads a committee investigating the accounting problems.
The private audit, which cost millions of dollars, is the most comprehensive look so far into the South Carolina Treasurer and Comptroller General's Office. Those agencies are typically led by elected officials and are in charge of making sure that government accounts stay balanced.
The audit isn't the final word on the matter. Investigators, including the Securities and Exchange Commission, are trying to determine if it was just a series of mistakes or whether state employees figured out what was going on and tried to cover it up, Grooms said.
Depending on how serious the allegations are, the state could see its rates to borrow money rise, pay fines or face other punishment.
In a separate case, the elected Republican comptroller general — the state’s top accountant — resigned in 2023 after his agency started double-posting the amount the state had sent to colleges and universities for a decade, leading to a different $3.5 billion error that also was all on paper.
While Richard Eckstrom stepped aside in that case, Loftis has defended himself and his office.
The problems with the $1.8 billion error started as the state changed computer systems in the 2010s. Grooms said the initial mistake happened when Loftis, whose job is to write checks for the state, shifted accounts from the old system to the new one.
Loftis testified under oath before senators last year that he invested the money in the mystery $1.8 billion account and made nearly $200 million in interest for the state, which Grooms said seems impossible since there was no money there. The senator said Loftis also appears to have lied under oath when he said their was no federal investigation into his office.