Operation Lost Trust

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The South Carolina State House.

Operation Lost Trust was the name of an FBI investigation into the South Carolina General Assembly from 1989 to 1999. By the end of the investigation, seventeen members of the South Carolina General Assembly were arrested for bribery, extortion, or drug use. Operation Lost Trust is often considered the greatest political scandal in the history of the state of South Carolina. It directly influenced the passing of South Carolina's Ethics Reform Act of 1991, and led to the restructuring of the state government in 1993. In its wake, the once-dominant South Carolina Democratic Party was weakened as a political party, and the Republican Party emerged as a viable political entity in the state.

Investigation

In 1989, the Federal Bureau of Investigation began investigating the South Carolina General Assembly after the narcotics arrest of Ron L. Cobb, a lobbyist and former Democratic[1] member of the South Carolina House of Representatives. The FBI supplied Cobb with a boat located in Hilton Head Island, South Carolina and an office in Atlanta for the purposes of misleading state lawmakers into believing that he represented the Alpha Group, a fake organization seeking support for a bill legalizing dog and horse-track betting. Cobb was instructed to bribe lawmakers with campaign contributions in return for their support for the bill.[2]

In July 1990, a grand jury subpoenaed the campaign finance records of all 170 members of the General Assembly, consequently revealing the existence of the investigation.[3] The investigators were looking for self-reported disclosures of the in-total $30,000 that investigators doled out to tempt lawmakers during the election season.[4] Five legislators, including State Representative Robert A. Kohn (R),[3] were initially indicted for failure to disclose the payments and violating the Hobbs Act. Kohn later agreed to cooperate with prosecutors. While the four indicted members of the General Assembly in the House of Representatives were suspended from official duties, the lone senator, William Richard Lee (R),[3] was able to continue his work in the South Carolina Senate.

Those convicted included:[5][6]

  1. Jack Rogers (D) — State Representative and Speaker Pro Temp from the 54th District; was accused of extorting money from lobbyists. He pled guilty to a charge of racketeering, and was sentenced to 45 months in prison. (1991)[7][8][9]
  2. Kenneth E. Bailey, Sr. (D) — State Representative ofEutawville; accepted a $500 cash bribe, and was convicted of conspiracy.[10][11][12]
  3. Larry Blanding (D) — State Representative fromSumter. After several trials and reversals, Blanding was found guilty of conspiracy and extortion, and sentenced to 37 months.[13][14]
  4. Robert B. Brown (D) — State Representative fromCharleston; pled guilty to bribery.[15][16]
  5. Paul Wayne Derrick (R) — State Representative ofLexington; was found guilty of conspiracy and extortion for accepting $1,000 in bribes. He was sentenced to 34 months.[17][18]
  6. Ennis M. Fant (D) — State Representative fromGreenville; pled guilty to conspiracy and extortion, received 20 months.[13][19]
  7. Jim Faber (D) — State Representative fromRichland County; pled guilty to accepting a 41,000 bribe.[20][21]
  8. James C. Ferguson (D) — State Representative and Circuit Judge of Spartanburg; guilty of extortion and drug charges, and sentenced to 33 months.[22][23]
  9. Benjamin J. Gordon (D) — State Representative ofKingstree; found guilty of conspiracy and extortion, but died during appeal.[13][24][25][26]
  10. Robert Albert Kohn (R) — State Senator fromCharleston; pled guilty to conspiracy and bribery, and served seven months in prison.[13][27]
  11. Rick Lee (R) — State Senator fromBoiling Springs; pled guilty to accepting a $2,000 bribe. He was sentenced to six months at a halfway house.[28][29]
  12. Thomas Limehouse (D) — State Representative fromDorchester; pled guilty to charges of conspiring to accept a bribe and tampering with a witness. Sentenced to 20 months.[30][31]
  13. John Charles “Jack” Lindsay (D) — State Senator fromMarlboro; found guilty in the Lost Trust investigation, but died during appeals.[32][33]
  14. Jefferson Marion “Bud” Long, Jr. (D) — State Representative fromHorry; guilty to $42,000 bribe.[24][34][35]
  15. Frank McBride (D) — State Representative fromColumbia; pled guilty to accepting $1000 in bribes.[10][36][21]
  16. John Irby “Jack” Rogers, III (D) — State Representative fromBennettsville; was indicted on charges of racketeering, bribery, witness tampering, and extortion in extracting thousands of dollars from lobbyists. He was sentenced to 46 months.[37][38][39]
  17. Luther L Taylor, Jr. (D) — State Representative fromColumbia; pled guilty to conspiracy and bribery, and was sentenced to 80 months in prison, but died during appeals.[40][41]
  18. Daniel E. Winstead (R) — State Representative fromCharleston; pled guilty to accepting bribes and obstruction of justice.[42]

At that time, South Carolina required that state lawmakers report any campaign contributions they received to the respective ethics committee of their governing body. After the initial five indictments made the news, Governor Carroll A. Campbell Jr. (R) and Speaker of the House Robert Sheheen (D) both stated that reforms to this system were in order.[3] Out of the 28 indictments in total (including indicted lobbyists), only the indictment of Representative Timothy Castles Wilkes (D)[43] resulted in a not guilty verdict.[44] The South Carolina Legislative Black Caucus raised concerns about the large number of African American lawmakers charged during the investigation.[45]

Aftermath

Ethics Reform Act of 1991

In response to Operation Lost Trust, state lawmakers passed the Ethics Reform Act of 1991. This act made it illegal for lobbyists to give any gift, including campaign contributions, to any serving member of the government. It also capped donations from lobbying firms (lobbyists themselves had to be uninvolved in the decision) to $1,000 when it was previously unlimited. The act also regulated how businesses and organizations which employ lobbyists could entertain lawmakers, ensuring that the entertainment was conducted only in formal groups.[46]

Strengthening the governorship

On February 23, 1993, a bill was introduced to the South Carolina House of Representatives to restructure the state government.[47] Up to this point, the governor of South Carolina had largely been a ceremonial figurehead with limited power. However, after Operation Lost Trust, the General Assembly voted to give the governor what was essentially a "third" of its power.[48] According to The State, the main newspaper of Columbia, South Carolina, “the legislation condensed 75 agencies into 17, and let the governor hire and fire the directors of 11.”[48] The legislature maintained its power over education, road construction, and environmental regulations, while giving the governor power over agencies that imprisoned people, managed healthcare, and collected taxes for the state. South Carolina is still considered a “legislative state,” with the General Assembly maintaining a large proportion of power over the governor’s appointments, as well as the ability to appoint judges.[49]

References

  1. ^ "Former Representative Ron L. Cobb". South Carolina Legislature Online. Archived from the original on 29 October 2023. Retrieved 29 October 2023.
  2. ^ "Statehouse Report – HISTORY: Operation Lost Trust". Archived from the original on 2019-05-31. Retrieved 2019-05-31.
  3. ^ a b c d Smothers, Ronald (1990-08-25). "5 South Carolina Lawmakers Indicted in Corruption Inquiry". The New York Times. ISSN 0362-4331. Archived from the original on 2019-05-31. Retrieved 2019-05-31.
  4. ^ Kropf, Schuyler (4 July 2010). "Lost Trust shook state 20 years ago". Post and Courier. Archived from the original on 2019-05-31. Retrieved 2019-05-31.
  5. ^ "Operation Lost Trust". South Carolina Encyclopedia. Archived from the original on 15 October 2016. Retrieved 2023-06-23.
  6. ^ "Operation Lost Trust". Archived from the original on 2021-07-27. Retrieved 2021-04-23.
  7. ^ AP (January 5, 1991). "2 More Indictments Charge Corruption In South Carolina". The New York Times. Archived from the original on April 23, 2021. Retrieved April 23, 2021.
  8. ^ "Ex-legislator Pleads Guilty In S.C. Racketeering Sting". Archived from the original on 2016-03-04. Retrieved 2021-04-23.
  9. ^ United States Court of Appeals, Fourth District (September 29, 1992). "United States v. John I. Rogers, III, 976 F.2d 728, 4th Cir. (1992)". scribd.com. Archived from the original on February 24, 2019. Retrieved April 23, 2021.
  10. ^ a b "United States of America, Plaintiff-appellee, v. Kenneth e. Bailey, Defendant-appellant, 990 F.2d 119 (4th Cir. 1993)". Archived from the original on 2021-04-23. Retrieved 2021-04-23.
  11. ^ "HOUSE JOURNAL for Dec. 6, 1988 - South Carolina Legislature Online". Archived from the original on 2020-10-07. Retrieved 2021-04-23.
  12. ^ Jurist, Open; Circuit, Fourth (December 1992). "990 F2d 119 United States v. E Bailey". Federal Reporter. Second Series (990): 119. Archived from the original on 2022-01-30. Retrieved 2021-04-23.
  13. ^ a b c d "U.S. v. Taylor, 956 F. Supp. 622 | Casetext Search + Citator". casetext.com. Archived from the original on 2021-04-23. Retrieved 2021-04-23.
  14. ^ United States v. Derrick, 163 F.3d 799 (4th Cir. 1998)
  15. ^ "Former S.C. State Senator Pleads Guilty In Bribery Case". AP NEWS. 10 September 1990. Archived from the original on 23 April 2021. Retrieved 2023-06-23.
  16. ^ Julia, M. Klein (9 September 1990). "Bribery Allegations Rock S.c. Legislature". philly.com. Archived from the original on 25 December 2015. Retrieved 23 June 2023.
  17. ^ S.C. STING Derrick found guilty The State Archived 2019-06-01 at the Wayback Machine, May 12, 1991, | [1] Archived 2021-04-23 at the Wayback Machine
  18. ^ "United States of America, Plaintiff-appellee, v. Paul Wayne Derrick, Defendant-appellant, 16 F.3d 412 (4th Cir. 1994)". Justia Law. 3 February 1994. Archived from the original on 18 November 2023. Retrieved 22 June 2023.
  19. ^ "FILE PHOTO Ennis Fant ...a Baptist minister Fant gets 20 months for conspiracy". Spartanburg Herald Journal. Archived from the original on 2 June 2017. Retrieved 2023-06-23.
  20. ^ WILSON, JILL (March 1, 1991). "Two Ex-S.C. Legislators Plead Guilty To Accepting Bribes In FBI Sting". AP NEWS. Archived from the original on 23 April 2021. Retrieved 2023-06-23.
  21. ^ a b "The Item - Google News Archive Search". news.google.com. Archived from the original on 2021-04-23. Retrieved 2021-04-23.
  22. ^ "Ex-Judge Is Sentenced For Bribery and Drugs". The New York Times. Associated Press. 11 August 1992. ISSN 0362-4331. Archived from the original on 18 November 2023. Retrieved 23 June 2023.
  23. ^ "United States of America, Plaintiff-appellee, v. James C. Ferguson, A/K/A Tee, Defendant-appellant.united States of America, Plaintiff-appellee, v. James C. Ferguson, A/K/A Tee, Defendant-appellant, 4 F.3d 986 (4th Cir. 1993)". Archived from the original on 2017-06-08. Retrieved 2021-04-23.
  24. ^ a b "U.S. V. Derrick, 163 F.3d 799 | Casetext Search + Citator". Archived from the original on 2021-04-23. Retrieved 2021-04-23.
  25. ^ "1997–98 Bill 3656: The Honorable Benjamin J. Gordon, Jr., Resolutions — South Carolina Legislature Online". www.scstatehouse.gov. 13 March 1997. Archived from the original on 18 November 2023. Retrieved 23 June 2023.
  26. ^ Appeals, United States Court of; Circuit, Fourth (December 1, 1992). "990 F2d 119 United States v. E Bailey". F2d (990): 119. Archived from the original on January 30, 2022. Retrieved June 22, 2023 – via openjurist.org. {{cite journal}}: Cite journal requires |journal= (help)
  27. ^ "From the archives: Ron Cobb five years after Lost Trust | The State". 2021-04-23. Archived from the original on 2021-04-23. Retrieved 2023-06-22.
  28. ^ "Former S.C. State Senator Pleads Guilty in Bribery Case". Associated Press. Archived from the original on 2021-04-23. Retrieved 2021-04-23.
  29. ^ "Indictment charges Lee with taking $2,000 bribe". www.goupstate.com. Associated Press. Aug 25, 1990. Archived from the original on April 23, 2021. Retrieved April 23, 2021.
  30. ^ BRUCE SMITH (December 7, 1990). "Former State Lawmaker Pleads Guilty in Statehouse Scandal". www.apnews.com. Associatd Press. Archived from the original on April 23, 2021. Retrieved April 23, 2021.
  31. ^ "The Item - Google News Archive Search". news.google.com. Archived from the original on 2021-04-23. Retrieved 2021-04-23.
  32. ^ "Former State Lawmaker Pleads Guilty in Statehouse Scandal". Associated Press. Archived from the original on 2021-04-23. Retrieved 2021-04-23.
  33. ^ "1991-92 Bill 518: Lindsay, Senator John C. "Jack" - South Carolina Legislature Online". www.scstatehouse.gov. Retrieved 2023-06-23.
  34. ^ Ex-Sen. Long, Lost Trust Figure, Dies, The Post and Courier, Apr. 28, 2003.
  35. ^ "Ex-state senator involved in Operation Lost Trust dies". www.goupstate.com. Associated Press. Apr 28, 2003.
  36. ^ JILL WILSON (March 1, 1991). "Two Ex-S.C. Legislators Plead Guilty To Accepting Bribes In FBI Sting". www.apnews.com. Archived from the original on April 23, 2021. Retrieved April 23, 2021.
  37. ^ "Two More South Carolina Officials Face Corruption Charges". www.washingtonpost.com. January 5, 1991.
  38. ^ "Ex-Legislator Pleads Guilty in S.c. Racketeering Sting". Archived from the original on 2016-03-04. Retrieved 2021-04-23.
  39. ^ "2 More Indictments Charge Corruption in South Carolina". The New York Times. 5 January 1991. Archived from the original on 24 April 2021. Retrieved 23 April 2021.
  40. ^ "State Lawmaker Found Guilty in a South Carolina Bribery Case". New York Times. October 26, 1990. Archived from the original on April 24, 2021. Retrieved April 23, 2021.
  41. ^ "Inquirer.com: Philadelphia local news, sports, jobs, cars, homes". inquirer. Archived from the original on 2016-03-04. Retrieved 2023-06-22.
  42. ^ "LAWMAKERS 5 make pleas, released on bonds". Archived from the original on 2021-04-23. Retrieved 2021-04-23.
  43. ^ "Five Men Indicted in S.C. Statehouse Investigation". Greensboro News & Record. 23 May 1991. Archived from the original on 30 October 2023. Retrieved 30 October 2023.
  44. ^ "Operation Lost Trust: The Tim Wilkes Story". ABC Columbia. 2014-11-21. Archived from the original on 2019-05-31. Retrieved 2019-05-31.
  45. ^ "'LOST TRUST' Fant pleads guilty". GoUpstate. Retrieved 2019-05-31.
  46. ^ Cindi, Ross Scoppe. "What Operation Lost Trust meant to South Carolina". thestate. Archived from the original on 2019-05-31. Retrieved 2019-05-31.
  47. ^ "South Carolina Legislature Online - Bill Search by Bill Number". www.scstatehouse.gov. Archived from the original on 2019-06-04. Retrieved 2019-06-01.
  48. ^ a b "Scoppe: 1993 restructuring law gave SC governors their first hint of authority". thestate. Archived from the original on 2019-05-31. Retrieved 2019-05-31.
  49. ^ "The "Legislative State:" How the General Assembly Controls South Carolina's Government". The South Carolina Policy Council. 2017-10-25. Archived from the original on 2019-06-01. Retrieved 2019-06-01.

[1]

  1. ^ "U.S. v. Derrick, 163 F.3d 799 (4th Cir. 1998)". Casetext. 23 November 1998. Archived from the original on 18 November 2023. Retrieved 18 November 2023.
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