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Hampton County CPST audit report released; state begins forensic audit

As the State of South Carolina lays the groundwork for a forensic audit of Hampton County's finances, the South Carolina Department of Revenue has released a Capital Projects Sales Tax (CPST) audit report that sheds more light on how and when the small, rural Lowcountry county wasted millions of taxpayer dollars.

Hampton County government came into the spotlight after publicly admitting in January 2022 that the county had embezzled approximately $3.6 million in sales tax funds for capital projects, legally earmarked and protected trust funds, and $1.5 million in fire department funds.

This public revelation was followed by a chain of problematic events: the resignation of a district administrator and a finance director, and two ongoing state police investigations into possible criminal activity.

Now, recent and ongoing audits of financial mismanagement in Hampton County are bringing alarming details to light.

CPST audit reveals patterns of poor accounting, mismanagement and even more misspending than previously thought

The SC Department of Revenue (DOR) recently completed a CPST audit for Hampton County and provided a report to the County on July 16.

This report confirmed some facts that locals already knew or suspected: The audit of sales tax revenues and expenditures from May 1, 2013, through June 30, 2021 concluded that “Hampton County is out of compliance with the Capital Projects Sales and Use Tax Act” and the 2012 CPST referendum passed by county voters and must return $3,613,685.19 to its CPST account.

But that's just the beginning. The CPST audit found that from August 2013 to June 2021, Hampton County officials borrowed $13,250,000 from the CPST account – money that should be protected by law and earmarked for specific purposes – to fund the county's general fund and balance its budget. Of that amount, about $10 million was later returned to the CPST account.

Equally troubling is the fact that Hampton County was “unable” to provide receipts and documentation for more than 23 withdrawals and transactions totaling $468,883.

“I have never seen such a lack of oversight and documentation as here,” said district administrator Lavar Youmans, who was hired in December 2023. “They (the previous administration) did not do the right thing in keeping and maintaining records.”

The report also revealed that Hampton County failed to follow the voter-approved order of projects and failed to submit monthly CPST reports to the DOR.

The DOR report examined finances from May 1, 2013, to June 30, 2021, and most of that period falls under the administration of former county official Rose Dobson-Elliott. In December 2014, Dobson-Elliott was hired as interim county administrator before being named permanent administrator, which some critics considered a controversial decision by the council at the time.

Dobson-Elliott, who left her post at the end of 2022 to take a government job in nearby Jasper County, is currently the subject of an ongoing State Police investigation into possible misappropriation of funds.

No crime has been charged against Dobson-Elliott, and to date no county official has been charged with a crime.

How will current Hampton County officials pay back the money? What's next?

In an effort to be transparent with the public, Youmans said, the current administration posted the CPST report on the Hampton County government website on July 26, followed by a Facebook post on August 12.

To clarify, the misspend money does not have to be paid back to the state because the $3.6 million came from local sales tax funds. That money must be returned to Hampton County's CPST account where it can be spent for the purposes required by law. So what are the next steps?

First, the county is continuing to investigate and seek additional documentation to confirm that the $3.6 million amount cited by the DOR is absolutely accurate. Given the county's poor record-keeping in the past, this will be a challenge, Youmans stressed.

“We believe the dollar amount could be a little under $3.6 million,” Youmans said. “We are re-examining the findings and are still looking for evidence to offset some of that and hope to renegotiate (with DOR).”

Youmans added that his office is primarily looking for more than $200,000 worth of receipts for repairs to the roof of the county administration building, and that is just one example.

Once Hampton County and DOR officially agree on a final amount, the next step is to develop a plan to return that money to the county's appropriate account so it can one day be used for major projects, such as a recreation center, for the citizens of Hampton County.

The recently approved county budget also includes funding for outside consultants, including a legal and financial advisory team, to help the administration formulate and implement that plan, Youmans said, adding that he also wants to create a local committee of citizens and county employees to address the issue.

Youmans plans to present the CPST report to the County Council during the regular meeting on Aug. 19 and then present several repayment options for their review and approval by the Sept. 16 meeting.

Youmans added that he hopes for a clear plan with clear controls and oversight, but cautioned citizens that paying back that money may take longer. He cited the example of a similar local government that recently approved a 30-year CPST repayment plan.

Youmans also pointed to Hampton County's current financial problems and budget deficits, but added that he hopes his administration can lead the county in a “healthy direction” within three years. Reducing the cost of building a reservation will be an important part of any plan presented.

“It's really about how much money we can pay back,” he added. “We're looking at what's the best way to pay that money back while offsetting any financial problems the county is having.”

“It takes a long time to turn a warship,” Youmans said. “It will take time to change direction, and it will not be easy. We are righting the ship and bringing it to a healthy horizon that people can be proud of. Trust and transparency are my priorities and the critical elements to building a healthier Hampton County.”

South Carolina State Auditor begins forensic audit process for Hampton County

As early as 2022, concerned citizens and reform groups called for an independent forensic audit of Hampton County's finances. When the County Council heard these calls in 2024, it solicited bids from accounting firms and selected Eide Bailly LLP to conduct the audit in April.

However, at the request of members of the Hampton County legislative delegation, the South Carolina General Assembly approved a state budget that included funding for an independent forensic audit authorized and overseen by the state.

After reviewing Hampton County's initial steps, the state also agreed that Eide Bailly LLP, an accounting and business consulting firm based in Fargo, North Dakota, was well qualified to conduct that audit on its behalf, Youmans said this week.

The difference? Not only will the state pay for an audit that the financially strapped county cannot afford, but it will be even more “technical” in scope, Youmans said.

The state auditor contacted the county earlier this week and is “ready to go,” Youmans said. He added that he has provided the state with all of Eide Bailey's documents and comments from concerned citizens about the process and wants the process to be transparent.

“We are committed to ensuring transparency and accuracy in Hampton County's financial practices,” the county government posted on its Hampton County, South Carolina Government Facebook page on Monday. “We are pleased to announce that the South Carolina State Auditor's Office has retained Eide Bailly to conduct a forensic audit of Hampton County's financial activities for the fiscal years beginning June 30, 2016, through June 30, 2024.”

According to the article, the forensic examination will:

  • Review the amounts borrowed by the General Fund from sales tax revenues for capital projects and other earmarked funds.
  • Investigate how these funds were used and whether any advances or uses could violate laws or regulations.
  • Provide findings and recommendations to correct any discrepancies and ensure the accuracy and completeness of our financial records.

“As part of this process, Hampton County will increase our efforts by interviewing individuals and potentially hiring additional staff to assist with requests for information. While this necessary step is critical to the engagement, please note that the County will not be reimbursed for these associated costs. We remain committed to maintaining the highest standards of financial integrity and will keep you updated as this process progresses.”

Youmans expressed hope that a timeline for the forensic audit process would be in place to share with council and the public by the Aug. 19 county council meeting.

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