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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 Cobb, a lobbyist and former 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.[1]

In July 1990, a grand jury subpoenaed the campaign finance records of all 170 members of the General Assembly revealing the existence of the investigation.[2] 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.[3] Five legislators, including State Representative Robert A. Kohn, 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, was able to continue his work in the South Carolina Senate.

Those convicted include: [4][5][6]

  1. Jack Rogers (politician) (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 of Eutawville, accepted a $500 cash bribe and was convicted of conspiracy.[10][11][12]
  3. Larry Blanding (D) State Representative from Sumter, 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 from Charleston, pled guilty to bribery.[15][16]
  5. Paul Wayne Derrick (R) State Representative of Lexington, 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 from Greenville, pled guilty to conspiracy and extortion, received 20 months.[13][19]
  7. Jim Faber (D) State Representative from Richland 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, sentenced to 33 months.[22][23]
  9. Benjamin J. Gordon (D) State Representative of Kingstree, found guilty of conspiracy and extortion, but died during appeal.[13][24][25][26]
  10. Robert Albert Kohn (R) State Senator from Charleston, pled guilty to conspiracy and bribery, served seven months in prison.[13][27]
  11. Rick Lee (R) State Senator from Boiling 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 from Dorchester, pleaded guilty to charges of conspiring to accept a bribe and tampering with a witness. Sentenced to 20 months.[30][31]
  13. Jack Lindsay (D) (John Charles Lindsay) State Senator from Marlboro, found guilty in the Lost Trust investigation, but died during appeals.[32][33]
  14. Jefferson Marion Long, Jr. (D) ‘Bud,’ State Representative from Horry, guilty to $42,000 bribe.[24][34][35]
  15. Frank McBride (D) State Representative from Columbia, pled guilty to accepting $1000 in bribes.[10][36][21]
  16. Jack Rogers (politician) (D) (John Irby Rogers III) State Representative from Bennettsville, 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 from Columbia, 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 from Charleston, 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. and Speaker of the House Robert Sheheen both stated that reforms to this system were in order.[2] Out of the 28 indictments in total (lobbyists were also indicted) only the indictment of Representative Tim Wilkes resulted in a no guilty verdict.[43] The South Carolina Legislative Black Caucus raised concerns about the large number of African American lawmakers charged during the investigation.[44]

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 a campaign contribution, 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.[45]

Strengthening the governorship

On February 23, 1993, a bill was introduced to the South Carolina House of Representatives to restructure the state government.[46] 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.[47] 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.[47] 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.[48]

References

  1. ^ "Statehouse Report – HISTORY: Operation Lost Trust". Archived from the original on 2019-05-31. Retrieved 2019-05-31.
  2. ^ a b 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.
  3. ^ Kropf, Schuyler. "Lost Trust shook state 20 years ago". Post and Courier. Archived from the original on 2019-05-31. Retrieved 2019-05-31.
  4. ^ http://www.scencyclopedia.org Archived 2016-10-15 at the Wayback Machine | Operation Lost Trust 1989—1999 | Operation Lost Trust was arguably South Carolina’s largest and longest-running political scandal | Written by Jon B. Pierce | [1] Archived 2021-07-27 at the Wayback Machine
  5. ^ https://www.postandcourier.com Archived 2019-06-01 at the Wayback Machine | July 4, 2010 | Lost Trust shook state 20 years ago | Schuyler Kropf | [2] Archived 2019-05-31 at the Wayback Machine
  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. ^ Circuit, Fourth (December 1992). "990 F2d 119 United States v. E Bailey" (Document). p. 119. {{cite document}}: Cite document requires |publisher= (help); Missing |author1= (help); Unknown parameter |access-date= ignored (help); Unknown parameter |archive-date= ignored (help); Unknown parameter |archive-url= ignored (help); Unknown parameter |issue= ignored (help); Unknown parameter |url-status= ignored (help); Unknown parameter |url= ignored (help); Unknown parameter |volume= ignored (help)
  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. ^ https://apnews.com Archived 2019-09-21 at the Wayback Machine | September 10, 1990 | Former S.C. State Senator Pleads Guilty In Bribery Case | [3] Archived 2021-04-23 at the Wayback Machine
  16. ^ http://articles.philly.com Archived 2011-04-15 at the Wayback Machine, POSTED: September 09, 1990, Bribery Allegations Rock S.C. Legislature By Julia M. Klein, Inquirer Staff Writer [4] Archived 2015-12-25 at the Wayback Machine
  17. ^ https://www.goupstate.com Archived 2019-06-01 at the Wayback Machine | May 12, 1991 | S.C. STING Derrick found guilty The State | [5] 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)Annotate this Case, U.S. Court of Appeals for the Fourth Circuit - 16 F.3d 412 (4th Cir. 1994) Submitted Dec. 13, 1993. Decided Feb. 3, 1994 [6] Archived 2021-04-24 at the Wayback Machine
  19. ^ http://www.goupstate.com Archived 2016-03-04 at the Wayback Machine | a Baptist minister Fant gets 20 months for conspiracy | Thursday, Aug 1, 1991 | [7] Archived 2017-06-02 at the Wayback Machine
  20. ^ https://www.apnews.com Archived 2021-04-23 at the Wayback Machine | March 1, 1991 | Two Ex-S.C. Legislators Plead Guilty To Accepting Bribes In FBI Sting | JILL WILSON | Associated Press | [8] Archived 2021-04-23 at the Wayback Machine
  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. ^ https://www.goupstate.com Archived 2019-06-01 at the Wayback Machine | October 9, 2011 | Former judge, state legislator James ‘Tee’ Ferguson dies |By LINDA CONLEY | [9]
  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".
  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. ^ https://www.thestate.com/opinion/opn-columns-blogs/cindi-ross-scoppe/article102026962.html Archived 2021-04-23 at the Wayback Machine [bare URL]
  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. ^ http://chronicle.augusta.com/stories/1997/12/04/met_218526.shtml#.Vj25uvmrS1s [dead link‍]
  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". https://www.inquirer.com. Archived from the original on 2016-03-04. Retrieved 2023-06-22. {{cite web}}: External link in |website= (help)
  42. ^ "LAWMAKERS 5 make pleas, released on bonds". Archived from the original on 2021-04-23. Retrieved 2021-04-23.
  43. ^ "Operation Lost Trust: The Tim Wilkes Story". ABC Columbia. 2014-11-21. Archived from the original on 2019-05-31. Retrieved 2019-05-31.
  44. ^ "'LOST TRUST' Fant pleads guilty". GoUpstate. Retrieved 2019-05-31.
  45. ^ Editor, Cindi Ross Scoppe Associate. "What Operation Lost Trust meant to South Carolina". thestate. Archived from the original on 2019-05-31. Retrieved 2019-05-31. {{cite web}}: |last= has generic name (help)
  46. ^ "South Carolina Legislature Online - Bill Search by Bill Number". www.scstatehouse.gov. Archived from the original on 2019-06-04. Retrieved 2019-06-01.
  47. ^ 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.
  48. ^ "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.
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