Local News

Audit Shows Financial Improprieties With N.C. Congressman, Foundation

Posted October 22, 2003

— State Auditor Ralph Campbell outlined Wednesday why he is troubled by a substance abuse foundation created by representative and former state

Sen. Frank Ballance

. He said there is evidence of questionable spending with no formal documentation.

In 1985, Ballance created the John Hyman Foundation and has served as chairman ever since. At that time, Ballance was a senator from Warren County.

In the past 10 years, the foundation received $2 million in grants from the Department of Correction. Ballance was the Senate gatekeeper of the correction budget most of that time. According to auditors, that is where problems may have started.

"The chairman wrote two Foundation checks totaling $30,000 and classified the checks as administrative costs," investigator Dale Price said.

The

audit

shows $35,000 was paid for rent even though Ballance admitted no contract existed.

"He said it was no written contract and that 'We made a settlement with the church that we thought was fair,'" Price said.

There are also examples of Ballance's relatives and friends receiving money that, according to the audit, created the appearance of a conflict of interest. Ballance's daughter and mother are mentioned as well as several area churches whose members later donated to his political campaigns. The doors to the foundation are now closed, but $238,000 remains in the foundation's bank account.

"We believe that the state should seek reimbursement of all of that at this point," Campbell said.

At his home in Warrenton, Ballance said he was saddened to close the doors of his foundation in September.

"We think we've done a pretty good job. It is a bit disheartening that we're no longer able to provide those services," he said.

Ballance admits problems were made, but said public funds were always used for public purposes. Part of the audit was critical of the way the foundation awarded grants to other agencies -- an area Ballance admits is part of his expertise.

"We were never a foundation that was in the business of making grants. We were in the business of having partners to work with us in prevention," Ballance said.

Ballance would not comment on other specifics in the audit, nor the impending federal investigation. He said that he will continue to focus on his job as Congressman and the future of the Hyman Foundation.

"We fell by the wayside on some of the reporting, and so we can clean up al this and get back on track," he said.

Ballance started his political career in the North Carolina House, where he served from 1983 to 1987. He was a state senator from 1989 through 2002. This is his first year in the U.S. Congress. He represents the first district, which includes part of Goldsboro, Rocky Mount and Greenville. Before turning to politics, Ballance worked as an attorney and law professor.

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