Local News

Auditor Says Ballance Foundation Riddled With Conflicts

Posted October 22, 2003 1:06 a.m. EDT

— The state auditor said Wednesday a foundation started by

Rep. Frank W. Ballance Jr., D-N.C.,

was riddled with conflicts of interest and had no formal structure for awarding grants from state funds.

Auditor Ralph Campbell said his office found the John A. Hyman Foundation received more than $200,000 a year from the state.

The audit

was sparked by a call to the auditor's confidential hot line.

Campbell said he was clearly troubled by what auditors found.

"These issues are very concerning and troublesome, because we know that so many of our organizations, nonprofits, work extremely hard with with very limited sources of funding to carry out some of the missions that the appropriations are intended for.

Federal investigators also are examining the now-defunct nonprofit foundation's records.

In a statement, Ballance, a longtime state legislator who was elected to Congress in 2002, said the auditor's report was "helpful and instructive" and he was committed to improving the foundation's policies and finances.

"The Hyman Foundation has been criticized for some of its administrative oversights with respect to filing reports. I agree errors were made," Ballance said. "I believe the public monies have always been used for the public good for which they were authorized."

State auditors said in a report that funds for the Warrenton-based foundation were put in the state budget when Ballance was a state senator and vice chairman of the Senate Finance Committee.

Auditors found numerous conflicts, including payments from the foundation's funds to Ballance's relatives and foundation employees who had served on his election campaigns.

The foundation wrote one $5,000 check to Ballance's daughter for work that wasn't performed.

The audit also said there was no formal process for seeking grants from the foundation whose stated mission was alcohol and drug counseling.