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The S.C. Attorney General has asked the former head of Strive to Excel, a nonprofit mentoring group at Hilton Head Island High School that ceased operations last week, for bank records and other documents.
Meanwhile, the Secretary of State's Office believes Strive committed at least three violations of the state's Solicitation of Charitable Funds Act on its most recent federal tax return. Strive was notified in a letter Friday to Strive president Tim Singleton and Bob Arundell, the local tax attorney and former Beaufort County Board of Education member who has prepared Strive's tax returns.
Strive has 15 days to file a corrected tax return with the Secretary of State or to provide proof the form is correct. Otherwise, Strive faces $6,000 in fines â€" $2,000 for each violation.
The Secretary of State's Office passed its findings to the Attorney General's Office, which requested bank records, board meeting minutes and other financial and governance information in a letter to Singleton, also dated Friday. Mark Plowden, a spokesman for Attorney General Alan Wilson, stopped short of calling the office's actions an investigation.
"We're reviewing the matter, hence the request for documents," he said. "Should there be something there, and we're not saying there is, that review could turn into something else."
The letters are the first official indications a state authority has examined Strive's finances and governance. The Island Packet and The Beaufort Gazette discovered in late August that the organization's board of directors had not met regularly in recent years and that Singleton raised his compensation by about $41,000 in a single year without its approval. Both violate Strive's bylaws.
Singleton's employment with Strive ended when the organization ceased operations Dec. 31 -- citing a poor economic outlook and Singleton's waning desire to continue -- according to board secretary Tom Gardo. However, the board is still working to legally dissolve the organization. It intends to file an overdue federal tax return for the 2010 fiscal year and another for 2011 before disbanding.
Gardo, who also has been the board's spokesman since it resumed regular meetings in September, said the organization was not previously been contacted by the Secretary of State or Attorney General offices, has not received their letters and had "no inkling" Strive was a subject of their inquiries.
Plowden said the letter from the attorney general was emailed Friday before he provided a copy of it to the newspapers. It was not clear to whom he had emailed it.
In addition to bank records, the Attorney General's Office has asked to see:
The Secretary of State's Office said Strive's most recent federal tax return contains information it believes to be false or misleading:
That indicates Strive had no overhead, said Shannon Wiley, deputy general counsel in the Secretary of State's office.
"That's basically saying everything that comes in is dedicated to the charitable purpose of the organization," said Wiley, who signed the letter to Singleton and Arundell. "And that's not true. That's not true for anybody."
Wiley added that the notice of violations doesn't mean the end of the Secretary of State's investigation.
Arundell said Friday he cannot comment without the board's permission, which he does not have.
Singleton said Friday he had not received the letter and declined further comment.
An investigator with the Secretary of State's office began looking into Strive "a few months ago," Wiley said, and contacted the Beaufort County School District for information in October.
School district spokesman Jim Foster confirmed that the district provided financial information regarding the benefits Singleton received from the school district.
"They didn't call it an investigation," Foster said. "They just asked for that information. There was no indication from the Secretary of State that they were looking at anything or suspected any problems with Strive's financial submissions or forms or anything else."
Because there was no indication anything was wrong with the tax returns, Foster said, the district accepted them in December as proof of the organization's financial status as required in an annual programmatic report. Attempts Friday to reach Superintendent Valerie Truesdale were unsuccessful.
Gardo said he was not aware the district had been contacted by the Secretary of State: "It's never been mentioned to me. I'd be very surprised if anyone (in Strive) was aware of it."
The Secretary of State also went to the Attorney General's office in December with their concerns about Strive, Wiley said. The Secretary of State's office can investigate violations of the Solicitation of Charitable Funds Act, but the Attorney General must get involved if violations of the Nonprofit Corporation Act are suspected.
Plowden said information from the Secretary of State's Office prompted Friday's letter.
"If the Attorney General's office is calling you, typically it's not going to be characterized as poking around," Plowden said. "There's enough information that had been presented to this office to justify our office asking for the materials we have. We don't do this for fun."
The Island Packet and The Beaufort Gazette provided Gardo with electronic copies of both letters, but he said he would not comment on them until meeting with the board.
It's not clear when such a meeting might take place.
Gardo said the board held an "unscheduled" meeting last week and that he spoke with at least some board members Friday after the Attorney General's letter was posted on the newspapers' websites. However, no date has been set for the next formal meeting.
There is no formal deadline for the materials to be returned, Plowden said, but the Attorney General's Office will follow up with Strive in 30 days.
The information in Strive's response will dictate the next step, Plowden said.
Follow reporter Rachel Heaton at twitter.com/HomeroomBft.