Bribery, extortion, influence peddling and money laundering are federal corruption charges three members of the North Charleston City Council face, stemming from a yearlong FBI investigation. Two of the indicted members have resigned and pleaded guilty to the charges and a third pleaded not guilty. Five other people were charged, including a North Carolina woman who owns a financial services business near Raleigh.
The kickbacks and bribery involve a one-time proposed park and $1.3 million that 13 nonprofit groups received from the city to help combat gun violence. Glenn Smith is deputy managing editor for investigations at the Post and Courier. He and his team had undertaken their own investigation surrounding the scandal.
Glenn Smith: We found after looking back after a year that the city had kind of lost track. They didn't know how the money had been spent. There was really no oversight of the thing, and there were rumors of all sorts of problems with it, and we learned through the FBI investigation that one of the guys on City Council had arranged to get kickbacks in return for giving (city contract) money to two of the groups. He was taking a 20% cut.
Gwendolyn Glenn: And who was that? Which council member was that?
Smith: This was a councilman, Jerome Heyward, who pleaded guilty a week ago in connection with this case.
Glenn: So you guys had been looking into this and probably had no idea that it went as deep as it did in terms of kickbacks and all of that?
Smith: We had been hearing rumors back then that something funny was going on with the money and that somebody on council may be getting a taste of some of the grant money coming back to them. (We were) unable to prove that at the time. And then the FBI investigation really came up with a whole bunch of different things.
Glenn: Well, in reading your story it seems as if Jerome Heyward has the most charges.
Smith: Yes. Jerome Heyward is a former police officer who later became a lobbyist at the state House. And he also ran a variety of businesses around this area, including a car wash and reportedly part of a restaurant. And as part of his lobbying and consulting business, he is accused, or he pled guilty to actually shaking down this local businessman for about $100,000 in consulting fees. He arranged to get some money from him in exchange for using the power of his office to win some different approvals that would benefit the businessman's operation.
(The FBI) have not identified the businessman, but said that he'd been having some trouble with zoning and some other issues, and Mr. Heyward offered to clear those up for him. He also pled guilty in connection with this scheme in which he was taking $40,000 from these two nonprofits and laundering the money through a third-party financial services group. And then he additionally pled guilty to his role in a scheme to get bribery money — him and another councilman, who has pled not guilty.
Glenn: And who is that councilman?
Smith: Mike A. Brown. Also, Mr. Heyward pled guilty to taking bribes in connection with an attempt to win rezoning for a piece of property that would have allowed a long-anticipated park to go in on a former hospital site and also allow a boat manufacturer to build a factory there.
Glenn: And when you talked about the $40,000 — the $40,000 was connected with the anti-gun program, correct?
Smith: Yes.
Glenn: Now the other two, they have significantly less in terms of the amounts of money they're being accused of taking in bribes, correct?
Smith: Yes, Mr. Brown was accused of accepting at least $1,000 in exchange for his help in winning rezoning approval for a project that eventually did not go forward because the park commission pulled the plan and then the boat manufacturer backed out of the deal.
And the other councilman, Sandino Moses, he was accused of accepting like $475 in exchange for working on behalf of a consultant who had been hired by the boat manufacturer. And he later had regrets and, I guess, came to realize that this was a bribe, and he returned the money. Where he ran into trouble was, he did not call the authorities and alert them to the fact that an attempt had been made to bribe him. He's also pled guilty.
Glenn: And from your reporting, there is a North Carolina connection here as well. Tell me about that.
Smith: Right. One of the people charged, her name is Rose Lorenzo. She’s from the Raleigh-Durham area, and she runs Lorenzo Financial Services. She's being accused of taking payments from two of the nonprofits, laundering those funds through her company and then paying Mr. Heyward — so serving as a conduit for the $40,000 that Mr. Heyward took.
Glenn: So what are other members of the council saying at this point? How is this being received?
Smith: Members of the council haven't said a whole lot. It seems that the tone the city's trying to project is that they cooperated fully with the investigation, and this is a sign of their transparency, and that whatever sort of cancer lurked within the council and within city government had now been excised by this federal probe, and this is not reflective of North Charleston as a whole. Now, attorneys for some of the people charged indicated that some of them got caught up in this because that is the culture of North Charleston — a pay-to-play environment that has been going on there for years.
Glenn: What do you think the long-term implications for the city will be because of this scandal?
Smith: There are concerns that it would hurt the city’s image and ability to attract businesses. It’s a very booming city. Boeing makes airplanes there. Mercedes makes fans there. It’s a giant retail center for the state and region. It’s coming into its own now. And they’re building parks and doing all sorts of things, and the worry is that it will taint the city’s image somehow and maybe hamper some of that progress. But city officials seem to be confident that they will move beyond this.
Glenn: So, what happens from here?
Smith: There is a special election set for May 27 to fill the three council vacant seats. Federal authorities won't say for sure where they are now, but we've received strong indications that the investigation is still underway, and that potentially more targets may emerge. And we'll be very interested to see as these cases proceed to trial what other information is revealed beyond what is included in the indictments.
