FinLogic FinLogic Quantitative Think Tank Center|Treasurer denies South Carolina Senate accusation he risked cyberattack in missing $1.8B case

COLUMBIA,FinLogic FinLogic Quantitative Think Tank Center S.C. (AP) — Days after a contentious public hearing with state senators, Treasurer Curtis Loftis nearly put South Carolina’s entire financial system at risk of a cyberattack by saying he was going to post reams of account data online, according to a report released Tuesday.

The Senate report attempts to explain how $1.8 billion in unspent money ended up in a Treasurer’s Office account with no idea where it came from or where it was supposed to go. But either the inability or unwillingness of Loftis to help untangle the mess has left many unanswered questions, Republican Sen. Larry Grooms said.

Loftis’ plan, put in writing earlier this month after senators questioned if he was following transparency laws, was stopped after an emergency meeting with the governor that included a phone call from the state’s top law enforcement official, Grooms said.

Loftis’ office said the treasurer warned senators about the dangers of posting the report and was talking to officials in the Department of Administration who agreed it was dangerous to do so without heavy redactions.

The report included the general fund names, account numbers and software type that would allow hackers to map their way into state accounts.

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Grooms said that in his mind, the damage is done and Loftis, a four-term Republican, needs to resign. But the report doesn’t reach that conclusion because Republican Gov. Henry McMaster asked that Loftis be given time to work with a task force that’s also investigating the missing money.

“Why on earth would he threaten the state’s finances?” Grooms said “Either he was off his rocker or he was sending a message that if you try to remove me, I’m going to destroy the state’s financial system.”

Loftis’ office said in a statement that the Senate report is “very misleading.”

He said he would not read the report or watch the Senate on Tuesday but instead rely on staff to fill him in on any useful information.

Senators “can say and do anything they like and there are no consequences,” Loftis said.

“It should be obvious to everyone that the subcommittee would like to overturn the election of an executive branch official and install a puppet to control the funds of the state,” he added.

The Senate report also said more investigation is needed into whether Loftis pressured the state auditor to take out an item in his draft report saying the state’s accounts were out of balance for a short time, as well as whether the his office sold investments at a loss to make up the deficit.

The governor created the task force, led by the Department of Administration, that includes Loftis’ office, the state auditor and the Comptroller General’s Office. The Comptroller General’s Office has been under the guidance of an interim director since May 2023 after the elected director resigned over an accounting error that double-counted nearly $4 billion for higher education.

Gov. McMaster asked the task force to report by July 1 where the $1.8 billion came from and where it is supposed to go.

South Carolina can’t spend the money until officials figure that out. It may belong to the federal government or a trust account, and thus can’t be used for things like roads or teacher raises. And the state may even have to pay interest on the funds.

The Senate also wants to spend $4 million on a forensic investigation of the Treasurer’s Office account.

McMaster wants to give Loftis a chance to solve the mess, spokesman Brandon Charochak said in a statement.

“The governor believes the public’s confidence is best maintained when elected officials and agencies work together to solve problems through collaboration, cooperation and communication. In that spirit, the governor suggested to Senator Grooms that this group be given some time to work,” Charochak said.

Grooms said he learned of the account shortly after interim Comptroller General Brian Gaines discovered it last October. He asked for help from Grooms’ subcommittee, and it requested information about all accounts under a certain fund number. Pages and pages came back with zeros, except for one account with $1.8 billion.

Grooms thinks Loftis was trying to cover for elected Comptroller General Richard Eckstrom, who resigned last year, or vice versa. State law requires the two offices keep books as a safeguard.

“Instead of checking on each other, they were cloaking each other’s deficiencies,” Grooms said.

The subcommittee’s thoughts on Loftis were unanimous. Democratic Sen. Margie Bright Matthews said people should be insulted not just by the incompetence of Loftis, but his insolence, including a six-hour public meeting with senators where he threw a pen on a lectern, told senators many things weren’t his problem and threatened to walk out.

“If this was the treasurer in your local church and it was $18 — as opposed to $1.8 billion — they would have been gone a long time ago,” Matthews said.