Attorney General sends referral letter to grand jury

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On Preston

By Stan Welch – The legal troubles that have plagued former Anderson County administrator Joey Preston since his buyout in 2008 continue as he has been named in a referral letter from the SC Attorney General’s Office to the state grand jury. The referral letter essentially indicates that the civil investigation may have uncovered evidence of potentially illegal activity and simply passes that information along.

The letter effectively moves Preston’s alleged involvement in the silver securities Ponzi scheme operated by former Councilman Ron Wilson from the civil to the criminal arena; and changes the tone of Preston’s legal entanglements in the three and a half years since he left the employ of Anderson County with a $1.2 million severance package.

The grand jury has been investigating the buyout of Preston’s contract as well as other aspects of the county’s operations during Preston’s tenure for the last two years, and has offered no hint of when or if the results of their investigation will be forthcoming.

While the actions and deliberations of the grand jury are of course secret, there is some evidence to support speculation that Preston’s lucrative exit was being prepared even before the September letter from his attorney which stated that he considered his employment contract to have been “anticipatorily breached”.

According to that letter, comments by then Councilman Bob Waldrep during a budget workshop after the 2008 Republican primary made it clear that three members of the Council would be replaced, gave Preston reason to believe that he would not be allowed to perform his duties.

Waldrep stated that the new members of the Council had asked him to announce that Preston and finance director Gina Humphreys would be placed on paid leave while a thorough audit of the county’s finances was performed. All three candidates, Eddie Moore, Tom Allen, and Tommy Dunn, had run on just such a promise.

Waldrep subsequently left the county Council to take a position on the Board of Trustees of S.C. State University, which is currently also the scene of extensive investigations into alleged corruption.

In the September 2008 letter, Preston claimed that the threat of paid leave led him to believe he would be unable to work with the new Council. Some members of that Council said that represented Preston’s resignation, but since they were not yet installed, they could not act to accept it. Humphreys never made such a claim of anticipatory breach, and continues to work for the county as a grant writer, though she has few, if any, financial responsibilities.

By the time the budget process was completed and the 2008-2009 budget adopted, forty new jobs had been added. The majority of those jobs were never filled; the funds ostensibly put in place to support those hirings were used in part to fund the buyout of Preston in November of that year.

During the infamous November 18 meeting that saw Preston’s severance package presented and approved within a half hour span, Councilman Larry Greer provided a list of more than 100 accounts from which funds could be drawn to produce the severance package. He did this amidst protestations by Councilman Ron Wilson that he, Wilson, was acting alone in proposing the severance package.

Also producing the necessary legal documents to immediately hire Michael Cunningham to replace Preston, again while claiming no prior knowledge of the preceding events, was Councilwoman Gracie Floyd, who produced from her purse an employment contract which hired Cunningham and gave him a three year contract with a generous buyout clause as well.

County attorney Tom Martin would later concede that Floyd had instructed him to prepare the document in advance of the meeting. Under the Council/administrator form of government established by the S.C. Home Rule Act, no individual member of Council has the authority to direct any county employee to perform work.

Cunningham was terminated within weeks after refusing to void that contract and accept a right to work contract for a year at a time. He currently is appealing his lawsuit, which he filed against the county and in which he was ruled against in the local courts.

A few months after leaving the County’s employ, Preston was arrested for DUI, adding to his legal woes; but the charges were later dropped after questions arose about the conduct of the arresting officer in other cases.

By that time, Preston had been named in a lawsuit by the County to retrieve the severance package. That lawsuit continues in the courts. Another similar lawsuit, brought by private citizen Rick Freemantle, was originally dismissed by Judge Cordell Maddox, on the grounds that Freemantle lacked standing to bring the suit.

The South Carolina Supreme Court recently heard arguments in that case, and their individual remarks and questions indicated that Freemantle’s case may well be reinstated. Chief Justice Jean Toal stated that Maddox’s decision to dismiss the case was in fact “an error in law” and called the events of November 18 “a wire job from start to finish” and an effort by the majority of Council” to give their pal Preston a golden parachute before they left office.”

A major distinction in the Freemantle case and the County’s case is that Freemantle’s lawsuit calls the five member majority criminal co-conspirators and seeks to make them equally and individually liable for the money spent.

During the three year course of the civil lawsuits, Preston also sued the state for failing to pay his legal bills. The state of that lawsuit is unknown, but the Insurance Reserve Fund has joined the County’s suit against Preston, seeking to retrieve funds it has paid Preston as part of the severance package.

Part of that package provided for the County to spend more than a quarter of a million dollars to purchase Preston’s full retirement, which resulted in a monthly stipend of approximately $8000.

Still, despite all the litigation and legal issues, until last week, Preston had not been placed in jeopardy of a criminal investigation and possible charge.

Wilson, with whom Preston had both a political and personal relationship since at least 2006, when Wilson was first elected to the Council, was first investigated for selling silver securities without a license in 1996, and agreed to cease and desist doing so. He apparently did not.

He has since been charged with operating a Ponzi scheme that swindled almost a thousand investors in twenty five states out of some ninety million dollars.

Preston, through his attorney Candy Kern Fuller, of The Upstate Law Group, has said that he too was victimized by Wilson, who finally told him the investment plan was a Ponzi scheme just days before the SC Attorney General closed Wilson’s business down.

He insists he had no knowledge of the nature of the scheme until just before the SC Attorney General’s Office closed Wilson down. Kern Fuller also claims to have been a victim of the scam.

Preston, however, told federal agents in an affidavit that he had directed people to Wilson to invest in the plan. Sources tell The Journal that there is a considerable list of people who claim that Preston in fact acted as an agent.

Also named in the referral letter which was issued on May 8, were Tracy Neily, aka Tracy Atwell, and Wallace Lindsey Howell.

Wilson has been cooperating with federal authorities, and the state has essentially turned the case over to the Treasury Department for investigation.