Federal Grand Jury indicts Ballance

Published 12:00 am Monday, September 6, 2004

RALEIGH – Former 1st District Congressman Frank Ballance was expected to surrender to federal authorities yesterday (Friday) following a Grand Jury indictment.

Ballance, a Bertie County native currently residing in Warrenton, and his now defunct John Hyman Memorial Youth Foundation have been under close scrutiny since early last year for questionable practices concerning the dispersal of state taxpayer money for substance abuse assistance programs. Those dispersals came in the form of &uot;mini grants.&uot;

On Thursday, a Federal Grand Jury in Raleigh indicted Ballance on one count each of conspiracy to commit honest service mail fraud, mail fraud of money and money laundering. All are felony charges, punishable by a maximum of five years in prison.

In addition, Ballance’s son, Garey – a District Court Judge residing in Norlina – was indicted by the Federal Grand Jury on one misdemeanor count of failing to file his 2000 federal income tax.

Locally, Hyman Foundation funds were distributed from 2001-03 to Nebo Baptist Church, located near Murfreesboro. During that time, Nebo’s &uot;ROADS&uot; (Reaching Out Against Drugs) program received a combined $31,000 in Hyman Foundation funding.

According to information supplied to state auditors, Nebo pastor Robert Holloman said the majority of the funding ($25,000) went to the &uot;ROADS&uot; program. Of those funds, $11,787.13 was paid to the church for rent while the remaining money was used to compensate individuals for their service to the program.

Holloman, a former Hertford County Commissioner who just recently earned his second term as District 4 State Senator (a seat previously held by Ballance prior to his 2002 election to the United States Congress), was called last year to testify before the Grand Jury. Holloman’s wife, Velma, was a member of the Hyman Foundation Board of Directors.

A report issued by State Auditor Ralph Campbell Jr. in October of last year revealed that during the fiscal years 2001 and 2003, Ballance, as Chairman of the Hyman Foundation, issued respective mini-grants of $20,000 and $12,500 to the Bertie County Rural Health Association (BCRHA). The $20,000 was used, according to Dr. Al Thompson, BCRHA executive director, to pay the salaries of a project director, two part-time coordinators and two part-time teachers in a program entitled, &uot;Triple D&uot; (Don’t Do Drugs). The &uot;Triple D&uot; project director is Alice Ballance, the mother of the Congressman. Mrs. Ballance, who also served on the Hyman Foundation Board of Directors, was paid $5,544.25 from the BCRHA mini grant. Shortly after the audit review began, the BCRHA reimbursed the 2003 mini-grant funding of $12,500 to the Hyman Foundation.

Campbell said the money paid to Mrs. Ballance was in violation of the Hyman Foundation’s conflict of interest policy.

Other Roanoke-Chowan area organizations grouped under the questionable mini grant procedure were the Atlantic District Fair in Ahoskie ($8,000 received over the three-year period) and Mt. Olive Missionary Baptist Church of Lewiston-Woodville ($6,500).

DuPont Davis, an official with the Atlantic District Fair, informed audit investigators that the funds were used for operational expenses, including financial prizes for first, second and third place finishes in a youth art contest.

Rev. James E. Jones Jr. of Mt. Olive Church said that 30 percent of the funds went to meet administrative costs while the remainder was used for substance abuse resource materials. He also said that the funding aided other various programs, such as a Back to School Conference, an HIV/AIDS banquet with an emphasis on drug abuse prevention, a summer camp that included topics on drug prevention and a Youth Ball designed to teach etiquette and self-esteem.

In addition, Campbell’s audit report showed that individuals linked to Hyman Foundation funding were contributors to the Committee to Elect Frank Ballance Jr. (to the U.S. Congress). Rev. and Mrs. Holloman combined to contribute $4,500; Alice Ballance supported her son’s bid with a $2,000 contribution; Dr. Thompson made a $1,000 donation while Davis and Rev. Jones each gave $500.

All totaled, Ballance’s campaign for U.S. Congress received $25,273.33 from those who were either directly or indirectly grant recipients of Hyman Foundation funding or were compensated for independent work contracts for the organization.

Additionally, Campbell’s audit discovered that the Foundation had paid $5,000 to Rep. Ballance’s daughter, Valerie, for work that was not performed (she allegedly was to have installed computers at the Foundation’s office in Warrenton). Also discovered were numerous apparent conflicts of interest, including payments from the Foundation to other relatives of Rep. Ballance as well as to Foundation employees who also served on his election campaigns.

The audit indicated that, over the past 10 years, the Hyman Foundation’s major funding source was the State of North Carolina through special appropriations to fund substance abuse programs. Those funds, totaling $2,115,000, were disbursed through the North Carolina Department of Corrections.

Additionally, the investigative report made reference to the fact that during the period that grant funds for the Foundation were included in the state budget was the same time period than then State Senator Frank Ballance Jr. was chairman of the Senate Appropriations subcommittee that oversaw the budget for the Department of Corrections.

One day following Campbell’s report, North Carolina State Attorney General Roy Cooper demanded that Hyman Foundation officials place the $239,000 remaining in their bank accounts into escrow while the SBI conducts an investigation into, what Cooper defined as, &uot;allegations of mismanagement, conflicts of interest and misuse of funds.&uot;

In May of this year, Ballance initially filed for reelection, but suddenly withdrew, saying that he just didn’t have the energy to run an effective campaign. He cited health reasons after being diagnosed in early February with Myasthenia Gravis, a neuromuscular disease.

Then, in June, Ballance issued a statement saying that recovery from his health condition had not progressed as expected and resigned his Congressional seat.

Gov. Mike Easley ordered a special election for July 20. At that time, G.K. Butterfield of Wilson earned the seat, one he will hold until at least January of next year. Butterfield will face Republican challenger Greg Dority in November’s General Election.