Ballance pleads guilty to misusing funds
Published 12:00 am Thursday, November 11, 2004
RALEIGH – Thirteen months following the release of an audit dealing with the financial improprieties of the John Hyman Foundation, former First District U.S. Congressman Frank Ballance publicly admitted he misused state funds.
On Tuesday, Ballance, a Bertie County native now residing in Warrenton, pled guilty in Federal Court to one count of conspiracy to commit mail fraud and money laundering. For those wrongdoings, Ballance faces up to five years in prison and a fine of $250,000. In addition, he was ordered to forfeit any assets and money from the nonprofit foundation and pay the state $63,000 in restitution. There was no mention of when the sentencing phase of his guilty plea will be carried out.
A Federal Grand Jury indicted Ballance on Sept. 2 on one count each of conspiracy to commit honest service mail fraud, mail fraud of money and money laundering. All are felony charges.
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.
The now defunct John Hyman Memorial Youth Foundation was founded by Ballance in 1985 for the purpose of substance abuse education, prevention and rehabilitation services. Over a 10-year period (1994-2003), the Foundation received nearly $2.3 million in funds from the NC Dept. of Corrections.
Since early last year, the Foundation fell under close scrutiny 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;
Locally, Hyman Foundation funds in the amount of $218,500 were distributed from 1994 to 2002 to Nebo Baptist Church, located near Murfreesboro, for Nebo’s &uot;ROADS&uot; (Reaching Out Against Drugs) program. Nebo’s pastor, Robert 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.
Ballance’s mother, Alice Eason Ballance of Windsor, was also mentioned in the indictment. Her personally owned daycare business – Kiddie World in Windsor – received a $4,250 Hyman Foundation check in 1997. Mrs. Ballance was also a member of the Foundation’s Board of Directors.
By early 2001, the Bertie County Rural Health Association (BCRHA), of which Mrs. Ballance was a Board of Directors member, agreed to allow the Association to serve as a conduit for funds to be passed from the Foundation to Kiddie World and its related programs. On March 5, 2001, Frank Ballance wrote a $20,000 Foundation check to the BCRHA. Mrs. Ballance controlled the disbursement of those funds, which were used to operate a &uot;Don’t Do Drugs&uot; program. Funds were also used to pay a stipend to Mrs. Ballance as well as to her Kiddie World employees and friends.
Later in 2001, Mrs. Ballance formed a non-profit entity – the AEB Foundation (Alice Eason Ballance Education and Justice Foundation). In January of 2003, a cashier’s check in the amount of $104,073.15 (endorsed by Frank Ballance as the Chairman of the Hyman Youth Foundation) was cashed at St. Luke Credit Union in Windsor. Of that money, $50,000 was used to purchase a certificate of deposit in the name of the AEB Foundation while the remaining $54,073.15 was written as a cashier’s check payable to the AEB Foundation.
After State Auditor Ralph Campbell Jr. launched his initial investigation in 2003 of the Hyman Foundation, Mrs. Ballance returned the $104,073.15 to the Foundation.
Other Roanoke-Chowan area organizations grouped under the questionable mini grant procedure were the Atlantic District Fair in Ahoskie ($8,000 received over a 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 (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. Al Thompson of the BCRHA 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.
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 now hold for the next two years after defeating
Republican challenger Greg Dority in last week’s General Election.