Treasurer denies South Carolina Senate accusation he risked cyberattack in missing $1.8B case

COLUMBIA, S.C. — Days after a contentious public hearing with senators, Treasurer Curtis Loftis put nearly South Carolina’s entire financial system at risk from a cyberattack by saying he would post large amounts of account information 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 account without any idea where it came from or where it was supposed to go. But Loftis’ inability or unwillingness to help untangle the mess has left many unanswered questions, said Republican Sen. Larry Grooms.

Loftis’ plan, which was put into writing earlier this month after senators questioned his compliance with transparency laws, was halted after an emergency meeting with the governor that included a 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 spoke with Department of Administration officials who agreed it was dangerous to do so without heavy redactions.

The report included the general fund names, account numbers and software type that hackers could use to find their way into state accounts.

Grooms said in his view the damage has been done and Loftis, a four-term Republican, should resign. But the report does not reach that conclusion because Republican Governor Henry McMaster asked that Loftis be given time to work with a task force that is also investigating the missing money.

“Why on earth would he threaten the state finances?” Grooms said: “Either he was out of his depth, or he sent a message that if you try to remove me, I will destroy the state’s financial system.”

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

He said he would not read the report or look at the Senate on Tuesday, but would instead rely on staff to provide him with any useful information.

Senators “can say and do whatever they want without consequences,” Loftis said.

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

The Senate report also says more investigation is needed into whether Loftis pressured the state auditor to remove an item from his draft report that said the state’s accounts were briefly out of balance, and whether his office sold investments at a loss. to make up for the shortage.

The governor created a task force, led by the Department of Administration, that includes Loftis’ office, the state auditor’s office and the comptroller general’s office. The Comptroller General’s Office has been led by an interim director since May 2023 after the director-elect resigned over an accounting error that resulted in nearly $4 billion in higher education double-counting.

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

South Carolina can’t spend the money until officials figure it out. It can be owned by the federal government or a trust account, so it 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 into the treasurer’s account.

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

“The Governor believes that public trust is best maintained when elected officials and agencies work together to solve problems through cooperation, cooperation and communication. In that spirit, the Governor suggested to Senator Grooms that he give this group some time to work,” Charochak said.

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

Grooms believes Loftis was trying to replace elected Comptroller General Richard Eckstrom, who resigned last year, or vice versa. State law requires the two agencies to keep books as safeguards.

“Instead of checking on each other, they covered up each other’s shortcomings,” Grooms said.

The subcommittee’s opinion on Loftis was unanimous. Democratic Sen. Margie Bright Matthews said people should not only be offended by Loftis’s incompetence, but that his insolence, including a six-hour public meeting with senators where he threw a pen on a lectern, told senators that many things are not were a problem and threatened to run away.

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