Pubdate: Fri, 03 Sep 2004
Source: News & Observer (NC)
Copyright: 2004 The News and Observer Publishing Company
Contact:  http://www.news-observer.com/
Details: http://www.mapinc.org/media/304
Author: Mathew Eisley, and Dan Kane
Bookmark: http://www.mapinc.org/corrupt.htm (Corruption - United States)
Bookmark: http://www.mapinc.org/rehab.htm (Treatment)
Bookmark: http://www.mapinc.org/topics/hyman+foundation
Bookmark: http://www.mapinc.org/people/frank+ballance

BALLANCE CHARGED WITH CORRUPTION

Indictment Alleges Abuses Of State Post. Ballance To Plead Guilty, Lawyer
Says.

Former U.S. Rep. Frank Ballance, a Warrenton lawyer who rose to
prominence over two decades as one of northeast North Carolina's
leading politicians, was charged Thursday with a federal corruption
crime. Ballance's lead defense lawyer, Joseph Cheshire V of Raleigh,
said he had discussed with federal prosecutors a likely agreement
under which Ballance would plead guilty, face no other charges and go
to prison for three to five years.

"We have discussed the parameters of a plea agreement to the one-count
indictment," Cheshire said Thursday. "The [sentencing] guidelines of
what he is pleading to will call for active time. There will not be a
trial."

A 51-page federal grand jury indictment issued Thursday alleges
repeated abuses of Ballance's former position as a state senator. As a
lawmaker, he channeled $2.3 million in state money from 1994 to 2003
to a nonprofit foundation he operated to help poor people fight drug
and alcohol abuse.

BALLANCE'S FALL

JAN. 7, 2003: The state Correction Department tells the John A. Hyman
Memorial Youth Foundation -- a drug-counseling program led by Frank
Ballance -- that the department is cutting off state funding to the
nonprofit after not receiving financial documents.

SEPT. 10, 2003: Hyman Foundation announces that it will close its
doors at end of the month.

OCT. 22, 2003: State Auditor Ralph Campbell releases audit that found
more than $325,000 in questionable spending or misspending between
July 1, 2000, and April 30, 2003.

OCT. 23, 2003: Attorney General Roy Cooper orders the Hyman Foundation
to freeze its accounts.

NOV. 5, 2003: A federal grand jury begins hearing evidence Nov. 5
about the Hyman Foundation.

DEC. 18, 2003: Ballance tells supporters he plans to seek a second
term representing First Congressional District.

MAY 7, 2004: Ballance announces he will not seek re-election because
of a debilitating illness, reversing course three days after he filed
to run.

JUNE 8, 2004: Ballance announces he is resigning because of poor
health.

JULY 17, 2004: State legislature approves budget that includes more
controls over nonprofit groups getting state money, such as the Hyman
Foundation.

JULY 20, 2004: G.K. Butterfield elected to serve out Ballance's
term.

SEPT. 2, 2004: Federal prosecutors announce indictment of Ballance on
one count of mail fraud.

According to the felony indictment, more than $100,000 from the John
A. Hyman Memorial Youth Foundation went to Ballance's law firm; his
church; his mother, Alice Eason Ballance; his daughter, Valerie
Ballance, and his son, Garey Ballance. Garey Ballance is a state
District Court judge charged Thursday with failing to file an income
tax return for 2000.

Frank Ballance, 62, also faces a fine of up to $250,000, federal
prosecutors said. And state authorities have said they want to get
back as much misspent foundation money as they can; they put a civil
lawsuit on hold pending the criminal investigation.

Cheshire said he does not expect charges to be filed against
Ballance's mother or daughter, or state charges to be filed against
Ballance.

"I believe that this will put the investigation into the Hyman
Foundation, and whoever, to rest," he said.

Garey Ballance, 34, could serve up to a year in prison and pay a fine
of up to $100,000 if convicted, prosecutors said. He could not be
reached Thursday for comment.

Frank Ballance resigned from Congress in June. He had represented
North Carolina's 1st District in the U.S. House of Representatives
since his election in 2002. For 18 years before that, the Democrat was
a member of the N.C. General Assembly, where he supported civil rights
and opposed the death penalty.

At the time, Ballance blamed his resignation on worsening health
resulting from a degenerative muscle disease.

Ballance wasn't available for comment Thursday and won't have much to
say today at his first court appearance, Cheshire said.

The foundation that Ballance led ran afoul of state and federal law.
It failed to file required financial reports with the Internal Revenue
Service and the state, and legislators cut the foundation from the
state budget last year.

A state audit later found that Ballance approved payments for services
provided by his family, campaign staff and campaign contributors. The
audit questioned about $325,000 in spending from July 1, 2000, to
April 30, 2003.

The audit's findings led to the federal criminal investigation,
according to the indictment.

Cheshire called Ballance's indictment a sad development for a man who
devoted his career to helping other people.

"He feels like he's let a lot of people down," Cheshire said. "He
feels that if mistakes were made, he made them, and other people
shouldn't pay for his mistakes."

Cheshire said many people benefited from the foundation's work.

"Congressman Ballance has meant as much to the poor and disadvantaged
people of this state as anyone I know," he said. "So I would say that
he has not betrayed the people of North Carolina. No person is perfect."

The lone formal charge against Ballance is broad: that he conspired to
deprive the state's citizens of his honest services as a state
senator; that he defrauded the Hyman Foundation of money; and that he
executed financial transactions to hide his self-dealing
expenditures.

The indictment describes what it says were Ballance's repeated
forgeries of the foundation director's signature on state money
requests. It also alleges the diversion of foundation money to pay
Ballance's $15,500 legal bill in a criminal case and to pay more than
$69,000 in rent to his church, where he was a deacon and where the
foundation's office was.

The indictment says Ballance also dipped into foundation money to give
his son $20,000 toward a Lincoln Navigator luxury sport utility
vehicle; to pay his daughter $5,000 for computer services she didn't
perform; and to give his mother $143,250 to spend on community programs.

"Frank Ballance was an organizer, leader, manager, and supervisor of
criminal activity that involved five or more participants and was
otherwise extensive," the indictment says.

Frank Perry, special agent in charge of the Raleigh FBI office, said
Ballance's indictment is another blow to the public's trust in North
Carolina public officials. It follows the conviction last year of
former Agriculture Commissioner Meg Scott Phipps in an illegal
campaign fund-raising conspiracy. Perry's office is investigating
possible corruption behind the sale of land for a state prison in
Greene County.

"This sort of activity as alleged continues to undermine the
confidence of the electorate," Perry said.

Perry said the investigation is continuing, but he wouldn't say
whether further charges could be filed in the case or whether other
people involved in Hyman Foundation affairs might face charges.
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MAP posted-by: Larry Seguin