COLUMBIA — The South Carolina attorney general’s office says it found nothing to prosecute after an investigation into “pay-to-play” accusations in the state pension system.
Treasurer Curtis Loftis on Friday called the decision a major victory for transparency and accountability.
“This effort by my political opponents to inject the legal process into a political battle over how public funds are invested was shameful,” he said in a statement.
The State Law Enforcement Division confirmed in February it was investigating a report that companies were told they could improve their chances of handling state pension investment work if they paid a friend of Loftis. The investigation surfaced as Loftis publicly complained that the state’s portfolio has too many alternative investments and pays excessive fees.
“When I began asking questions about the pension funds’ fees and expenses, I was denied important information,” Loftis said.
The first-term Republican treasurer said he spent more than $10,000 of his own money on his legal defense.
The attorney general’s office reviewed SLED’s report on its investigation and concluded “there was no activity which warrants action,” Chief Deputy Attorney General John McIntosh wrote in a three-sentence letter dated Thursday. The letter was addressed to SLED Chief Mark Keel.
McIntosh asked Keel to investigate Dec. 7, noting it received information from the Retirement System Investment Commission about a possible “pay to play” scheme. Loftis has said he both advocated and voted for the review.
Charleston investor Mallory Factor, whose research triggered the investigation, said he was questioned only as a witness but became collateral damage of Loftis’ political opponents in what Factor called a “total smear campaign.” As a third-party marketer, he said he was trying to save the state money by offering better money managers, but the commission declined to consider the two firms.
In a release in February, Factor said he did nothing wrong but no longer represents the two firms.
Pay-to-play schemes, which have been an issue in past public corruption cases, typically require people to put up money to be considered for work.
In late January, Loftis told a Senate subcommittee that the state pension system is underperforming and paying too much in fees. He said South Carolina might need to reduce its alternative investments. He said nearly half of the state’s portfolio consists of arrangements outside of cash, stocks and bonds, compared to a national average of less than 15 percent.