1. The crook

Before his downfall, Brantley Thomas III had reached the highest rungs of South Carolina’s education ladder: He was chief financial officer for Berkeley County School District, a rapidly growing system with a $260 million budget. And he chaired a nonprofit that helped school districts across the state borrow hundreds of millions of dollars.

He also led a secret life, bilking Berkeley County taxpayers out of at least $1.3 million to pay for cars, overseas travel and membership in the Carolina Yacht Club. That life crumbled in 2017 after a tip from a bank spawned state and federal investigations, which led to guilty pleas and prison time. Thomas recently finished his federal sentence and is now in the Manning Work Release Center, a minimum-security prison in Columbia. The state Department of Corrections said he is eligible for parole as early as next year.

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While Thomas’ crimes were well-chronicled, less attention has been paid to the companies and nonprofits he worked with. But a deeper look by The Post and Courier’s Uncovered project opens a revealing window, one that sheds light on Thomas’ wide-ranging schemes, along with an obscure financial instrument school districts across South Carolina use to construct new buildings.

Some of the most alarming claims are in lawsuits filed by the Berkeley County School District against HUB International, a Chicago-based insurance broker, and Compass Municipal Advisors, which helps districts across the country borrow money.

The lawsuits allege links between Thomas and executives in those companies, claims that the executives and companies deny. Yet during a hearing for one lawsuit, a federal judge in Charleston noted: “I’m not prejudging anything — just seems like that it takes two to tango, it takes two to commit fraud, one to take the bribe and one to give the bribe.”

A State Law Enforcement Division agent puts shackles on Brantley D.Thomas III in a parking lot off North Main Street in Summerville early Friday, Sept. 21, 2018. Brantley has admitted stealing from the Berkeley County School.

The charges against Thomas represented one of South Carolina’s largest public embezzlement cases, a shocking reminder of how a public official used his job as a personal cash register. The cases and their aftermath also highlight the challenges of rooting out corruption; no one else in Thomas’ orbit has been charged. The district settled some of its lawsuits, but the most explosive ones have yet to go before a jury.

As a result, seven years after FBI agents began investigating Thomas’ schemes, questions linger. How did he get away with the crimes for so long? And given his long tango with taxpayers’ money, did Thomas have any dance partners?

The Post and Courier of Charleston in 2021 launched “Uncovered,” a project to cast new light on questionable government conduct, especially in…

2. The opportunity

Berkeley County once was a rural area of small towns defined by Lake Moultrie and the pinelands of Francis Marion National Forest. But in the 1990s, waves of growth from the Charleston metro area spilled into the county, doubling its population in 25 years and creating constant pressure to build new schools.

In 1992, Brantley Thomas landed a job as comptroller in this rapidly growing district. Over time, he worked his way into positions of even more responsibility, becoming director of finance and then chief financial officer. Although he worked in Berkeley County, his roots were planted more deeply in Charleston, where he attended the private Porter-Gaud School and his father was prominent in downtown civic group circles.

White-collar crime typically requires three things: a position that gives you access to other people’s money; an economic or psychological void that’s filled by stealing; and a constant stream of self-justification to continue the thefts. In criminology circles, this is called the fraud triangle.

In Berkeley County, Thomas’ role as the district’s financial chief gave him broad discretion over other people’s money. He took advantage of this opportunity as early as Sept. 11, 2001, the day of the 9/11 terror attacks, when he pocketed $8,318 from a University of South Carolina transaction.

As with that crime, his most lucrative criminal schemes involved rebates. Thomas would first direct the district to overpay vendors; when those vendors realized they had been paid too much, they wrote checks back to the district. Thomas then funneled those rebates into his personal accounts.

The rebate checks were hardly a secret. The district’s media team touted them as examples of how the school system kept tabs on taxpayers’ money. But these stolen rebates added up over time, to the tune of more than $450,000.

All this helped Thomas buy jewelry and a membership at the Carolina Yacht Club. He funneled taxpayers’ money to pay off car loans and jet to the Cayman Islands. His salary of $130,000 made him among the district’s highest-paid employees, and he also collected another $62,000 a year from a pension, his wife said during their divorce proceedings. But it wasn’t enough.

“Brantley has always been a heavy drinker and seemingly overwhelmed by his work for the Berkeley County School District,” his then-wife, Debra Gallagher, said in an affidavit in their divorce case. “He would tell me he was working when he was really drinking with his friends at the Carolina Yacht Club.”

In 2016, his behavior grew worse, she said in the affidavit. He was deeply dissatisfied with his work and hunting for new jobs.

“It seemed like he was spending more time at the Carolina Yacht Club than at his office. He was also drinking more bourbon every day. He began complaining of stomach issues.”

Then, on Feb. 6, 2017, “my world seemed to fall apart,” her affidavit said. “When I got home, Brantley told me that the FBI and SLED had been at the house because he had taken some checks over the past few years and put them in his account.”

In another court document, she said, “Our lives have been upended.”

In the background, the district’s lawyer, Josh Whitley, heard that BCSD might be storing financial records in a long-closed school building in Bonneau.

When he arrived at the school, he discovered hundreds of boxes stretching back decades. These records were supposed to have been destroyed but weren’t, Whitley told The Post and Courier.

“We found financial records from the day Mr. Thomas was hired.”

Whitley contacted the S.C. attorney general. Soon, agents with the State Law Enforcement Division were on the case.

“It was from those boxes that the entire case was proved,” Whitley said.

As for Thomas, he seemed to recognize he was in a downward spiral, saying in an affidavit for his divorce, “I turn 61 on Nov 14th and presently suffer from severe depression and anxiety … There is simply no way I can make amends for (the) position I have put our family in.”

As investigators combed through financial records, they also noticed 16 deposits into Thomas’ personal bank accounts.

Each deposit was $2,000. And they came from Stanley Pokorney, executive vice president of HUB International, the district’s insurance broker.

Lawmakers have asked Gov. Henry McMaster to order an investigation into Hampton County’s precarious financial situation, saying county government is too broke to hire someone to find out how millions of dollars vanished from its coffers.

3. Lack and justification

Federal prosecutors called the contributions kickbacks during Thomas’ guilty plea but didn’t name the broker. Lawyers for Berkeley County School District did, however, filing a lawsuit in 2018 against HUB International and Pokorney.

The lawsuit alleged that under Thomas, the district spent “tens of millions of dollars in unnecessary, duplicative premiums and sham consulting fees,” money that could have been used to hire new teachers and buy student supplies. One proposal insured against “employee dishonesty.” The broker allegedly arranged for massages for school officials during district-related business trips. “Of course, there is no charge,” said an email from one of Pokorney’s colleagues.

Pokorney knew he was funneling rebate money into his personal account, Thomas later said in a deposition. “I would hear comments like, you don’t have to worry, we’ll protect you. It’s between us. No one will find out.”

Pokorney denied the district’s allegation in court papers. His attorney declined to comment, and Pokorney did not respond to requests for comment.

In September 2020, the district told HUB it would dismiss the suit for $12 million, but legal maneuvers on both sides continued. A month later, the district dismissed Pokorney from its lawsuit without explanation. HUB demanded that the case be settled by an arbitrator, a move that would take the allegations out of a jury’s hands. This demand led in 2021 to a nonjury trial before U.S. District Judge David C. Norton in Charleston.

The trial was about whether the case should go before an arbitrator, but it also included eye-opening testimony from Pokorney about his payments to Thomas and his longtime friend’s psyche.

Pokorney testified that the district hired him in 1996. At the time, the Berkeley school system insured itself through the government-run Insurance Reserve Fund. But Pokorney thought the district could save money with private insurers, which is the route the district decided to take.

Pokorney testified that he and Thomas grew close over time.

“My wife and I considered Brantley almost like a family member, certainly one of my best, best, best friends,” Pokorney told the court. “… He referred to me as his big brother. And it was not untypical with Brantley or very close friends for a spiritual program that I’m in to refer to each other as brothers and say, ‘Love you brother.’ ”

Thomas also confided in him about his job’s demands, Pokorney testified. “He referred to the school board members as snakes.”

Thomas complained to him that he would never be able to afford to send his daughter to college on his salary. Pokorney said he “made the offer to contribute an occasional $2,000 to her 529 (college fund), which he said he would set up.”

This prompted heated questions from Dick Harpootlian, one of the district’s lawyers. “Sir, you were giving $4,000 to $6,000, by your own admission, per year, to the person who facilitates you getting this (insurance) business. And that never crossed your mind that would be inappropriate?” Harpootlian asked.

“No,” Pokorney testified. “… I feel giving toward education is imperative.”

Later, Harpootlian queried, “Were you aware of the fact that he’d already funded her college through an inheritance through his father?”

“No,” Pokorney said.

“Sure,” Harpootlian continued, “this is your brother. The guy you love. The guy you talk to as if he is your brother. Y’all never talked about that?”

“No,” Pokorney answered. “We talked about marriage infidelity, and we talked about addiction problems. And we talked about porn on a computer and other things. But no, I did not ask him how her 529 (college fund) was performing.”

Later, Harpootlian referenced Thomas’ testimony in a deposition that he thought the $2,000 checks were bribes. “He’s now said you were bribing him? Do you understand that?”

Pokorney: “Yeah. He’s a sociopath, so I don’t put much credibility in what Brantley Thomas would say.”

Harpootlian: “So birds of a feather, do they fly together?”

At that point, Norton interceded.

But at the trial’s conclusion, the judge showed no sympathy for Pokorney’s explanations. In a written order, he sided with Berkeley County School District and denied HUB’s attempt to send the case to an arbitrator.

About Pokorney, Norton wrote: “In sum, the court finds that Stan Pokorney knew of Thomas’s illegal activities well prior to 2017, and that he sent Thomas bribes to steer the District’s business to (the district’s insurance brokers).”

The lawsuit against HUB is still working its way through the courts. But it’s just one fight in a much larger legal war.

Another lawsuit cast a spotlight on SCAGO, an obscure nonprofit with a big say in how districts across South Carolina build their schools.

HAMPTON — Long before this county misspent a single dollar of its residents’ sales taxes, it broke a law intended to safeguard that money.

4. High finance

Like most homeowners, school systems typically can’t afford to build new buildings out of their operating budgets or savings. So most borrow money in the form of bonds, paying them off over long periods.

But bond issues require reams of paperwork and expensive legal expertise. This can put smaller districts in a bind; they often don’t need to borrow as much as larger districts, but they still must do all the required legal and financial legwork. Enter SCAGO.

In 2002, local school officials worked with what became Compass Municipal Advisors to create a nonprofit called SCAGO, short for South Carolina Association of Governmental Organizations.

The SCAGO process works like this: Districts sell bonds to SCAGO. Then, with the help of Compass Municipal Advisors, SCAGO pools money into a larger financial instrument and sells it on the open market. SCAGO and Compass then distribute the proceeds to districts. Districts lined up to use this tool, and SCAGO and Compass raised hundreds of millions of dollars. Brantley Thomas was SCAGO’s longtime chairman.

Thomas also milked the nonprofit as part of his rebate schemes, prosecutors detailed. In all, SCAGO sent Berkeley County School District more than $130,000 in rebate checks, money that Thomas diverted into his personal accounts. In its lawsuit, the district alleged that Compass executive Michael Gallagher hand-delivered checks to Thomas. At the time, Gallagher also was Thomas’ brother-in-law.

Gallagher did not respond to requests for comment, but in an affidavit for his sister’s divorce case, he said he’d known Thomas since 1994 when he and his sister began dating. Gallagher said that Thomas’ role in Berkeley County and as head of SCAGO put him in “very well-respected positions locally and across the Southeast.” But news that the FBI and SLED were investigating, Gallagher said, “came as quite a shock and was unexpected as it seemed out of character for a person we thought we knew.”

The district’s lawsuit painted a different picture, alleging that SCAGO, under Thomas and Compass, inappropriately charged the district for junkets to New York City. These trips included expensive hotels, first-class airfares and Broadway shows. The lawsuit said those costs were then added to bond issuances — essentially putting those expenses on the taxpayers’ backs. Another allegation said that Compass officials helped orchestrate scholarships for children of school finance officials.

HAMPTON — State and federal investigators have spent untold hours here in the heart of Murdaugh country, documenting how one of this town’s most prominent native sons became its most notorious.

In court filings, attorneys for SCAGO denied the district’s allegations of wrongdoing. Gallagher denied in court papers that he hand-delivered the checks. Compass and SCAGO also denied that the district was charged for junkets or that it financed scholarships to children of financial officers. In legal filings, attorneys for Compass and its executives argued that the district had done a thorough investigation into Thomas and knew that Compass “did not, and has not, converted any (of the district’s) property.”

They said the district instead received “significant monetary benefit from” Gallagher’s work as a financial adviser, that the lawsuit’s claims were “unfounded and unwarranted” and designed to harass Gallagher. Attorneys argued that the claims were frivolous and should be tossed out.

As with the HUB lawsuit, the claims against Compass and SCAGO are still winding their way through the courts.

Meanwhile, another judicial proceeding, a secret one, added another wrinkle.

5. Takeaways

In 2020, Deborah Barbier, an attorney for Stanley Pokorney, alleged that Josh Whitley, one of the district’s lawyers, was working with the state Grand Jury. Barbier argued it was wrong to use the grand jury process to further a lawsuit. But state and federal judges found Whitley had done nothing wrong. In an interview, Creighton Waters, a prosecutor for the S.C. Attorney General’s Office, said legal safeguards were in place to protect the integrity of the state grand jury process.

“The big lesson we learned from this was the effectiveness of the state grand jury,” Waters said. “We were able to go way back with historical records to put together a longstanding course of embezzlement conduct that otherwise would have gone undetected.”

It’s unclear what happened to the grand jury investigation because those proceedings are secret. More clear is that seven years after federal and state investigators got their first tip, the Brantley Thomas scandal continues to reverberate in the courts and among the people and institutions formerly in his orbit.

Nathan Williams, the federal prosecutor in the Thomas case, is now in private practice.

“It was one of those things that started small, got bigger, went over a long period of time because there weren’t a lot of internal controls to detect it,” Williams told The Post and Courier.

The case itself wasn’t a particularly sophisticated form of embezzlement, he said. And he wasn’t surprised when Thomas began confirming what happened to federal and state agents.

“People who go down that path of deception often find it’s a difficult thing to maintain over a long time — that someday, somebody will find out. I don’t think (Thomas) was surprised when he finally got that phone call.”

But he said Thomas’ value as a government witness in other cases took a hit in 2018. That’s when Thomas was arrested again. While on bail, he took a job with Jackson Davenport, a downtown eyecare store, and promptly stole $36,000.

“His credibility went out the window,” Williams said.

The district’s lawsuits have generated a few settlements, including nearly $823,000 from a firm that advised the district under Thomas. After its first settlement, the board used part of the proceeds to build playgrounds for children with special needs, a move that Whitley said was one of the highlights of his career.

Meanwhile, the Berkeley County School District fired its auditors and financial advisers, then hired new ones.

All of this began with a deeply broken man, placed in a position of public trust with few controls, who decided to steal to fill an empty space in his life and then found ways to rationalize it year after year — until that triangle of deception finally collapsed.

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