Senate subcommittee says $1.8 billion unreconciled on treasury books, recommends removal of Treasurer Curtis Loftus

The Senate constitutional subcommittee told the full Senate Finance Committee that its 13‑month investigation found conversion‑related accounting entries that net to $1.8 billion on the treasury books and recommended removal of State Treasurer Curtis Loftus for willful neglect of duty and other causes.

Senator Grimes, presenting the subcommittee’s final report, said the discrepancy first surfaced during preparation of the state’s annual comprehensive financial report and that Comptroller General Gaines had repeatedly sought satisfactory explanations from the treasurer’s office. The subcommittee contracted a forensic audit by Alex Partners and assembled roughly 640 exhibits documenting the findings.

“Today, right now, multi‑billion dollar errors continue to exist in the treasury books, making them inaccurate and incomplete,” Senator Grimes said. He reported that the forensic review traced the $1.8 billion net balance to entries that accumulated during a conversion from the legacy accounting system (Stars) to a newer system (Skis). The subcommittee said 23,342 entries were made into the disputed fund by treasury employees, more than 7,600 entries were made by contract employees assigned to the treasurer’s office, and two entries were made later by the comptroller’s office while attempting corrections.

The report recommended several actions: complete reconciliation of cash and investment balances by fund; statutory and structural reforms including creation of an independent Office of the State Auditor (a legislative amendment detailing that office was presented and advanced by the committee later in the hearing); independent oversight or a compliance officer to ensure implementation of audit recommendations; and referral of matters to other oversight bodies including the inspector general, the Legislative Audit Council and federal investigators.

The subcommittee described other findings and costs: Alex Partners’ forensic audit cost about $3 million, the committee reported legal fees of roughly $5 million to date and requested another $5 million in the state budget to cover additional legal work, and the state treasurer’s office currently custodies about $54 billion in state funds. The report says Alex Partners found that the $1.8 billion discrepancy arises from balances related to a set of bank accounts that, when combined with other misposted balances, produce the net difference; the subcommittee said Alex Partners confirmed that Skis cannot be reconciled to bank statements for the affected banks without including the unreconciled differences.

Treasurer Curtis Loftus provided a recorded statement the subcommittee played for the committee in which he said Alex Partners’ final report “confirms that there is no mystery bank account with $1,800,000,000 in it. There is no missing money and all cash and investments are accounted for.” The subcommittee’s presenters responded that, while cash may be present at a portfolio level, the books are not reconciled by agency and by fund and therefore do not meet statutory and accepted accounting standards.

Senators on the subcommittee recounted other concerns disclosed during the investigation: the treasurer’s office had at times declined to provide the detailed reconciliations the Comptroller General requested; there were episodes in which the treasurer suggested posting detailed account architecture online and then later said he would not; the subcommittee said staff purchased crisis‑communications services and that some testimony from treasurer’s staff was scripted.

The subcommittee explicitly recommended that the Senate and governor remove the state treasurer from office pursuant to Article IX, Section 3 of the South Carolina Constitution and pursue statutory and structural reforms, including making the state auditor an independent, governor‑appointed position subject to Senate confirmation, strengthening reconciliation requirements, and mandating periodic independent audits of the treasurer’s office. The committee received the report as information and the chairman said staff and counsel would consult on next steps.