The head of the West Virginia Senate’s finance panel has asked a U.S. Treasury Department watchdog agency to review whether Gov. Jim Justice “grossly misappropriated” $28.3 million in federal COVID relief dollars.
Finance Committee Chairman Eric Tarr, R-Putnam, addressed a letter Monday to the Treasury’s Office of Inspector General asking it to respond to his concerns about “ethics, legality, and risk of any future claw backs” regarding the Governor’s Office’s transfer of $28,375,985 in remaining CARES Act funding unspent at the Sept. 30 deadline to spend it to a discretionary fund controlled by the office.
Sens. Tarr and Randy Smith, R-Tucker, likened the move to money laundering during a Finance Committee meeting last month that followed a December Gazette-Mail report exposing that transfer, and a subsequent $10 million payment from the fund the leftover money was placed in, to Marshall University to support construction of a new baseball stadium.
Other Gifts, Grants and Donations Fund expenses since the transfer have included $280,721 to the Division of Corrections and Rehabilitation for human resources services; $106,000 to Appalachian Bible College, a private Christian Bible college in Mount Hope, to assist with a new mini-bus purchase; and just under $80,000 to BDO, the financial consulting firm that advised West Virginia that it could reimburse itself for the original funding source used for an expense once that expense is considered charged to the state’s COVID relief fund.
“Hence the Governor converted at least more than $10,000,000 funds received from the CARE[S] Act to give aways not even remotely related to Covid 19 and claimed it as reimbursement for Department of Corrections expenses that had previously been reimbursed. Given this information, is federal investigation warranted?” Tarr wrote in his letter.
The letter also was sent to the West Virginia Ethics Commission and the U.S. Attorney for the Southern District of West Virginia, according to Senate communications director Jacque Bland.
In his letter, Tarr noted Governor’s Office general counsel Berkeley Bentley’s defense of the administration’s handling of the funds at the Feb. 3 meeting that the state used CARES Act money to reimburse itself for previously paid COVID-related Division of Corrections and Rehabilitation expenses and, therefore, the funding isn’t subject to Treasury guidance.
Under federal Treasury guidance, any remaining amount from the Coronavirus Relief Fund established by the CARES Act not used for eligible expenses obligated by Dec. 31, 2021, must be returned to the Treasury. The feds consider unreturned funds a debt owed to them.
Rather than return the roughly $28.3 million to the federal government, the Governor’s Office transferred it to the Governor’s Office Gifts, Grants and Donations Fund, a fund that has been budgeted only $50,000 in recent years.
Bentley cited consulting advice the Governor’s Office received in August from a Virginia-based consultant at BDO USA LLP asserting that West Virginia could reimburse itself.
But since it claimed $28.3 million in state corrections money for COVID-related spending, Justice’s office has sat on most of the money in the Gifts, Grants and Donations Fund.
There was still $17,844,687 in the fund as of Monday, according to the Auditor’s Office.
At the Senate’s Feb. 3 meeting, Tarr objected to the Governor’s Office using $28.3 million in Division of Corrections and Rehabilitation expenses to transfer the same total to a discretionary account that has helped a baseball stadium project by 100 times more than it has supported the agency since then.
C.J. Harvey, Justice’s press secretary, dismissed Tarr’s letter Monday as “simply a regurgitation of old news.”
“The Governor’s Office firmly believes that all transactions involving the use of CARES Act funds were legal and appropriate,” Harvey said in an email.
On Sept. 30, almost 1,000 days after declared a COVID-19 state of emergency in West Virginia, $28,375,985 remained in the state’s CARES Act cash balance, according to State Auditor’s Office data.
On Oct. 5, the governor approved $10 million from the Gifts, Grants and Donations Fund to be paid to Marshall University for the baseball stadium, according to a letter from Justice to the Auditor’s Office. The transfer came five days after the $28.3 million in CARES Act money was transferred to that fund.
On Sept. 29, the governor announced a $13.8 million contribution to the stadium project slated for completion in March 2024. Justice joined Marshall University President Brad Smith and Athletic Director Christian Spears to make the announcement at the future home of Marshall baseball. The governor, a Marshall alumnus, presented an oversized $13.8 million check to the university before throwing out a ceremonial first pitch.
The Governor’s Office said the $13.8 million was to come from the West Virginia Water Development Authority’s Economic Enhancement Grant program, established through the Legislature’s allotment of $250 million from the American Rescue Plan Act, a large federal COVID-19 package enacted in 2021.
Water Development Authority Executive Director Marie Prezioso said in a December phone interview that the Governor’s Office had told her the agency needed only to provide $3.8 million of the approved $13.8 million, leaving $10 million left over. Prezioso said she wasn’t informed why.
There was $252 million in the Economic Enhancement Grant Fund as of December, according to the Auditor’s Office.
Bentley told the committee that Justice decided to contribute $10 million to the Marshall stadium project to “free up” that amount for other Water Development Authority projects.
Auditor JB McCuskey estimated at the Feb. 3 Senate meeting that his office answered “a thousand” questions from local governments about how they could use COVID relief dollars distributed to them.
“I wasn’t asked if anyone could build a baseball stadium,” said McCuskey, a Republican who has since launched a 2024 gubernatorial bid. “Especially at the beginning of the guidance, it would have been my opinion that we need to stick to the idea that this money was designed for water and sewer infrastructure to fix problems that were longstanding.”
Justice is term-limited as governor but has said he is considering a 2024 U.S. Senate run.
