A federal grand jury Thursday indicted former U.S. Rep. Frank Ballance Jr. of Warrenton on charges of conspiracy to commit honest services mail fraud, mail fraud of money, and money laundering.
His son, N.C. District Judge Garey M. Ballance of Norlina, was indicted on a charge of failure to file a federal income tax return for 2000.
Frank Ballance faces felony counts that carry a maximum of five years in prison. The charge against Garey Ballance is a misdemeanor having a maximum of one year imprisonment.
The federal investigation of the men stemmed from a scathing review of the John A. Hyman Memorial Foundation by State Auditor Ralph Campbell, Jr. in October 2003. The former 1st District congressman helped start the nonprofit drug-abuse prevention and treatment program in Warrenton and served as its board chairman. While in the state Senate, he channeled more than $2 million in state grants to the organization.
The audit identified several irregularities in the use of state appropriations by the foundation from July 1, 2000 through April 30, 2003. The indictment alleged that Frank Ballance, while serving as state senator, defrauded North Carolina and its citizens of “their right to his honest services by using his office to obtain more than $2 million in appropriations for the Hyman Foundation.”
The indictment also charged that Frank Ballance knew that more than $100,000 of the foundation’s funds were going to the personal benefit of himself, members of his family, and the church where he was chairman of the Board of Deacons.
As part of the scheme, Frank Ballance forged or caused to be forged the notarized signature of the executive director of the foundation on 10 official disbursement requests to the state. The foundation was defrauded by the former congressman’s diversion of money for the personal benefit of himself and his family, the indictment says. Frank Ballance also used financial transactions to conceal the proceeds of the fraudulent schemes, the indictments say.
As specified in the indictment, Garey Ballance received $20,000 in foundation funds in February 2000, which he used to purchase a 2000 Lincoln Navigator. The $20,000 should have been reported on his 2000 income tax return. The return, which was due Aug. 15, 2001, was not filed until June 2003, omitting the $20,000. Garey Ballance filed an amended return in October 2003, belatedly reporting the $20,000. He remains as judge of Judicial District 9A.
Ballance, citing poor health, resigned from Congress in June.
Carolina Journal was at the forefront of early investigations into the finances of the Hyman Foundation and failure to comply with state and federal laws and regulations. The CJ> Exclusive series on the affair can be found here.