Another city employee quits amid Columbia loan program investigation

Scott Blackmon / Adam Pinsker

COLUMBIA (WACH) -- Another city of Columbia employee has resigned from the department responsible for overseeing multiple loan programs that are now under investigation by the federal government.

Larry Kea, a former auditor at Wachovia Bank with 20 years experience, submitted his resignation this week WACH Fox News has learned.

Kea is the second person to quit since the news broke Monday that the U.S. Commerce Department is investigating how Columbia officials managed the loaning of federal money. Last month, the agency suspended the city's federal funds because Columbia had been unable to produce documents pertaining to 80 loans issued since September 2008.

Kea worked as a loan processor under Scott Blackmon, who resigned his city job Monday after telling WACH Fox News he discovered multiple improprieties in city records during his six-month tenure. Blackmon says he quit in part because city officials asked him to break the law and he doesn't "want to go to jail" for being associated with the department.

"Some of the things I was asked to do were not (just) immoral but illegal," said Blackmon.

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Blackmon, 60, is a former chairman of the Greater Columbia Chamber of Commerce and most recently served as the market president of VistaBank from 2006 to 2008 and the local president/CEO of Regions Bank from 1998-2005.

Blackmon said Thursday the lack of safeguards and records he found during his six months of employment with the city are the worst examples of mismanagement he has seen in his 36 years of banking. Blackmon says he submitted reports to city leaders detailing the problems he found, but "those reports didn't go anywhere."

"I tried to convince myself this was sloppy record keeping, but it goes beyond that," said Blackmon.

Blackmon estimates between 30 to 40 percent of the loan files he reviewed are past due, and he says he found multiple loans that were approved and then no payments were made for years without the city taking any action to collect on the debt.

"My guess is the taxpayers are ultimately going to be left picking up as much as $2 million due to all this," said Blackmon.

District Two City Councilman Brian DeQuincey Newman indirectly addressed the controversy Thursday at a groundbreaking ceremony in the Lincoln Park neighborhood for a project replacing aging duplexes with new townhomes using a $1.2 million loan approved by the city.

"A lot of people are speaking negatively about our community development department," said Newman. "I think this is an important day to show not only the direction our department is going in, but also it's a testament to the quality of work."

Newman said loaning money to redevelop the neighborhood shows Columbia residents the city's commitment to improving neighborhoods.

Columbia's chief financial officer Bill Ellis says the city has the correct documentation for all the federal loans it has made, but that they weren't recorded properly in a federal computer system. The government is looking into 80 loans backed by federal dollars approved by the city since 2008.

City Manager Steve Gantt denied Thursday that city officials were aware of any employee allegations of impropriety, but he said an outside investigation will be launched to look into the matter.

The integrity of the City of Columbia is very important and we are committed to ensuring transparency in the management of our financial resources, said Gantt.

City officials would not name the agency it says it has asked to conduct the investigation.

What do you think about Blackmon's claims he was asked to engage in illegal activity while working for the city of Columbia? Please leave a comment and give us your thoughts.