By FRANK LEWIS
PDT Staff Writer
The Southern Ohio Growth Partnership (SOGP) Board of Directors has removed Bob Huff as president and CEO after they say they discovered that restricted loan funds were improperly used to cover SOGP operating expenses.
Now, Board Treasurer Mike Gampp says the Board is trying to find a way to recover from the problems caused by the improper use of those funds.
Gampp said when the Board discovered the funds had been improperly allocated, members immediately contacted the U.S. Department of Agriculture (USDA), engaged an independent auditor, and assumed responsibility for the day-to-day operations of SOGP.
Huff, reached Tuesday morning, was asked if he had a response to charges that restricted loan funds were improperly used.
“I’m disappointed they (SOGB Board) would make a comment like that,” Huff said. “I have no comment, as far as I’m concerned, I’m retired.”
Meanwhile, Gampp said the Board is moving forward.
“We are working with all our partners to better understand and resolve this matter,” Gampp said. “We are confident that a resolution will be found.”
Gampp said despite several years of audits from private firms, the discrepancies apparently went undetected until recently. It was on Feb. 2, 2012, that the detection of the issues led to a special meeting of the Board with an outside auditor present. The board determined then to remove Huff and to bring in an outside law firm to give the Board a report.
“We became aware of the improper allocation while preparing the 2012 budget earlier this month,” Gampp said. “The Board took immediate action and is working with the USDA to remedy the error.”
Gampp credited work done by Attorney Josh Howard as important to resolving the problems. Gampp said the USDA has several options as to what they can do, but he said he believes they have confidence in the Board and its efforts.
Gampp said SOGP provides low-interest loans to those who want to expand or open a business. Funding for many of those loans come from the USDA. He said those funds are restricted, meanig they cannot be used for operating expenses. He added that loan repayments go back into the community, funding future economic development loans.
As a part of its operations, SOGP received annual audits, which never indicated any improper allocations of funds.
“We’re working with these agencies to determine why this was not detected earlier,” Gampp said.
Gampp said the misallocation does not impact any current loans or repayment of those loans by businesses. He also said no one on the Board got anything for the money that had been earmarked for loans, but instead, the money went into the operation of the organization, which he said is forbidden by the USDA.
“In years past, if the Board had been aware that the deficits were as serious as they were, we could have done things to cut expenses, and we wouldn’t have been where we are,” Gampp said. “But the Board was led to believe that things were better than they were.”
Gampp said the loans are extremely important to businesses looking to locate or grow in the community, because companies often don’t have the money required to get started, and that is what the funds were intended to be used for. SOGP can give up to $150,000 to someone who wants to start a business. He said the company can take the $150,000 and it can be second to a first loan somewhere else — it works at most banks similar to how a down payment would work as seed money, or capital.
The SOGP Board is comprised of volunteers. The organization is the largest revolving loan fund provider in Ohio. Gampp said that because a full audit and repayment plan to the USDA will take time, the SOGP Board expects it might take more than a year for the issue to be resolved.
Gampp said it is too early in the investigation to determine if any legal action is expected.
Gampp said the Board’s concerns include the future of the Scioto County Welcome Center on Second Street, where SOGP which house the Chamber of Commerce offices. He said it is important to the future of tourism in the area that the facility remain open and functional, and that it might require assistance from the county and the city of Portsmouth.
Gampp said anyone with questions may contact the Chamber of Commerce office at 740-353-7647.
Frank Lewis may be reached at 740-353-3101, ext. 232, or at firstname.lastname@example.org.