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March 1998 – New Evidence in Crimes Against Democracy

March 9, 1998


Steve Pierce’s troubles may be just beginning.

Last week, the SBI charged the rest-home tycoon and three family members with conspiring to funnel up to $20,000 to state Senator Beverly Perdue. Sources close to the case also suggest that the money came from Pierce’s business, another violation of state campaign finance law.
Now the watchdog group whose complaint triggered the SBI investigation says the warrants address only “the tip of the iceberg” of Pierce’s political operation and possible misdeeds.
Democracy South of Chapel Hill today sent District Attorney Thomas J. Keith of Forsyth County details of more than a dozen other examples of bundling involving Steve Pierce and his family or associates. Keith, who is handling prosecution of the case, says he’s eager to learn more about Pierce’s donations.

The examples total $205,850. Nearly $100,000 was delivered in bundles in mid- or late 1996 — well within the two-year statute of limitation for prosecuting campaign finance violations. Recipients include:

-$83,000 to Jim Hunt’s 1992 and 1996 campaigns;
-$55,000 to Lt. Governor Dennis Wicker’s 1996 campaign;
-$11,000 to Republican Senator Betsy Cochran, co-chair of the NC Study
Commission on Aging and a senior member of other committees overseeing rest homes.

Democracy South also noted that if Pierce’s company treated money used for political donations as a business expense, then that would violate state and federal tax laws.

Pierce served as president of the rest-home industry’s trade group and lobbying arm for 20 years until 1993. In October 1997, he sold his rest-home chain, the largest in the state, but his son Guy heads the management firm that still operates the homes. Guy Pierce is named in the arrest warrant along with two of Steve Pierce’s son-in-laws, William Hammonds and Brian O. Smith.

Rest homes rely heavily on patients receiving tax-subsidized aid, with fee schedules and care standards set by the Governor’s appointees and General Assembly. Critics say the industry gets favorable treatment from regulators at the expense of taxpayers and quality care.

Marlene Chasson of Friends of Residents in Long-Term Care, which has often opposed the Pierce-initiated trade group, says citizens should demand to know if “these contributions are responsible for the close relationship between the industry and the state.”

Pete MacDowell, Democracy South’s executive director, says the Pierce case illustrates the need for stronger ethics laws and enforcement, better disclosure to expose violators, and an alternative method of financing campaigns.

“Ultimately, we need a new system that frees candidates from their dependency on big donors and deprives those donors of receiving special favors. That’s why the leaders of Friends of Residents and dozens of other groups that represent ordinary citizens support the voluntary public financing system in the Clean Election Act,” MacDowell said.