A judge has ordered the Beaufort County Black Chamber of Commerce president to dismantle his “improperly constituted” board of directors, reinstate the old board as ‘lawful,’ and provide board members with copies of the organization’s financial records within a week.

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The court order filed on Wednesday by Beaufort County Judge Marvin Dukes said chamber president Larry Holman violated the organization’s bylaws by appointing his own board of directors and offered “no reason” why he shouldn’t provide board members with copies of the organization’s tax returns.

Dukes’ order is the result of a lawsuit filed last month by three members of the chamber’s board of directors alleging that Holman improperly fired them, appointed his own board — including his wife as chair — misused money and hid financial documents.

The lawsuit has led to scrutiny of the 21-year-old chamber of commerce, whose mission is to promote economic empowerment of Black communities and small businesses. Over the past month, local governments have argued over whether to cut funding to the organization as court documents showed the internal disorganization of the chamber and allegations of financial mismanagement.

The board members who filed the suit — Bernard McIntyre, John McCoy and Leroy Gilliard — claim the organization is in danger of losing its tax-exempt status because Holman was treating the chamber as if it were his own family-run private business.

In his court order, Dukes wrote that if the Chamber were operated as a “private foundation or corporation,” its tax-exempt status would be “immediately jeopardized.”

Holman, as president of the organization, did not have power to appoint his own board of directors, the judge wrote.

A non-profit’s board of directors and president must be independent to remain tax-exempt, he said.

“If the Chamber loses its tax exempt status, it will cease to exist altogether and like Humpty-Dumpty, it will likely not be able to be put back together,” Dukes wrote. Holman “is not being charged to do any more than what is fundamentally required in the running of a nonprofit — recognize the Chamber’s lawful Board and provide requested information so that Board can perform its fiduciary duties.”

If Holman does not comply with the judge’s order, he will be found in civil contempt, punishable by a fine of up to $1,500 or up to one year in jail, according to the order.

THE JUDGE’S ORDER
In his order granting a preliminary injunction, Dukes cites the chamber’s bylaws and state and federal nonprofit laws. He said that the board members are “very likely to succeed” in the lawsuit.

The temporary injunction lists six specific orders:

• Holman must recognize the Black Chamber’s “lawful” board of directors — Bernard McIntyre, John McCoy, Leroy Gilliard, Rose Marie Lewis and Wilma Holman — and obey the board’s decision and directives.
• Holman must provide the board with a copy of the chamber’s full tax returns, W-2s and 1099s for 2017, 2018 and 2019 within seven days.
• The 11-member board that Holman “improperly constituted” has “no authority.”
• Holman cannot use any chamber money or resources to defend the lawsuit.
• The board of directors cannot change Holman’s employment status without another court order.

NEPOTISM
In the board’s lawsuit against Holman, it claimed that nepotism was a problem in the organization. Holman unilaterally appointed his wife as chair, and his son oversees programs and events.

Judge Dukes ruled that he is “tentatively inclined” to allow Holman’s wife, Wilma Holman, to remain on the chamber’s board because she was identified as a board member on the organization’s 2018 Form 990.

However, Dukes wrote, the chamber “must be mindful” of the board’s possible conflicts of interest because nonprofits are “subject to immense scrutiny.”

By allowing her to remain the board, Dukes said he was not ruling that she is a “proper” member.

He said there is evidence that Larry Holman appointed his wife to the board without the board’s approval, but “that is a matter for final hearing.”

CUTTING FUNDING?
Earlier this week, Beaufort County Council voted to override interim County Administrator Eric Greenway’s decision to withhold $32,000 in state accommodations tax money to the chamber until the lawsuit was resolved.

Several council members — including York Glover, Gerald Dawson and Stu Rodman — argued that because Holman was “innocent until proven guilty,” the money should be allocated to the organization. Council member Brian Flewelling said the county was risking being sued if it cut the funds.

The allocation has to be approved on two more readings.

In a text to a reporter Thursday, Council Chair Joe Passiment said once the money is approved by council, the county will reimburse the chamber $32,000 after the chamber submits receipts for the work performed.

At the municipal level, Beaufort Mayor-elect Stephen Murray said last week that the city doesn’t “just cut the money loose” when it provides accommodations and hospitality tax funding to organizations. The groups have to prove to the city the money was spent properly and then are reimbursed.

Murray called the lawsuit “unfortunate.”

“I’m sad to see board members sue the organization,” he said. “I think the entity is needed in Beaufort County, and I hope they can resolve their issues.”