The Daily Tar Heel
Printing news. Raising hell. Since 1893.
Thursday, Feb. 22, 2024 Newsletters Latest print issue

We keep you informed.

Help us keep going. Donate Today.
The Daily Tar Heel

Behind closed doors: UNC System concealed $74,999 deal's role in Confederate payoff

UPDATE unc system money transfer-01.png

A small circle of UNC System leaders gave $74,999 to the North Carolina Division Sons of Confederate Veterans Inc. two months ago, advancing a larger goal that both groups have concealed from public knowledge. 

The agreement put UNC funds toward a third-party payoff, according to multiple people with first-hand knowledge of the deal, one which played a crucial role in a courtroom collusion effort between the state’s higher-education authority and a politically-active, pro-Confederate group.

Finalized on Nov. 21, the UNC System’s specifically-priced settlement agreement with the SCV fell $1 short of needing approval by the state’s Attorney General. 

The deal also remained concealed from public knowledge for nearly a month.

Five members of the System’s Board of Governors eventually revealed the $74,999 payment in a December op-ed, amid nationwide criticism of a separate deal they’d secretly struck one week later — giving the SCV official possession of Silent Sam and a $2.5 million trust of UNC’s money

Kevin Stone, the SCV’s state commander, called the predetermined lawsuit settlement “a major strategic victory” for the pro-Confederate movement in a private email at the time.

The UNC System claims to have made its earlier $74,999 payment for an isolated agreement, meant solely to limit the SCV’s practices and display of Confederate symbolism on the System’s statewide property for five years.

But numerous inside sources told The Daily Tar Heel that at its core, the System’s payment actually enabled a lawsuit against itself, one it would intentionally forfeit millions on despite knowing it lacked merit.

The Daily Tar Heel's investigative reports require intensive research, sourcing and interviewing. As an organization, we aim to be transparent about how we report our most important stories. Click for more.

Through the SCV, the UNC System directed its $74,999 payment into the hands of Sara Powell, president of the United Daughters of the Confederacy North Carolina Division Inc. 

Those funds incentivized Powell to cut her own deal on behalf of the UDC, allowing the SCV to “turn around and sue the (UNC System Board of Governors), so we could settle it and give them $2.5 million,” one person close to the UNC System's board said.

“I think it’s fairly common knowledge amongst the board that the payment to the SCV was not for the stated purpose of keeping them off our campuses, but to provide them the funds by which they could procure the statue from the UDC so that they then had a right to sue us,” the source told the DTH.

Boyd Sturges was the SCV’s attorney in its backdoor Silent Sam dealings with the System, a process that lasted most of 2019, and at one point involved the Confederate group lobbying the North Carolina legislature with near-success, according to a letter written by Stone.

Sturges confirmed the $74,999 payment’s purpose was to pay off the UDC for Silent Sam, appearing to misconstrue which documents his team had already released publicly.

“I can, I have it right in front of me, but I mean, that was used to pay the UDC for their right, title and interest in the statue,” Sturges said.

When Sturges was asked to share his legal documentation of the SCV’s $74,999 payment to the UDC, he responded, “Well, unfortunately I probably can’t do that. But anyway, I’ll talk to you later."

Frank Powell is the SCV’s North Carolina chapter spokesperson, its national magazine editor and, according to multiple SCV members, a close confidant of Stone and other leaders involved in the Silent Sam dealings. He is also Sara Powell’s husband.

When asked if the SCV had actually received the $74,999 and then transferred it to the UDC — or if the UNC System had just sent the money directly to his wife on its own accord — Frank Powell said “the SCV paid the UDC” in an email.

Frank declined multiple inquiries from the DTH on Sara Powell's behalf, saying the UDC was not giving comments. He did not address questions for clarification on the $74,999 UDC payment, such as the specific individuals who conceived of it or if it was made in the form of a check.

Multiple requests for comment from the UNC System and most individual members of the Board of Governors were declined or not responded to.

Jim Holmes, one of the five UNC System Board of Governors members involved in the SCV negotiations, said he couldn’t comment because of ongoing litigation with DTH Media Corp., the parent company of The Daily Tar Heel, which alleges that the board violated the state’s Open Meetings Law when meeting about the $2.5 million Silent Sam settlement.

To get the day's news and headlines in your inbox each morning, sign up for our email newsletters.

“I don’t want to avoid anything,” Holmes said. “There will be a time when I will answer any and all questions out there, and the bright light of sunshine will make everybody see the logic, but I can’t talk about any of it right now."

Stone, the SCV's state leader, did not respond to multiple requests for comment. One SCV member with first-hand knowledge of the organization's financials — who has been granted anonymity based on personal safety concerns — told the DTH that the group has no record of receiving or paying a $74,999 transaction in recent history. 

The member said he's been looking for one but has heard nothing from Stone on the matter. He expressed concern that it could complicate the group's next tax return with the U.S. Internal Revenue Service.

Earlier this month, the DTH revealed that the SCV has been violating federal tax laws, operating a political action committee in violation of its tax-exempt status and facilitating political donations through illegal means for years.

The UDC's claim to legal ownership of Silent Sam rested on the argument that once the Confederate monument’s pedestal was removed from UNC-Chapel Hill’s campus on Jan. 14, 2019, UNC sacrificed its possession of Silent Sam to the UDC. 

The removal came months after the statue had been toppled by hundreds of residents in and around the Chapel Hill community, a culmination of years of intensifying protests over what many see as a monument to white supremacy.

UNC was required by a 2015 state monuments law to return Silent Sam to its original spot on campus within 90 days of its toppling, which it did not do. That violation reverted possession of Silent Sam to the UDC, the SCV's lawsuit argues.

The argument hinges primarily on the idea that Silent Sam was a conditional gift by the UDC to the University over a century ago. The condition, the Confederate groups argued, was laid out in an archival transcript of a UDC representative's speech at Silent Sam's unveiling in 1913, attributing her as saying, "Accept this monument and may it stand forever as a perpetual memorial" to the UNC students who fought in the Confederate army during the Civil War.

UNC Law professor Rick Su sees the deal as an exercise in creative legal interpretations.

He referenced a handful of legal principles that invalidate the UDC's claims in the modern day, including the lack of any firmly-established agreement in writing. 

“From a property perspective, it’s hilarious, because there were so many obstacles they had to overcome,” Su said. “You can see them — like, you’re reading through it, and you can see, ‘Oh, I get it, this is knocking out this, this is knocking down this,’ — like, it’s just so many.”

Neither Powell nor the UDC is mentioned anywhere in public documentation of the System’s $74,999 agreement with the SCV. The most detailed filing currently available to the public describes the payment only as a response to proposed legal action by the SCV, providing the payment on the sole condition that the SCV obey the System’s First Amendment restrictions.

The $74,999 transfer was signed into reality on Nov. 21 by Stone and Bill Roper, the UNC System’s interim president. Two days later, an official memorandum was signed by Sara Powell, on behalf of the UDC, and Stone on behalf of the SCV. The memorandum made the transfer of Silent Sam official.

With that, the SCV obtained enough perceived grounds to sue the UNC System and claimed it had suffered its own damages from UNC’s violation of the state monuments law. UNC's alleged violation of the law occurred before the SCV had begun its plan to obtain Silent Sam. 

The UDC has historically worked as a sister organization with the SCV. Both claim to be the modern iterations — ones with tax-exempt statuses — of two groups that spearheaded a movement beginning in the late-1800s to reclaim Civil War history. The groups, more prominently the UDC, are responsible for placing Confederate monuments across the South, implementing textbooks that whitewashed the institution of slavery and more, Karen Cox, a southern historian who has long focused on the UDC, said.

The legal basis of the Silent Sam dealings as a whole, still seem "pretty spurious to me,” former N.C. Supreme Court Justice Bob Orr said.

Orr noted in a follow-up email that multiple legitimate defenses were actually cited in the System's official response to the SCV's lawsuit, adding, "I don't see how you quickly settle the case particularly for this amount of money.  A lawyer has an ethical duty to plead legitimate defenses."

He told the DTH that his personal experience overseeing court action against the UNC System raises additional questions about its apparent eagerness to settle with the SCV.

"Normally, the University — because like I said, I've fought them — they'll fight you tooth and nail," Orr said. "They'll throw every defense known to the legal profession out there."


Special Print Edition
The Daily Tar Heel Victory Paper for February 5, 2024

More in City & County

More in The OC Report

More in City & State

More in University