ACCOUNTS ORDERED FROZEN

Hyman Foundation Told Not To Spend State Money In The Aftermath Of A
Critical Audit

Attorney General Roy Cooper has ordered the John A. Hyman Memorial Youth
Foundation to freeze its accounts as he tries to recover $239,000 in state
money the foundation has yet to spend. Cooper's senior deputy, Grayson G.
Kelley, warned the foundation in a letter sent late Thursday that if it
spent any remaining money, he would take action to have a judge dissolve
the foundation.

"No further expenditures of state appropriated funds should be made without
the express consent of this office," Kelley wrote.

The order comes after a blistering state audit released Wednesday that
found the foundation's chairman, U.S. Rep. Frank Ballance, a Warrenton
Democrat, had paid his family, church, campaign staff and political
contributors foundation money for their work with counseling and prevention
programs for substance abuse.

State Auditor Ralph Campbell questioned about $325,000 in expenditures over
the past three years and said the foundation was "riddled with conflicts of
interest." He recommended that state officials collect the foundation's
remaining assets.

The next step, according to Kelley's letter, is a financial audit to
determine how much the foundation owes the state. In the interim, Kelley
told the foundation to move all its money into an escrow account and
provide him with the account information.

Ballance helped secure for the foundation more than $2.1 million in state
money over the past decade while he was a state senator. He served as vice
chairman of the subcommittee that oversaw justice and public safety
spending, and advocated money for the Warrenton foundation each year.

The spending and lack of accountability by the foundation have triggered
inquiries by the FBI and the State Bureau of Investigation. Ballance and
the foundation have retained lawyers Joseph B. Cheshire V of Raleigh and
James Ferguson of Charlotte.

Ballance and other Hyman Foundation officials could not be reached for
comment Friday. On Wednesday, Ballance said no decision had been made about
the foundation's remaining assets. It closed its doors last month after the
state cut off money.