When business executives offered to build a $150 million media company with 1,600 employees in rural Lancaster County, S.C., public officials pulled out their checkbook.

They hoped Front Door Communications would become the county's second-largest employer when it started churning out magazines and infomercials.

So Lancaster leaders gave the company $637,000 last year to help with start-up costs. The county didn't have money to waste: It first tried to borrow $250,000 for the deal from its schools.

Now officials say they regret their rush to recruit Front Door.

More than a year later, nothing has been built. Company executives promise to return the public money, but Front Door's $500,000 check to the county bounced in June.

The Observer found Lancaster and state officials made a series of decisions over three months last year that propelled the Front Door project forward even as the company hit financial obstacles.

The newspaper analyzed court records, letters and financial documents, and spoke with more than two dozen public officials, business experts, Front Door executives and employees, and others.

In interviews, county leaders said they were accustomed to negotiating smaller economic development deals with a handshake or a letter.

They never required proof that Front Door could deliver on its promises. They didn't sign a contract before giving Front Door money. They made key decisions illegally in secret session instead of voting in public.

The missteps entangled Lancaster County further in a deal that experts say leaders should have treated as risky simply because it involved a company with no track record.

Ultimately, none of the officials who took credit for recruiting Front Door -- including South Carolina's governor at the time -- took responsibility for making sure the project was financially viable before promoting it.

And some county leaders say they didn't know that the man they were negotiating with last year, Front Door President Robert Davis, had legal and financial problems in his past.

Big plans

Davis promised to bring information-age jobs to a county whose factories are going silent.The county due south of Charlotte's Ballantyne has struggled for years to lure new industry, with textile jobs bleeding overseas and newcomers crowding its most northern schools and roads.

About 62,000 people call the county home. Its largest employer, Springs Industries, has 1,800 workers.

In early September 2002, business executives pitched a plan for a media complex southwest of the city of Lancaster.

Front Door founder Lee Tobin said he wanted to construct a corporate headquarters and facilities to produce dozens of magazines, television programs and mail-order catalogues serving 80 markets.

In a brochure, the company advertised 14 monthly publications on subjects such as boating, entertainment, the building industry, travel and home decor. Front Door also planned television programs and infomercials. An Internet site would sell products featured.

The proposal rivaled BMW's announcement a decade before that it would open a $250 million automobile plant employing 1,200 in Greer, S.C.

Front Door's plans impressed Lancaster County officials. Fearing competition from other counties, leaders began putting together the largest incentive package they had ever offered a business.

The Lancaster County Council met in closed session on Sept. 9 last year to discuss the incentive deal, said council member Alston DeVenny.

Lancaster Economic Development Corp. President Ray Gardner, a well-known former council chairman, explained the company's proposal.

The council chairwoman at the time, Polly Jackson, then asked each council member his position, said DeVenny, council member Rudy Carter and County Administrator Chap Hurst.

All members agreed to support Front Door, said Hurst and county lawyer Randy Sims.

Voting or polling members in closed session is illegal under South Carolina's open meetings law. Elected officials can talk privately about economic development, but they are supposed to make all decisions publicly.

Council members now disagree on what they decided and what instructions they gave Hurst during the meeting. There's no official record of the discussion because, unlike in North Carolina, S.C. law doesn't require notes to be taken in closed sessions.

Jackson declined to discuss her actions at the meeting.

County officials agree, however, that no public vote was taken before county money began flowing to Front Door.

County Administrator Hurst sent Front Door President Davis a Sept. 23, 2002, letter, laying out the terms of an agreement.

The county would give Front Door 100 acres and $500,000 for relocation and business development expenses. Front Door would pay 40 percent less in property taxes over two decades, a break the state estimated would amount to $22.6 million. Front Door would invest $150 million and create 1,600 jobs in five years.

During the closed council session, Gardner vouched for Front Door and said he had checked out the company, according to Hurst and DeVenny.

Hurst said he didn't think it was his job to investigate the company again.

But he said no one told him then that Front Door's president had a history of financial problems.

A Salisbury native, Davis is a 50-year-old executive for Cosmicolor, a Charlotte printing company owned by his wife, D. Carol Davis. They live in Charlotte.

Davis' previous ventures have included real estate development and food service companies.

Between 1987 and May 2003, business associates sued him more than a dozen times, claiming he failed to pay for goods and services or to repay loans, public records show. N.C. courts ruled Davis owed a total of more than $372,000.

Most complaints occurred in 1988 and 1989, the year creditors forced him into involuntary bankruptcy.

In one civil case, a judge found that Davis defrauded a man of $55,000 in a land deal. Anthony McLaughlin Sr. of Jamestown, which is near Greensboro, said recently he was never paid back.

Davis also faced three criminal charges for writing bad checks. The charges were dismissed after he paid off the debts.

Davis said his past is irrelevant to Front Door. He said the county never asked him about the bankruptcy, the lawsuits or the charges.

Little protection

The Sept. 23, 2002, letter became the only written agreement between the company and county before Lancaster officials began writing checks to Front Door. It offered the county little protection if the deal soured, Lancaster officials now say.

The letter didn't force Front Door to take steps toward building its media complex before receiving county money.

It didn't lay out what recourse the county could take if the project collapsed.

"The formalities that should have occurred didn't occur," said council member DeVenny, an attorney.

No one raised concerns at the time, in part because informality had worked for the county when it recruited smaller companies in the past, DeVenny said.

He pointed to Belden Wire & Cable, which opened a Lancaster County plant in 1999 and now employs 200; and to Illinois-based Cardinal Health, formerly Allegiance Healthcare, which has 700 workers at a facility it moved into the same year.

DeVenny said the council also relied on Gardner's assurances that Front Door had the financial means to move forward.

It didn't.

Gardner did not respond to three phone messages or a certified letter from The Observer requesting an interview. Gardner is a paid economic development employee on permanent medical leave.

Davis said Sovereign Funding LLC of Tampa, Fla., gave Front Door preliminary approval for a loan in August, but the media company never completed financing.

He said Front Door never misled the county about the status of financing. "They knew exactly where we were all along," he said.

A lender's commitment would have given the county an indication the project was feasible, said Alan Peters, an economic development expert and professor at the University of Iowa.

But Lancaster County did not require Front Door to secure a loan before issuing it the first $250,000 check on Oct. 3, 2002, on Hurst's authority.

When the school superintendent rejected the county's request for help, Hurst found the money elsewhere. Lancaster's budget was about $18 million.

Front Door sent the county documents showing how it planned to spend the money. Among its needs: $68,000 for desktop computers, $26,000 for filing cabinets and $18,700 for chairs.

County money helped pay $200,000 in loan application fees, Davis said.

Front Door also showed Lancaster a $10,000 bill from attorney Tony Orsbon for incorporating Front Door, reviewing a lease and other routine legal expenses.

Providing public money for such an expense is unconventional, Peters said. Officials often insist their funds be used for costs such as buildings or machinery that could be repossessed if a company went bankrupt, he said.

In contrast, legal bills are an intangible that can't be recovered, he said. As such, they are "usually out of the question" in terms of public reimbursement, he said.

Lancaster's neighbor, York County, does not give companies direct cash incentives, said county Economic Development Director Mark Farris. The county does not want to assume the kind of risk that comes with providing such grants, he said.

"That kind of cash outlay is often unwise," Farris said. Instead, York County offers tax breaks and help with infrastructure costs.

Lancaster County never required Front Door to account for how it spent the funds.

Some on the council later said they were surprised that the county was writing checks to Front Door at all last fall.

Five council members and Sims, the county attorney, now say they didn't know Hurst was authorizing checks to the company. DeVenny said council members expected Front Door to get the incentive money after it took title to the land where it planned to build.

Hurst said recently he was "shocked" when he heard some council members said they weren't aware of the payments.

He said he never would have sent out the checks if the council had not approved the incentives during several closed-door meetings.

Governor joins in

As of the first two weeks of October 2002, the public knew nothing of the multimillion-dollar project or the $250,000 of taxpayer money already spent on it.That was about to change.

The project had caught the eye of Gov. Jim Hodges, a Democrat who was fighting a losing battle for his job.

Republican challenger Mark Sanford had repeatedly scolded Hodges for not bringing more jobs to South Carolina.

Three weeks before the November election, Hodges traveled to his native county to announce Front Door's plans to make the largest single economic investment in Lancaster's history.

In response to a reporter's question that day, Gardner insisted he had investigated Front Door's finances.

"We would not have gone this far if we had not checked them out," he said. "Everything is on the up and up."

A week later, the S.C. Department of Commerce faxed the county to inform it that Front Door could qualify for $75 million in state tax breaks over 15 years.

County officials now say Hodges and the Commerce Department gave them added confidence in Front Door they shouldn't have had. In the month after the news conference, the county issued two more checks to the company, bringing the total payouts to $500,000.

Reached at his law office in Columbia last month, Hodges said he relied on local economic development officials and had no reason to doubt the project.

"In this business, you just don't have people announcing jobs and involving numbers of that magnitude if they don't intend to follow through on it," he said.

County leaders discovered in early December that Front Door wasn't close to breaking ground as planned.

The week of Dec. 3, 2002, interim Lancaster economic development President Keith Tunnell realized Front Door would miss a state grant deadline because the company had not provided proof of financing. He said he told Gardner and Hurst.

The state wouldn't give Front Door money without proof the company had its own funding source.

But the county paid Front Door $137,000 little more than a week later after renegotiating its agreement so the company became responsible for buying the 100 acres. The check would help Front Door with costs associated with the purchase.

Front Door never bought the land.

Front Door attorney Orsbon said the company had to start its search for cash from scratch after choosing not to complete financing through Sovereign Funding. He said Front Door had concerns about the lender's ability to fund the project.

Sovereign attorney Bill Jacobson would not comment on Front Door.

Deadline missed

By this spring, three of the seven council members were publicly expressing concern about the project -- which the company had drastically scaled back.

The county and Front Door signed a formal contract in May for the first time, requiring Front Door to buy land, create a minimum of 50 jobs and make a $30 million investment.

When the company missed the deadline to buy the land, county officials said Front Door should pay back the incentive money.

Davis wrote them a $500,000 check. It bounced. He was arrested on a fraudulent check charge in September.

The State Law Enforcement Division opened an investigation after three council members alleged that the county misappropriated funds when it gave Front Door $637,000.

Saying Front Door should never have received the money, the three councilmen tried to place Hurst on temporary leave in August. The motion failed, 4-3.

Davis said he and attorney Orsbon, who are equal, majority shareholders in Front Door, have sacrificed trying to get the company started.

Davis said Front Door owes him and Cosmicolor, his wife's business, $1.5 million. He said Front Door isn't paying him a salary.

"Mr. Orsbon and I have personally put our families and ourselves at financial risk to help foster Front Door's continued growth and prosperity," Davis said.

He said the county will get its money back, and the political squabbles make it harder to line up another lender.

Front Door founder Lee Tobin, who left the company early this year, announced plans this month to buy back the company by Dec. 15. The company produced several editions of Front Door magazine earlier this year before suspending publication this month.

Tobin said he still wants to build in Lancaster.

Council member DeVenny said the county knows it made mistakes with Front Door. He said Lancaster's business recruitment process is stronger now.

County Administrator Hurst said that in the future, he'll seek formal contracts with companies receiving county incentives. And he said he won't be part of any deal in which Lancaster gives a business money upfront.

But he also said risk is unavoidable if the county wants to succeed in economic development.

"If you don't take a risk, and you don't constantly try to do more," Hurst said, "then you're not a real leader."