by David Wren, SC Daily Gazette
May 22, 2025
Jeffrey McWhorter, the former head of South Carolina-owned Palmetto Railways, will serve five years of probation for his part in a felony fraud scheme involving a key Port of Charleston customer.
McWhorter, president and CEO of the railroad from 2007 to 2022, was sentenced Thursday to probation by Judge David Norton during a hearing in federal court in Charleston, five months after he pleaded guilty.
McWhorter, 63, of Awendaw, admitted he took a cash kickback to steer a construction contract to a local businessman for a $35.5 million, rail-served plastic pellets warehouse adjacent to port-owned property.
While the scheme occurred while he was president of the state railroad, the case didn’t come to light until after he retired.
“It was a horrible decision I made, one that I will regret for the rest of my life,” McWhorter tearfully told the court. “This act does not reflect the person I’ve tried so hard to be all my life.”
The U.S. Attorney’s office had sought a prison sentence of between eight and 14 months, saying McWhorter “abused his position of trust” as a public official.
“His conduct was serious, the fraud offense is a serious offense, and a period of incarceration is appropriate,” Bryan Stirling, U.S. Attorney for South Carolina, said in a court document.
However, McWhorter’s friends, family members and business associates said the kickback scheme was out of character for the former police officer turned railroad executive, and they asked the judge in testimony and letters of support for leniency.
In the end, Norton opted for a sentence of supervision rather than incarceration.
“This was a very serious offense,” Norton said. “It’s stealing for the lack of anything else. What he did was a betrayal of everything he stood for his whole life.”
In addition to probation, McWhorter must pay $90,000 in restitution, a $4,000 fine and perform 300 hours of community service. McWhorter has already put the $90,000 in an escrow account for repayment.
Hatching a kickback
Recent court documents and testimony have shed new light on how the kickback scheme took place, outlining who else was involved, how they arranged the fraud and the name of the victimized business. Previously, court documents did not identify the co-conspirators.
Texas-based Frontier Logistics in 2018 was looking for a place near Charleston’s port to build a warehouse where plastic pellets — also known as nurdles — could be transferred from rail cars to cargo containers for export to foreign markets.
Charleston’s port is the East Coast’s busiest export hub for plastic pellets and chemicals, and Frontier has played a key role in the growth of those exports at the Port of Charleston.
Kevin Newkirk, a vice president at Frontier, had discussed the warehouse project with McWhorter because the facility would need railroad access. McWhorter then introduced Newkirk to Tony Berenyi, the founder of Charleston contractor Berenyi Inc., who wanted to build the warehouse.
The three men discussed how the construction contract could be steered to Berenyi.
“At one point, Berenyi offered Newkirk and Jeff a commission on the contract,” court records state. “However, Newkirk decided that a kickback payment was more appropriate and approached Jeff about it.”
Newkirk and McWhorter initially considered asking for a $2 million kickback but later settled on $1 million. Berenyi ultimately agreed to pay the men $420,000, with the money coming from his business profits. McWhorter’s lawyers — Bart Daniel and co-counsel Nathan Williams — stressed no taxpayer money was involved.
Frontier was not aware of the kickback scheme but eventually chose Berenyi to build the warehouse on land it bought from Palmetto Railways.
Berenyi is incarcerated in a federal prison in Florida after a jury found him guilty in 2023 of a similar but unrelated kickback scheme for construction at a Nucor Steel plant in Kentucky. He is scheduled to be released later this year.
Things start to unravel
Newkirk and McWhorter were supposed to split the $420,000 but Berenyi never finished making all of the payments. All told, Newkirk received about $84,000 in addition to the money that went to McWhorter.
Investigators learned of the kickback scheme while investigating Berenyi’s actions in the Kentucky case. That eventually led to charges against Newkirk and McWhorter.
Newkirk was sentenced in April to five years of probation for filing a false federal tax return related to the scheme.
“Unfortunately, this discussion of payment came at a point in Jeff’s life where he was struggling, and that struggle, combined with the opportunity presented to him, was more than he could resist,” McWhorter’s lawyers said in a court document.
“At the time, Jeff was going through a difficult divorce with high attorney’s fees, needed to pay for a daughter’s wedding, and was in the process of having to find a new place to live,” they wrote.
McWhorter, a state employee, was being paid $200,000 a year to lead Palmetto Railways at the time the scheme took place. He also received bonuses in 2020 totaling $133,000.
In 23 letters of support submitted to the court, supporters said McWhorter’s conduct was the opposite of the integrity he had shown throughout his career.
“Jeff’s guilty plea stunned his colleagues throughout South Carolina,” wrote Ron Brinson, a former North Charleston councilman. He added McWhorter’s actions are “so uncharacteristic and inconsistent” with his reputation.
Bobby Hitt, the state’s former Commerce secretary, wrote that he had “developed a trust relationship” with McWhorter and others at Palmetto Railways, “both professionally and personally.”
He added McWhorter played a role in some of the state’s biggest economic development announcements.
The felony McWhorter pleaded guilty to is called honest services fraud — a type of white-collar crime in which a company or individual offers something of value to another person, usually a public official, in exchange for special or preferred treatment.
McWhorter retired from Palmetto Railways in 2022 after 37 years with the railroad — a so-called short line railroad that connects Port of Charleston customers and other businesses to bigger, long-haul services.
Following his retirement, McWhorter started a consulting business that includes Frontier among its clients.
SC Daily Gazette is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. SC Daily Gazette maintains editorial independence. Contact Editor Seanna Adcox for questions: [email protected].
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