Four Greenwood men have pleaded guilty to conspiracy to commit bank fraud after banks reported losing over $10 million in a lending scheme.
According to the U.S. Attorney’s office, John Harrison, 53, was a real estate developer who developed residential property in North Carolina, South Carolina and Georgia. Henry Dorn, 63; Kevin Dempsey, 45; and C. Jody Hazel, 42, were accountants for a firm handling Harrison’s financial statements and tax returns.
Over the course of an investigation, agents discovered that the accountants were keeping different sets of Harrison’s financial information.
“There were multiple sets of books kept for Mr. Harrison,” said Bill Watkins, assistant U.S. Attorney based in Greenville. “Information from one would be provided to lending institutions, and the other would be for tax returns and such.”
The records from Aug. 31, 2000 to May 31, 2008 indicated that Harrison had understated his overall debt in the records used to secure real estate development loans and “the financial statements contained false information and this false information was material to the lenders and was meant to influence the actions of the lenders,” according to a release from the U.S. Attorney’s office.
“The FBI has been working this case for a while, and it was a referral from one of the victim banks: Countybank in Greenwood,” Watkins said.
Additionally, Harrison had accommodation borrowing agreements with the three accountants, and this allowed Harrison to sell the property to Dorn, Dempsey and Hazel and continue to develop and sell the properties. The U.S. Attorney’s office said the interest payments would be paid by Harrison and the loans would be paid off when Harrison sold the property.
Harrison would take the profit or loss and, subsequently, pay a fee to the accountants equal to 3% of the loan amount. Banks lending the money were not made aware of Harrison’s agreements with the accountants until the loans were past due.
When applying for their respective real estate loans, the three accountants also understated their debt and law enforcement estimated federally insured banks lost over $10 million in the scheme, according to prosecutors.
According to Watkins, the maximum penalty each of the defendants can receive is a fine of $1 million or 30 years in jail or both. U.S. District Court Judge Bruce Howe Hendricks, of Charleston, accepted the pleas and will impose sentencing after review of a presentence report provided by the U.S. Probation Office.
Watkins prosecuted the case for the U.S. Attorney’s office, while Harrison was represented by Alexandra Marie Benevento; Dorn was represented by John S. Simmons; Dempsey was represented by Gregory Poole Harris; and Hazel was represented by Ryan Beasley.
Reach Matthew Clark at 864-235-5677, ext. 107, or @matthewclark76 on Twitter