In an abrupt about face, one of the former leaders of a failed South Carolina subprime lender has pleaded guilty to charges she deceived thousands of investors and now faces a long prison term.
With her children standing at her side Anne Owen, the former vice president of Carolina Investors, changed her plea following a pretrial hearing and admitted to eight counts of misleading investors about the financial stability of the company, Mark Plowden, a spokesman for the South Carolina Attorney General’s office, confirmed to MortgageDaily.com.
Owen could be sentenced to 80 years in prison and as much as $400,000 in fines, Plowden said.
However, Owen could receive less jail time after agreeing to help investigators in their case against others in the company. Plowden confirmed that South Carolina Attorney General Henry McMaster is continuing the state’s investigation into HomeGold.
Owen’s husband, former company president Larry Owen, has already been sentenced to eight years on 22 fraud counts.
Carolina Investors and its parent company, subprime lender HomeGold Financial of Columbia, declared bankruptcy and went out of business in the spring of 2003.
Investigators say about 12,000 investors lost $278 million in the company’s collapse.
Previously pleading guilty was former South Carolina Lieutenant Governor Earle E. Morris, who was the company’s chairman.
The company was also investigated by the Securities and Exchange Commission and caught the notice of U.S. Sen. Lindsey Graham, a South Carolina Republican who wrote federal regulators in the spring of 2003 after the company went into bankruptcy.
“Carolina Investors sold notes and subordinated debentures to the public and turned the proceeds over to HomeGold,” Graham wrote in the letter. “According to reports filed with the SEC in recent years, Carolina Investors provided HomeGold with an estimated $267.5 million in capital.
“Without warning, Carolina Investors closed its offices on March 24 leaving more than eight thousand investors with no access to their accounts,” wrote Graham. “This situation had had a detrimental impact on the financial well-being of thousands of residents of my state, many of whom had their life savings invested with Carolina Investors.”
Employees were also left in a lurch.
MortgageDaily.com reported in April of 2003 that HomeGold abruptly closed its doors and left 40 people out of work at its office in Cincinnati. Employees were told a month earlier they were going to be paid a “fat raise,” workers said at the time.
In the two years prior to the bankruptcy HomeGold lost more than $100 million, according to published reports.