Myrtle Beach lenders admit fraud

FLORENCE -- Two former Myrtle Beach area bank officials pleaded guilty in federal court here Monday to bank fraud charges as part of an ongoing federal investigation into fraudulent mortgage transactions that contributed to the decimation of this area's real estate industry.

Judge Terry Wooten accepted the guilty pleas from Gary Albert Hager and Jill Diane Brennan, who admitted to falsifying information on loan applications so banks would approve mortgages that eventually wound up in foreclosure.

Meanwhile, a third person charged with real-estate-related bank fraud was placed on home detention because he has repeatedly violated the terms of his bail agreement.

Jeff Shoup - one of the would-be developers of the failed Bahama Island condominium project in North Myrtle Beach - will be confined to his home except for work, medical appointments and court hearings. Shoup also must wear a monitoring device until his trial, tentatively scheduled for early October.

Judge Shiva Hodges also ordered Shoup to refrain from any use of alcohol and advised him to take part in substance abuse counseling. Since his bail hearing on Dec. 29, Shoup has been arrested twice on separate alcohol-related charges, including driving under the influence. Shoup also was charged with driving on a suspended license in a third incident, and he tested positive for cocaine use during a court-ordered drug test.

"I have grave concerns about what appears to be the excessive use of alcohol," Hodges said. "That is a danger to the community and to Mr. Shoup. I'm also concerned about the timing of these charges. It's not all on one weekend where Mr. Shoup could suggest it was just a bad weekend. The dates are continuous since December."

Shoup also did not report his arrests as required under the bail agreement, according to William Day, the assistant U.S. attorney who is prosecuting the bank fraud cases.

Shoup did not speak during Monday's hearing. His court-appointed lawyer, Michael Meetze, said Shoup disputes the validity of the drug test but admits violating the terms of his bail.

Hodges said Shoup "has had many opportunities to comply, and he has not. This is your last chance."

In a hearing held earlier on Monday, Wooten agreed that Hager and Brennan should be allowed to remain free on bail until they are sentenced later this year.

Hager, 58, a former loan officer with the J.P. Morgan Chase office in Myrtle Beach, pleaded guilty to one felony charge of conspiracy to commit bank fraud that could put him in prison for up to 30 years.

Hager admitted that he prepared and submitted fraudulent documents to J.P. Morgan Chase so the bank would approve mortgages that far exceeded the property's values. Hager said he received kickbacks totaling $25,110 from Jeremy Eason, a mortgage broker with Myrtle Beach-based Dunes Mortgage, after three of those loans were approved.

The kickbacks were on $3.3 million worth of loans made by J.P. Morgan Chase and Pawleys Island-based Plantation Federal Bank.

Eason has not been charged with any crime, but he is named as an unindicted co-conspirator in court documents. Hager has agreed to work with investigators as part of his plea deal, and further indictments are expected.

Brennan, 44, a former employee at the Bank of America office in Myrtle Beach, also pleaded guilty to one felony charge of conspiracy to commit bank fraud that could put her in prison for up to 30 years.

Brennan admitted that she falsified information about bank customers' accounts so they could qualify for loans arranged by Eason and Darin Epps, the owner of Dunes Mortgage.

"The false information made it appear that the people had more money and assets than they actually had," Day said. "The bank relied on [the information] to determine whether a loan should be issued."

The false information led to nearly $1.4 million in losses for RBC Bank, which made the loans based in part on fraudulent documents Brennan prepared.

Epps has agreed to plead guilty to bank fraud in another case involving Shoup, and he is working with investigators.

Hager and Brennan answered questions Wooten posed about whether they understood their plea agreements, but neither made any statement to the court.

Hager and Brennan will be sentenced after a pre-sentence report is completed in one or two months, according to Day. In addition to the prison sentences, Hager and Brennan face possible fines of up to $1 million apiece and could be ordered to pay restitution.

Prosecutors have asked for reduced sentences for Hager and Brennan, based on their cooperation, but the judge is not bound by that request.

In the other case heard Monday, Shoup and two business associates were indicted Dec. 15 on six felony charges of mortgage fraud related to condo sales at Cherry Grove Villas II in North Myrtle Beach.

The indictment was expanded in April to include Bahama Island and other area condo projects, in which Shoup and business partner Tommy Hix are accused of stealing $10 million from investors.

The Bahama Island case has been one of the highest-profile mortgage fraud cases along the S.C. coast, with most of the allegations uncovered through an investigation by The Sun News and dozens of pending civil lawsuits filed by the Mullins Law Firm in North Myrtle Beach.

A series of motion hearings in those civil cases have been postponed until after Shoup's criminal trial.

Shoup and Hix were partners in T&J Development of North Myrtle Beach, which was supposed to build Bahama Island along the Intracoastal Waterway and the Crystal Palace condo tower on the oceanfront.

Federal indictments accuse Shoup and Hix of taking more than $7 million in deposits from condo buyers. Although the deposits were supposed to be kept in an escrow account, Shoup and Hix are accused of spending the money on personal expenses and unrelated debts. Bahama Island and Crystal Palace never were built and the depositors' money is gone.

In addition, Shoup and Hix are accused of submitting false financial statements to an Arizona group that loaned the pair about $3 million for Bahama Island and a proposed condo resort in the British Virgin Islands. That resort never was built and the loan money is also gone.

The mortgage fraud charges involving Epps, Shoup and Tiffany Travis - a former real estate agent at Shoup's Ocean Front Real Estate agency - stem from the sale of three condominiums at Cherry Grove Villas II, another North Myrtle Beach project that Shoup and Hix developed.

A federal indictment alleges that Shoup, Travis and Epps falsified loan documents to obtain six mortgages totaling nearly $2.4 million. Travis purportedly used the mortgages to pay for condos that were owned by Shoup, but the three individuals split the money instead, the indictment states.

Shoup, Hix and Travis have pleaded not guilty to the criminal charges.