FLORENCE — The would-be developers of the failed Bahama Island and Crystal Palace condominium projects were sentenced to federal prison Tuesday for their roles in a real estate scam that cost investors millions of dollars.
Jeff Shoup, a partner in T&J Development of North Myrtle Beach, was sentenced to 7 years and 4 months in prison and ordered to pay $5.3 million in restitution. He also will be on three years of probation after he is released.
Tommy Hix, the other T&J partner, was sentenced to 3 years and 4 months of prison and ordered to pay $5 million in restitution. He also will be on three years of probation after he is released.
The two men pleaded guilty last year to one felony charge each of conspiracy to commit mail or wire fraud. Prosecutors accused the men of stealing real estate deposits that buyers had placed on condo units at the two projects in North Myrtle Beach. Neither project was built and the deposit money was never returned to investors.
"Justice is served," said Randy Mullins, a North Myrtle Beach lawyer who represents 53 condo buyers and has pursued Shoup and Hix in civil court in attempts to recoup some of the lost money. Mullins said he will ask a judge for a summary judgment against Shoup and Hix in those cases based on their guilty pleas and sentencings in federal court.
In addition, three other Myrtle Beach area residents were sentenced for their roles in mortgage fraud that took place during the real estate boom. That fraud helped lead to the collapse of this area's real estate market, which has not yet fully recovered.
Tiffany Travis, the former girlfriend of Shoup and a real estate agent at his Oceanfront Real Estate company, was sentenced to 30 days in jail after pleading guilty to one felony charge of bank fraud. She also must pay restitution totaling $390,491 and will be on five years of supervised release.
Travis signed blank mortgage loan applications and then allowed Shoup and former Myrtle Beach mortgage broker Darin Epps to fill in fraudulent information on the documents to obtain six loans totaling nearly $2.4 million. The proceeds from those loans were split between Travis, Shoup and Epps. The loans eventually went into default and the condos fell into foreclosure.
Epps was sentenced to 2 years and 9 months in prison after pleading guilty to one felony charge of bank fraud. He was ordered to pay $390,492 in restitution and will be on five years of probation after he is released.
Epps - whose Dunes Mortgage brokerage was at the center of much of the real estate fraud that took place in Myrtle Beach during the boom, according to prosecutors - has been cooperating with investigators in an ongoing case where more indictments are expected. His sentence could be reduced in coming months depending on how much additional help he provides.
Gary Albert Hager, a former loan officer at the JP Morgan Chase Bank branch in Myrtle Beach, was sentenced to 24 months in prison and ordered to pay about $25,000 in restitution. He also will be on five years of probation after his release.
Hager approved loan applications submitted by Dunes Mortgage even though he knew they contained false information. Hager received kickbacks from Dunes Mortgage for approving the applications.
All five individuals remain free on bond while they await a prison report date from the federal Bureau of Prisons. Bill Day, the prosecutor in each of the cases, said the bureau usually assigns a prison date and location within about a month. Epps will not have to report to prison for 90 days because he continues to help investigators.
Several victims attended the sentencing hearings, telling Judge Terry Wooten about how the fraud has affected their lives. Some victims said they have lost their businesses and homes, and another said his financial losses to Shoup and Hix cost him his health and his marriage.
Shoup and Hix "maintained a lifestyle based upon other people's money, and that money is now gone," Mullins told Wooten. "This may be the only justice that is done in this case."
Mullins said he has not been able to recover any of the condo deposits for his 53 clients and Wooten said it is unlikely full restitution can ever be made by Shoup or Hix.
Shoup and Hix could not get bank financing for their condo projects as the real estate market began to collapse. Instead of refunding pre-construction deposits that investors made, however, the two men turned to a purported financier named DuWayne Woods, who they said wound up taking much of the investors' money.
Woods told Shoup and Hix to send all of the condo deposits for Bahama Island and Crystal Palace - totaling $6.9 million - to him so he could begin the loan process. Woods kept $5 million, prosecutors say, and sent about $1.9 million back to Shoup and Hix as purported "construction loan advances."
Instead of spending that money on Bahama Island and Crystal Palace, however, Shoup and Hix used it to pay other personal and business expenses. Shoup, for example, spent about $250,000 of the money to settle a personal tax debt. The men also used the money for travel and salaries.
Prosecutors say Shoup and Hix also lied to investors by telling them their money would be safely held in a trust account. Instead, the deposits were placed into a regular bank account and then transferred to Woods.
Kirk Truslow, Hix's lawyer, said his client believed that Woods could finance the condo projects and did not transfer the money with criminal intent.
"This was not a Ponzi scheme or an attempt to steal anyone's money," Truslow said. "It was an unlawful use of people's money in an attempt to get the project done."
Hix told Wooten that he is sorry investors lost money that had been entrusted with him.
"I never intended for anybody to lose any money," he said. "I really thought at the time I would get the project done and it would benefit everybody."
Shoup also apologized but said he has been victimized as well.
"I've suffered a lot, too, the last few years," Shoup said. "I lost my business and material things as well as any reputation I might have had. I've been publicly slandered and beat up. I've suffered a lot of mental anguish."
Patricia Foley, who along with her husband invested $105,000 in three Bahama Island condos, said the financial loss has been long-lasting.
"We have grandchildren that we would love to see and help but we can't because, in our retirement, we are having to work six days a week," she said. "We no longer have the lifestyle we once had - a lifestyle we worked two and three jobs to get to."
Contact DAVID WREN at 626-0281.