Claim buys 90 days of freedom in Bahama Island scam

NORTH MYRTLE BEACH -- Tommy Hix, one of the partners in the Bahama Island condominium scam here, says he has new information that could help investors recover some of the $6.9 million they lost on that and another project.

That assertion has piqued the interest and skepticism of some area lawyers, and bought Hix another 90 days of freedom before he has to report to federal prison.

He was scheduled to report on July 7 to begin his 40-month sentence on a charge of conspiracy to commit mail and wire fraud related to the condo projects. A federal judge granted Hix a 90-day extension, however, after Hix filed court documents late last month stating that he needs more time on the outside to help condo investors recover their money.

Among those court documents was a letter in which Tommy Brittain, one of the lawyers representing Hix, outlined four sources of money that Hix thinks could be used to refund deposits that Bahama Island and Crystal Palace investors lost when thefinancing for those projects fell apart.

Bahama Island and Crystal Palace never were built. The deposits for those condos were misappropriated by Hix and his business partner, Jeff Shoup, leaving investors without their home and money.

"What we're hoping to do is help the depositors," said Kirk Truslow, another lawyer representing Hix.

Truslow said in a court filing that Hix's cooperation "is very likely to result in money being recovered for the victims in this case."

"Mr. Hix was unable to do this work prior to now due to scheduling issues and the fact that his criminal case was not yet completed," Truslow said in the court filing.

Lawyers representing the condo investors, however, say the information in Brittain's letter is nothing new and they are doubtful that Hix has anything substantial to offer them.

"The letter is total bull," said Randy Mullins, a lawyer here who represents 53 condo buyers.

Mullins - who has pursued Hix and Shoup in civil court for more than three years - said he long ago looked into the possibility of recovering money from the sources mentioned in the letter. So far, Mullins has had little success getting anything for his clients.

"We are still hoping for any recovery in this case and are still working on it," Mullins said.

Condo investors also say they do not believe there is anything to recover from their deposits, which averaged $35,000 per unit.

"I think they've [Hix and Shoup] squandered all of the money," Sharon Clark told The Sun News earlier this year. Clark, who once worked for Hix and Shoup, placed deposits on two units at Bahama Island.

"There's nothing left," Clark said.

Sid Connor, a Surfside Beach lawyer who represents Clark, said he will take Hix's deposition on July 28 as part of an investigation into whether any money still exists for depositors.

"Hix says he has information that we don't have," Connor said. "I want to know what it is. I want to hear what he has to say."

Among the possible financial sources Hix points to in the letter is his partnership in a condominium project here called Towers on the Grove.

Truslow said Hix invested money in Towers on the Grove and has assigned his interest in that project to the U.S. attorney's office, although there now are questions about the extent of Hix's involvement in the development.

"If he has any interest in that project, it's on the tail end of it," said Connor, who said he has examined the contract for Towers on the Grove in North Myrtle Beach and previously looked into whether any of that project's money could reimburse clients.

Connor said the real estate crash has hurt condo sales at that and other projects, dimming the likelihood of any financial recovery.

"Hix only stands to gain anything if there is profit at the end," Connor said, adding that the prospect is "very, very remote."

Bill Day, the assistant U.S. attorney who prosecuted Hix and Shoup, could not be reached for comment.

Hix also says investors could pursue claims against Bhupendra Patel and Pradipkumar Patel - two Grand Strand hoteliers who formed a partnership with Hix and Shoup to construct a marina at Bahama Island.

Brittain's letter states that the Patels received $1.3 million of investors' money as the Bahama Island project was crumbling, and the two men had another $540,000 they collected as deposits on a dry dock storage building at the marina.

Bill DesChamps, a lawyer representing the Patels, said his clients did not know the $1.3 million they received came from the Bahama Island escrow account. Hix and Shoup gave the Patels that money to pay off a loan.

DesChamps filed court documents in 2008, including an affidavit from a forensic accountant, showing the Patels had no connection to any misspent escrow funds.

"These things have been public record for a long time," DesChamps said. "I don't know why it's coming up again now."

Mullins said he is "not giving up on the Patels," but points to a $2.5 million judgment filed against Bhupendra Patel last year as evidence that no money is available.

The Patels could not be reached for comment.

Brittain's letter also states that Hix believes a claim could be filed against National Bank of South Carolina, the bank that loaned money for the Bahama Island property and then foreclosed on the land when Hix and Shoup did not make payments on the mortgage.

Mullins and Brittain tried in 2008 to convince a judge that depositors should get money from the Bahama Island property foreclosure sale before the bank took its share. The bank's loan predated all of the condo contracts, however, giving NBSC first shot at the money.

The foreclosure sale did not produce enough money to pay the bank's claim, leaving nothing for the depositors.

Hix says depositors should revisit the bank issue, but Brittain said in the letter that such a claim more than three years after the fact "would now be almost impossible."

The fourth possible source of money is an even bigger long shot, lawyers say - finding elusive financier Duwayne Woods and making him pay back the $2.2 million in escrow money he took from the condo projects.

Woods had promised Hix and Shoup in late 2006 that he would pay for the construction of their condo projects, even as the real estate market was crashing and legitimate banks had pulled the plug on financing.

Hix and Shoup sent the $6.9 million in condo escrow funds to Woods, who returned some of the money to them as purported construction loan advances.

Hix and Shoup used those "advances" to pay personal expenses - such as a $266,300 federal tax debt - and bills unrelated to Bahama Island and Crystal Palace. The men also paid themselves $25,000 per month in developer fees, according to testimony during court hearings.

Hix said during a court hearing this year he knew he shouldn't have given Woods the money, but did so in a last-ditch effort to keep the condo projects alive. Hix and Shoup have said they did not know the money Woods sent back to them came from the misappropriated escrow funds.

By the time Hix and Shoup realized that Woods was not going to finance their projects, Woods had disappeared with nearly one-third of the money. The FBI has been looking for Woods, who reportedly fled the country, but has not been able to track him down.

Day said during a hearing earlier this year that federal officials are making progress in finding Woods, whose last known address was in San Diego, but Mullins and others say they are not counting on his arrest.

Hix and Shoup were ordered to pay a combined $10.3 million in restitution to banks and investors in Bahama Island, Crystal Palace and other projects, but Judge Terry Wooten said during their sentencing hearings in May that it is doubtful the men will be able to comply with that order because the dollar amounts are so large.

Shoup, who has not offered any additional assistance to find money for depositors, was sentenced to 88 months in prison for one charge of conspiracy to commit mail and wire fraud related to the condo projects. Shoup has not yet reported to prison, according to a federal Bureau of Prisons database.

Bahama Island was supposed to have 320 condos along the western edge of the Intracoastal Waterway, a pool, marina and dry dock storage building for boats. Crystal Palace was to have been an oceanfront condo tower with 35 units.