MYRTLE BEACH — Loris resident Katie Bell waits in a long line of victims who are trying to get their money back from admitted Myrtle Beach fraudster Joseph Guernsey, who is awaiting sentencing in federal court on a felony bank fraud charge.
Bell loaned $18,000 to Guernsey and his Exteriors International construction company in November 2009 – a debt Guernsey never repaid, according to court documents. Bell told The Sun News that she thought the loan was collateralized by the title to a mobile home that Guernsey presented to her. Bell said she later learned the title was fraudulent.
Although Guernsey – who pleaded guilty to the bank fraud charge in October – continues to do business through Exteriors International while awaiting sentencing, Bell said she has been unable to find any assets in Guernsey’s name and cannot collect on a judgment she obtained against him in December.
“He claims he’s not making any money,” Bell said.
Guernsey declined to comment and referred questions to his lawyer, Morgan Martin, who could not be reached for comment Friday.
Guernsey’s sentencing is scheduled for Wednesday, but it likely will be delayed at the request of federal prosecutors. The FBI agent who investigated the case will be in Quantico, Va., for training this week and will not be available to testify. A judge likely will schedule a new sentencing date this week.
Stories similar to Bell’s have been told in court documents filed by others, including a recently widowed woman who says Guernsey stole her late husband’s classic Corvette in a scam involving his previous business – Southern Auto Sales. The woman eventually recovered the $30,000 loss from the dealership’s insurance company.
While Guernsey’s sentencing might give Bell a small sense of satisfaction, it likely will do little to recoup her financial losses.
Bill Day, the assistant U.S. attorney who is prosecuting Guernsey, said any restitution ordered during this week’s sentencing would be limited to the criminal case and would not include civil judgments obtained outside the scope of the criminal charge.
However, that doesn’t necessarily mean Guernsey’s past behavior won’t be a factor when Judge Bryan Harwell imposes a sentence of up to 30 years in prison and a $1 million fine followed by up five years of supervised release.
Victims in a criminal case have a right to make statements in court before a sentence is handed down. Many judges extend that right to victims in other cases – including civil matters – involving the defendant. Such victim testimony can impact a judge’s decision to impose punishment at the high end rather than low end of federal sentencing guidelines.
In addition, Day said victims of other crimes or court battles involving a criminal defendant can present him with written evidence of their case.
Guernsey has a prior criminal record. He was placed on two years of probation in December 2008 after pleading guilty to a felony fraudulent check charge, according to court documents. Ten additional felony fraudulent check charges were dropped as part of that guilty plea, court records show.
The criminal charge he faces in federal court involves the sale of a Murrells Inlet home that once belonged to co-conspirator Benedict “Gus” Olberding’s wife. An indictment states that Guernsey and Olberding, who also pleaded guilty last year, defrauded SunTrust Bank and Countrywide Bank of $1 million by lying on three loan applications related to the home sale. The loans were never repaid and the home wound up in foreclosure.
Guernsey also is facing another criminal charge in state court of practicing law without a license related to an alleged home foreclosure scam.
The criminal charges are in addition to a long list of civil court cases involving Guernsey.
After filing for bankruptcy protection in April 2008, Guernsey told court officials that he would provide them with Southern Auto’s financial records. He later told court officials that he could not find most of the dealership’s records.
A bankruptcy trustee investigating the matter later found a canceled check Guernsey had written to a document shredding company less than a month after he filed for bankruptcy protection. That check indicated that Guernsey had shredded more than 1,000 pounds of paper – or about 22 banker’s boxes worth of documents, according to court records.
The trustee denied Guernsey’s bankruptcy discharge because of that and other financial issues.
One of the creditors in that bankruptcy case – Flex Fund Financial Services LLC – also filed a complaint against Guernsey over an unpaid $1 million debt, court records show.
Flex Fund said in its complaint that Guernsey used automobiles purportedly owned by his dealership as collateral for the loan. Flex Fund said it later learned the ownership documents and duplicate titles Guernsey provided had been falsified.
“Guernsey previously had sold these vehicles or never owned these vehicles,” Flex Fund said in its complaint.
In addition, other creditors have obtained judgments against Guernsey totaling nearly $836,000.
Lawyer ordered to appear for deposition
A federal magistrate judge has ordered former Myrtle Beach lawyer Mark McAdams to sit for a deposition in a case the U.S. Securities and Exchange Commission filed against him and business partner Dane Freeman.
The federal government claims the two men bilked 35 customers of an investment scheme out of more than $3.5 million in a civil case now scheduled to go to trial in September.
McAdams was supposed to appear for a deposition in November but did not show up, according to court documents. Judge Thomas Rogers last week ordered McAdams to appear for a deposition by June 20. McAdams and Freeman are representing themselves in the case.
The SEC says McAdams used his position at the McNair Law Firm to give the scheme credibility, using the firm’s letterhead and email system to communicate with investors about the company – Global Holdings LLC – that he and Freeman formed as part of the alleged scheme.
McAdams and Freeman typically promised customers that they could make $1 million off of a $20,000 investment in just 60 days – a return of 4,900 percent, according to the SEC’s lawsuit. Investors were told that Global Holdings could buy bonds directly from issuers at a discount and then quickly resell the bonds for a profit, according to the SEC.
Most investors never received any profits or a return of their investment, according to the lawsuit.
McAdams, who resigned from the McNair Law Firm in 2008, and Freeman are accused of fraud and securities violations. Both men deny any wrongdoing and Freeman said in court documents that a German company called Curaconsult was the one that actually stole the investors’ money.
Contact DAVID WREN at 626-0281.