NORTH MYRTLE BEACH — Larry Duwayne Woods, the alleged mastermind behind the Bahama Island and Crystal Palace condominium scams here that cost investors millions of dollars, was arrested Wednesday in San Diego and will be returned to South Carolina to face felony wire fraud charges, according to an FBI spokesman in Myrtle Beach.
Greg Hautau, a special agent with the Myrtle Beach office of the Federal Bureau of Investigation, said San Diego police took Woods into custody in the early morning hours Wednesday after learning an arrest warrant had been issued for him on Sept. 27 by a federal magistrate judge in Florence.
Woods, age 69, disappeared in 2007, allegedly with $3 million of investors’ condo deposits, and had been rumored to have fled the United States. Hautau said Woods had traveled outside of the country several times but was living in San Diego for the past 12 months to 14 months.
San Diego police initially stopped and questioned Woods because he was loitering outside the Mission Valley Public Library on Fenton Parkway. Woods was booked into the Metropolitan Correctional Center in San Diego and will be extradited to South Carolina for court proceedings that will take place in Florence.
“He was stopped due to some good work by the San Diego police officers,” Hautau said, adding that Woods knew he was being sought and “had taken extensive steps to avoid being captured.”
Hautau did not specify what steps Woods had taken, but said more information about Woods’ lifestyle in recent months likely will come out during court proceedings.
The public portion of a police incident report sheds little light on Woods’ arrest. The report describes Woods as being 6-foot-2 and weighing 170 pounds with short, bushy gray hair and a moustache. The report states that Woods was wearing a blue polo-style shirt, blue jeans and black shoes at the time of his arrest. The San Diego Police Department does not release the narrative portion of its incident reports, which would describe the circumstances surrounding the arrest.
Woods is facing two felony charges of wire fraud, each of which carries a maximum sentence of 30 years in prison and a $1 million fine.
An indictment issued in September accuses Woods of making illegal bank transfers in 2006 of $4.5 million from deposits placed on Bahama Island units and $988,279 from deposits placed on Crystal Palace units. Those deposits, from people who planned to buy units at the unbuilt projects, were supposed to be kept in an escrow account.
Prosecutors say Woods sent some of the money back to local developers Jeff Shoup and Tommy Hix, but pocketed more than half of the cash. The condos were never built and Woods disappeared in 2007, just as the depositors started to realize their money had been taken.
Jarod Ownbey, a lawyer who represents dozens of condo depositors in civil lawsuits filed against the developers, said he is “ecstatic” about Woods’ arrest because it might lead to some financial recovery for his clients.
“This changes everything,” Ownbey said. “If the U.S. Attorney’s office can recover some of the money, we should be in a good position to at least get some of it for our clients, who have been destroyed financially by this.”
Owbey said he has attempted to track Woods through bank records and other documents for five years but never could pin down his location or the missing money. Ownbey applauded the FBI and the U.S. Attorney’s office for continuing to pursue Woods even when it seemed he would never be found.
“It seemed like he was a ghost,” Ownbey said. “Nobody really knew what he looked like or where he was. It’s a great day to see this finally come to fruition.”
Shoup and Hix pleaded guilty last year for their roles in the real estate scam.
Shoup is serving an 88-month prison sentence at the Butner Federal Correctional Complex in Butner, N.C. His scheduled release date is Dec. 11, 2017, according to a federal database. Hix is serving a 40-month prison sentence at the Morgantown Federal Correctional Institute in Morgantown, W.Va. His scheduled release date is Sept. 30, 2013, according to the database.
During a court hearing last year in Florence, Assistant U.S. Attorney Bill Day told Judge Terry Wooten that Woods “was involved in an advance-fee scheme,” in which Woods promised to give Shoup and Hix about $100 million in construction financing in exchange for the condo deposits. Woods, who was to provide the financing through his Atlewa Trust company, is being charged as the alleged perpetrator of the scheme.
Shoup and Hix have maintained that they were duped by Woods, who they trusted to fund their condo projects after a pair of banks backed out of the deals.
“Hix was desperately seeking financing to complete the promised projects, and that is when he was introduced to Atlewa Trust and Duwayne Woods,” Kirk Truslow, a lawyer representing Hix, said in court documents filed in the case last year.
Woods claimed to be able to fund construction through a bond Atlewa Trust had on Euroclear, a foreign bond clearinghouse based in Belgium. The bond document he showed to Hix and Shoup turned out to be a fake.
Woods stopped communicating with Shoup and Hix in 2007, and Hix hired a private investigator to track him down. That investigator concluded that Woods had probably fled the country.
Bahama Island was supposed to be a condo and marina project along the western bank of the Intracoastal Waterway while Crystal Palace was supposed to be an oceanfront condo tower. Neither project was built and, so far, there has been no financial recovery for those who lost deposits on the projects.
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Contact DAVID WREN at 626-0281