MYRTLE BEACH — Real estate developer Ford Shelley – currently serving a 20-month prison sentence for mortgage fraud related to his Pineapple Bay condominium project here – wants a judge to give him access to recorded telephone conversations Shelley has made during his stay at Bennettsville Federal Correctional Institution.
He believes the recordings could help him in his efforts to gain a new trial.
“Some of the conversations people have had with him while he was in jail would support some of the claims in our petition” to vacate Shelley’s guilty plea, Conway lawyer Bert von Herrmann said Tuesday. Von Herrmann, who is representing Shelley, said he cannot be more specific about the discussions that have taken place or who Shelley has talked with while in prison.
Federal prisons typically record telephone conversations made by inmates.
Meanwhile, a federal prosecutor wants Shelley’s petition to vacate his guilty plea put on hold while a separate court action is pending in federal appeals court. John Potterfield, an assistant U.S. attorney in South Carolina, said Shelley filed an appeal of his prison sentence on Oct. 22. Shelley later filed a petition in district court to vacate his guilty plea, claiming his lawyers at the time – Gene Connell of Surfside Beach and Brown Johnson of Florence – misled him by telling him he would not have to serve time in prison.
Potterfield said in court documents that the appeals court case should take precedence. Von Herrman said he disagrees, adding that both issues should be heard without delay, and he plans to file court documents asking for a hearing on the matter.
No court date has been scheduled for either Shelley’s appeal of his sentence or the request to vacate his guilty plea.
Shelley pleaded guilty in 2011 to charges that he provided Pineapple Bay buyers with kickbacks that were not disclosed on HUD-1 settlement statements. The loans on those condos went into default and banks lost nearly $1 million on the deals Shelley made. Shelley began his prison sentence in January.
Shelley has maintained his innocence, even after signing a guilty plea agreement, saying the bank that made the condo loans told him that it would be legal for him to pay 10 percent of the purchase cost for Pineapple Bay buyers yet not disclose that payment on closing documents. Shelley has said the only reason he pleaded guilty was because Johnson and Connell promised him he would get probation.
Johnson and Connell deny Shelley’s claims in affidavits filed in federal court. A court order this month allowed Johnson and Connell to withdraw as Shelley’s lawyers.
The lawyers’ affidavits show there was much more going on with the Pineapple Bay sales than the 10 percent payments that brought Shelley to law enforcement’s attention.
Brown stated that Shelley also promised buyers that he would pay them large “lump sum payments” after the units closed, that he paid one buyer a $12,000 kickback and that he paid the closing costs and made monthly payments for another buyer. None of those payments were reported on the HUD-1 closing documents, as required by law.
Buyers of some units were going to testify that Shelley recruited them to buy the condos and promised them large kickbacks from the loan proceeds if they went through with the purchases, Johnson’s affidavit states. The bank’s loan officer also was going to testify that Shelley told him “what amount would work on the loan applications.”
More troubling for Johnson, according to the affidavit, was that Shelley recruited Myrtle Beach real estate agent Scott Lemons to find straw buyers for four of the condos. Shelley then paid Lemons more than $700,000 for finding the buyers, who never made a payment on their mortgages.
Lemons, in an unrelated case, is facing three felony charges of mail fraud related to condo sales at the Ashley Park project in Carolina Forest. Lemons falsely inflated the comparable values of units in the project by taking part in sham purchases from Ashley Park’s developer, according to an indictment. That case is pending in federal court.
Contact DAVID WREN at 626-0281.