February 26, 2013

Affidavits cast doubt on Myrtle Beach developer Shelley’s innocence claims

Shelley was sentenced to 20 months in prison and began serving his sentence last month at Bennettsville Federal Correctional Institution. Shelley is asking that his sentence be vacated and a new trial granted, but a judge has not ruled on that request.

Affidavits filed this month in Myrtle Beach developer Ford Shelley’s mortgage fraud case cast doubt on Shelley’s continued claims of innocence – despite his guilty plea – and his contention that lawyers misled him into believing he would not have to serve time in prison for a felony charge of mail fraud related to sales of his Pineapple Bay condominiums.

Shelley was sentenced to 20 months in prison and began serving his sentence last month at Bennettsville Federal Correctional Institution. Shelley is asking that his sentence be vacated and a new trial granted, but a judge has not ruled on that request.

Shelley has maintained his innocence, even after signing a guilty plea agreement last year, 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.

The affidavits – filed by Surfside Beach lawyer Gene Connell and Florence lawyer Brown Johnson, who represented Shelley – 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 the fact 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.

Shelley’s payments to Lemons gave prosecutors considerable leverage during plea negotiations. Johnson and Connell said in their affidavits that they feared prosecutors would file additional charges against Shelley for the four buyers that Lemons recruited, thus increasing the dollar amount of loss charged to Shelley and his prison sentence.

“I was convinced the assistant U.S. Attorney could prove bank fraud,” Johnson said in his affidavit, adding later that he “was concerned the payments to Lemons would be considered kickbacks.”

Johnson and Connell said they negotiated a reduced sentence for Shelley but it was clear during those negotiations – and during his sentencing hearing – that prison time was almost guaranteed.

“We advised Shelley on a number of occasions that the guidelines most likely would require prison time,” Connell said in his affidavit.

Judge Terry Wooten “commented on the lack of restitution in the case and Mr. Shelley’s expensive automobile and a $5,000 watch” during the sentencing hearing, Johnson said in his affidavit.

“Your client is going to have to pay restitution he is going to have to do some time,” Wooten said, adding that he is concerned about defendants “who take a lot of money [yet] have to pay a minimum amount of restitution.”

“That weighs heavily with me,” Wooten said during the sentencing hearing.

In addition to 20 months in prison followed by three years of supervised release, Wooten sentenced Shelley to pay restitution of at least $1,000 per month.

Shelley was surprised by the prison sentence and, in December, told Wooten he only pleaded guilty because his lawyers had promised him he would do no jail time.

“Shelley would not have pled guilty to the crime charged, but for trial counsel’s assurance of a no-jail-time sentence,” Shelley said in a December court filing, adding that his lawyer urged him “to accept the agreement because if he didn’t ‘they [prosecutors] will dig something up’.”

Johnson and Connell, in their affidavits, deny they ever made such promises to Shelley.

The two lawyers also deny Shelley’s claim that prosecutors threatened to pursue charges against his wife, Gina, if he didn’t sign a plea agreement. Gina Shelley – who is scheduled to make her television debut Sunday as co-owner of a trailer park-based hair salon on the cable television show “Myrtle Manor” – was one of the Pineapple Bay buyers.

“I am not aware of the U.S. Attorney’s office or the FBI mentioning Shelley’s wife, although I did comment to Shelley that his wife could have been charged in this scheme,” Connell said in his affidavit.

Johnson and Connell filed their affidavits in response to Shelley’s request for a vacated sentence and new trial. Shelley must prove his counsel was ineffective or that there was prosecutorial misconduct in order to get a new trial. Johnson and Connell say they conducted an “exhaustive investigation” into Shelley’s case and briefed him extensively about the plea agreement before Shelley signed it, according to court documents.

Wooten refused to postpone Shelley’s prison sentence while his request for a new trial is pending. No hearing date has been set for Shelley’s request.

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