A former Hilton Head Island property manager pleaded guilty Tuesday to one count of federal wire fraud and is now facing the possibility of prison time and paying restitution, which could total millions of dollars.
Don Christy, who owned Property Administrators Inc., pleaded guilty to the felony charge — Count No. 5 — in U.S. District Courthouse Tuesday in Charleston. The charge stemmed from a Jan. 28, 2013 transaction during which Christy wired $5,000 — money the federal government alleged he stole from his clients — to a New Jersey bank.
The plea agreement, summarized by Assistant U.S. Attorney Rhett DeHart and agreed to by Christy on Tuesday, dismissed four other counts of wire fraud Christy faced.
“Count No. 5 summarizes the extent of the activity,” Mike Macloskie, Christy’s attorney, said Tuesday morning, after the plea hearing. “And he was allowed to do that, quite frankly, by the United States government ... because he’s cooperated in some sense. ... However, (during) sentencing, he’s going to be responsible for the entire amount of the loss.”
That loss totals $3.5 million, according to the government. Most of the money the government alleges Christy stole was used to cover PAI’s payroll after the company began to experience financial hardship in 2007, DeHart told District Judge David C. Norton, who presided over the hearing.
Christy used about $400,000 of the stolen money for “personal use,” specifically to pay his mortgage, according to DeHart.
DeHart also described a years-long scheme during which Christy and his accountant, Lisa Arnold, made unauthorized transfers from clients’ accounts, overcharged them with bogus “advance management fees,” and prepared false financial statements in an attempt to cover up the embezzlement.
Arnold, faces the same federal charges, as well as one count of misprision with a felony for allegedly covering up fraud, the U.S. Attorney’s Office said in November.
Ray Pfeiffer, president of the Inverness Homeowners Associations – a condo community in Palmetto Dunes that’s missing money – said his regime received regular monthly statements showing its finances were in good shape and being managed appropriately by PAI.
"They were our property managers for 20-plus years,” Pfeiffer said. “You gain a certain level of trust. Then all of a sudden you find out it's all phony."
"When someone betrays a trust ... I don't look too kindly on that," he added. "But you have to let the legal system work."
Christy’s business closed its doors in February 2015 without notice, locking 21 property owners’ associations and regimes on Hilton Head out of their financial records. Federal investigators quickly determined that money was missing from some of the bank accounts the company managed.
The closure was especially jarring to regimes that had been under Christy’s management since the early 1970s, the height of the mid-island development boom. He also served as chairman of the Hilton Head Island-Bluffton Chamber of Commerce board in 1974 and grew his business well beyond the south end of the island, into Bluffton and Georgia, before shuttering his business.
In addition to restitution, the maximum sentence Christy could receive includes 20 years in prison and a $250,000 fine, according to DeHart.
DeHart declined to comment on the nature of Christy’s cooperation with the investigation, but said he would be able to say more during the sentencing phase.
A date for sentencing has not yet been set. Macloskie said it “normally takes two to three months” but said he was “told by the probation officer that this is going to take a while.”
Christy was released Tuesday under a $100,000 personal recognizance bond.
Macloskie declined to comment on how much prison time Christy might serve, and how much restitution he might have to pay.
He stressed that the $3.5 million figure referenced in Tuesday’s plea agreement was just an “allegation” at this point.
“That amount may very well change.”