Feds hunting Myrtle Beach con man in real estate fraud cases - Local - TheSunNews.com

Feds hunting Myrtle Beach con man in real estate fraud cases - Local - TheSunNews.com
Sunday, May. 29, 2011

Feds hunting Myrtle Beach con man in real estate fraud cases
Others charged say Woods was mastermind

By David Wren - dwren@thesunnews.com
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Federal officials are close to charging more Myrtle Beach area residents with real estate-related fraud and are closing in on Duwayne Woods, who is labeled an elusive con man and the mastermind behind the Bahama Island and Crystal Palace condominium scams in court documents.
"We anticipate further action against Duwayne Woods in the near future," Bill Day, an assistant U.S. attorney, said last week during court hearings for five area residents who pleaded guilty to bank fraud and conspiracy charges.
Woods is the man who told North Myrtle Beach developers Jeff Shoup and Tommy Hix - partners in T&J Development of North Myrtle Beach - that he could finance their condominium projects if they would send him the $6.4 million in deposits that unit purchasers thought were being held in an escrow account.
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Woods sent some of the money back to the developers, but kept $2.2 million for himself before disappearing sometime in 2007. Woods never funded the loans that were supposed to be used to build the condos and the depositors - who put down as much as $75,000 per unit - lost all of their money.
In addition to Woods, Day said he expects Jeremy Eason - a former mortgage broker at Dunes Mortgage - to pleadguilty to fraud charges. Gary Hager, a former loan officer at JP Morgan Chase, said in a court hearing last week that he received kickbacks from Eason in exchange for approving mortgage applications that he knew contained false information.
"We anticipate getting a conviction on Jeremy Eason based on his [Hager's] cooperation," Day said, calling Eason a "major player" in the government's mortgage fraud investigation.
Eason could not be reached for comment.
Billy Monckton - a lawyer representing Darin Epps, another broker at Dunes Mortgage - said his client also is providing information to investigators about others who participated in mortgage fraud.
"There are some things going on that are just not ripe enough yet," Monckton said during a court hearing last week.
Day said the indictment - and subsequent guilty plea - of Epps can snowball into indictments against others, because Epps was at the center of a wide-ranging conspiracy and knows all of the players.
"He has cooperated regarding numerous individuals involved in mortgage fraud," Day said.
Slim restitution hopes
The FBI declined to talk about its efforts to find Woods, who was rumored to have fled to Europe following a series of alleged similar scams nationwide.
However, Day offered a preview of the pending charges during court hearings when he told Judge Terry Wooten that Woods "was involved in an advance-fee scheme."
In an advance-fee scheme, a victim is persuaded to advance money to someone in the hopes of realizing a significantly larger gain. It is similar to the Nigerian email scam or promised lottery winnings that require an upfront "tax payment."
When the money is wired from one bank to another - as was the case in the Bahama Island and Crystal Palace projects - the perpetrator can be charged with wire fraud, which carries a prison term of up to 30 years.
The pursuit of Woods is good news for condo investors who lost their money, according to Jarrod Ownbey, a lawyer who represents 53 victims.
"He is the key to this whole thing," Ownbey said. "You find Duwayne and you find some money."
So far, there has been no financial recovery for those who put deposits on Bahama Island and Crystal Palace units that were never built.
Although Hix and Shoup were ordered to pay restitution last week, Wooten admitted in court that the prospects for any meaningful recovery are slim because the losses are so large.
Ownbey said he has been able to track Woods through several European bank accounts in countries such as Liechtenstein, Switzerland and Germany. Ownbey is skeptical, however, about the prospects of bringing Woods to trial.
"This case has been surrounded by rumor and conjecture," he said. "It's hard to separate what's real from what's not."
Hix and Shoup were sentenced to prison terms of 40 months and 88 months, respectively, for conspiracy to commit mail and wire fraud related to the Bahama Island and Crystal Palace scams. Both men will be on three years of probation after they are released from prison.
While there is no parole in the federal prison system, Hix and Shoup could shave more than a year off their sentences by participating in substance abuse programs ordered by Wooten.
'The real culprit'
Court documents filed by Hix paint Woods as the true villain in the Bahama Island and Crystal Palace fiascos.
Kirk Truslow, a lawyer representing Hix, said his client was duped by Woods and didn't realize "until the very end of this saga ... that Woods and his company Atlewa Trust was a scam."
According to the court documents, Hix and Shoup thought NBSC was going to finance construction of the Bahama Island project, but the bank pulled out in early 2006 as the real estate collapse hit.
Bank of America considered financing the project and the would-be developers reworked contracts and appraisals in an attempt to satisfy the bank's underwriters. In the end, however, Bank of America refused to fund the project but kept the $75,000 loan origination fee Hix and Shoup had provided.
"Hix was desperately seeking financing to complete the promised projects, and that is when he was introduced to Atlewa Trust and Duwayne Woods," Truslow said in a court filing this month.
Woods claimed to be able to fund construction through a bond his 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 promised to provide the construction money on several occasions, but the funding never arrived. In the meantime, Woods sent some of the deposit money back to Hix and Shoup as purported advances on the construction loan. Shoup and Hix used that money for personal expenses and unrelated debts.
Woods stopped communicating with Shoup and Hix in early 2007, and Hix hired Donald Myers - a private detective and former FBI agent - in an effort to track him down.
"This was a very complex matter and [I] suspected from the beginning it was a scam and that Hix and Shoup were duped by Woods and others," Myers wrote in a Feb. 15 letter that was included in court documents.
Myers wrote that he "still asserts the real culprit in this whole matter started with Duwayne Woods, yet unindicted and apparently out of the country as of this writing."
Truslow, during a court hearing last week, said he is happy to see an increased effort to find and charge Woods.
"We had lost hope in tracking that individual down," Truslow said. "Now, it looks like there is renewed energy in tracking him down."
Contact DAVID WREN at 626-0281.