Originally created 11/22/04

Investors may see more put on trial



GREENVILLE, S.C. - After nearly two years and two trials, Attorney General Henry McMaster said the investigation is continuing into the collapse of Carolina Investors Inc.

"We are following the evidence where it leads," he said last week after former Lt. Gov. Earle Morris Jr. was found guilty of 22 counts of securities fraud.

"We have an excellent team of investigators and prosecutors who are accumulating that evidence, and we will not stop until we've reached the end of that evidence."

McMaster would not say whether more indictments are possible and if the evidence might lead to HomeGold Financial Inc., Carolina Investors' parent company.

More than 8,000 investors lost $278 million when Pickens-based Carolina Investors collapsed last year. The company's failure has wreaked havoc among Upstate families, wiped out the savings of many retirees and likely will send two men to prison.

Morris, Carolina Investors former chairman, was sentenced Friday to 44 months in prison for scheming to defraud investors and misleading them to keep money in the company as it was slid into bankruptcy.

Morris, 76, had faced a maximum of 213 years in prison and more than $1 million fines. He remains free on bond pending appeal.

McMaster said the sentence demonstrates "justice applies equally to everyone, whether you're big, little, rich, poor, powerful, connected or unknown."

McMaster has overseen the state grand jury investigation that thus far has indicted three people, including Morris, for their roles in allegedly misleading investors.

Former Carolina Investors President Larry C. Owen, 61, pleaded guilty to securities fraud in July. He awaits sentencing.

Owen's wife, Anne, 51, Carolina Investors' former senior vice president of investments, faces similar charges. Her trial date has not been set, but McMaster said he intends to prosecute her.

She has pleaded not guilty.

No HomeGold officials have admitted wrongdoing. Morris testified at his trial he was kept in the dark about HomeGold's true financial condition and that he relied on its officers, accountants and lawyers for information he relayed to investors.

Prosecutors said Morris planned to defraud investors and made untrue statements or omitted key information to them to convince them to keep their money in the failing company.

In the end, the Carolina Investors case ranks among the biggest investigative efforts in the state's criminal history, said McMaster.

"I'd say that probably the Operation Jackpot cases and the Lost Trust cases and this case are the largest in terms of the magnitude of investigative resources that have been put into it that we've had in the state," he said.

In Lost Trust, 28 lawmakers, lobbyists and public officials were indicted on corruption and drug charges in a scandal that rocked the state capital in 1990.

Operation Jackpot resulted in more than 100 convictions and saw $1 million of seized assets funneled to crime-fighting organizations in the state.

McMaster said there is a need for more probes into white-collar crime in the state.

"There's a significant need in the other things we do as well, the regular insurance fraud, Medicaid fraud all the kinds of cases we have," he said. "We need more resources to investigate and prosecute those cases thoroughly and quickly."