Conversion Solutions Holdings (fka CSHD)

[dia duit]

Harris, of Adairsville, Ga., helped Woods form Atlewa Trust, the company that was supposed to finance Crystal Palace and Bahama Island. Harris is being sued by the Securities and Exchange Commission over an alleged pump-and-dump stock scheme he orchestrated.

Harris told The Sun News in October that the timber deal fell through and he severed his ties with Atlewa later that year.

Atlewa seemed to be the culmination of years' worth of questionable business practices for Woods and Harris, according to court documents and the SEC.

Harris told The Sun News in October that he and Woods had a falling out in the months after Atlewa was formed and that Woods left Waatle to do business on his own using the Atlewa name.

Lawyers representing Bahama Island's buyers, however, say they think Woods and Harris might still be doing business together.

http://www.myrtlebeachonline.com/news/local/story/312794.html

Posted on Sun, Jan. 13, 2008

2nd condo project languishes
Financier and investors' deposits missing

By David Wren - The Sun News

NORTH MYRTLE BEACH --
Investors' money is missing from a second failed condominium project here, and a familiar story is emerging of an elusive financier who local developers say took off with millions of dollars in condo deposits, never to be heard from again.

About $600,000 in deposits for the oceanfront Crystal Palace condo project has disappeared, according to court and S.C. Real Estate Commission documents.

Tommy Hix and Jeff Shoup, the would-be developers of Crystal Palace who live in Briarcliffe Acres, say purported financier Duwayne Woods took that money and $5.1 million in deposits from another project.

Hix and Shoup, who do business as T&J Development, say Woods promised his Atlewa Trust company could finance the condo projects.

Hix and Shoup gave the deposit money to Woods, but Woods never funded loans for the projects, Shoup said.

Hix and Shoup said they have not been able to contact Woods since early last year.

Woods did not respond to an e-mail seeking comment and he did not return a message left at his last known telephone number.

Woods' assistant, Melissa Smith, said in an e-mail Friday that Woods has been in contact with Hix and Shoup and the men "have an agreement and an understanding."

Smith said the deposit money Hix and Shoup gave to Woods was to repay loans Woods had made to the two developers.

"Mr. Woods did not steal any money from anyone," Smith said. "T&J Development made payments on several outstanding loans that were due to Mr. Woods."

Shoup said Smith's comments are not true. He said T&J did not owe money to Woods and "we have not had any conversation with him."

The Crystal Palace tale mirrors events at another failed Hix and Shoup project called Bahama Island Resort and Marina.

In that case, Hix and Shoup say Woods took $5.1 million in buyers' deposits, which were supposed to be held in an escrow account.

The missing money might represent one of the Grand Strand's largest real estate scandals, but there are indications the problem isn't limited to this area.

Investors in condominium projects in Florida, Nevada and Baja, Mexico, might have met with the same fate, according to documents obtained by The Sun News.

An investigation by The Sun News shows the local condos and those in other states are the latest venture for Woods, who is connected to a web of shell corporations with dubious finances and counts penny-stock promoter Rufus Paul Harris among his business partners.

Harris, of Adairsville, Ga., helped Woods form Atlewa Trust, the company that was supposed to finance Crystal Palace and Bahama Island. Harris is being sued by the Securities and Exchange Commission over an alleged pump-and-dump stock scheme he orchestrated.

Woods lived in Adairsville until the end of 2004, according to property records. His last known address was in San Diego.

The series of events and cast of characters that led to the condo failures might read like a fiction novel, but investors say their pain is all too real.

"I know I'm probably never going to see my money again," said Thomas Lewis, a New York resident who in January 2006 gave T&J Development a $37,495 deposit on a Crystal Palace unit.

Lewis recently spent a week in North Myrtle Beach trying to get law enforcement agencies to investigate the missing condo money.

"No one wants to help," Lewis said. "I can't understand that. If I were to go into a Wal-Mart and steal something, they'd put me in jail. But someone steals thousands of dollars in a real estate deal, and nobody cares."

The Crystal Palace deal

Crystal Palace was supposed to be a 35-unit oceanfront condo tower built on two lots in the 900 block of South Ocean Boulevard.

Hix and Shoup marketed the project through their Ocean Front Real Estate agency in North Myrtle Beach, and they touted Crystal Palace as having "super, ultra high-end" units with "views that will take your breath away."

Prices ranged from $649,900 for an interior unit to $2 million for a penthouse suite, and buyers were required to pay a 10 percent, nonrefundable deposit to reserve their spot in the building.

Those deposits were supposed to be kept in an escrow account until the project was completed, according to S.C. law.

Instead, the developers gave the money to Atlewa Trust, according to Conway lawyer Ronald Norton.

Norton is representing four Crystal Palace buyers who lost a combined $298,000 in deposits.

Shoup said Atlewa Trust was given the money because that company was supposed to be the source of funding for the condo projects.

Robert Gwin, a Myrtle Beach lawyer representing Hix and Shoup in the Crystal Palace case, did not return telephone calls to The Sun News.

Bahama Island was a more ambitious project, with a planned 320 units and a marina to be built along the western bank of the Intracoastal Waterway.

Atlewa Trust was supposed to finance that deal, too, but the only construction that took place was for a dry-dock storage building that now sits empty on the property.

National Bank of South Carolina is foreclosing on the Bahama Island land because Hix and Shoup have not made payments on a $7.7 million mortgage they received along with business partners and Grand Strand hoteliers Bhupendra Patel and Pradipkuman Patel.

Shoup has said he hopes there will be enough money left over from the sale of that property to pay off the mortgage and refund deposits to Bahama Island and Crystal Palace investors.

Lawyers in the Bahama Island case say an unknown buyer has offered $18.5 million for the property, which should be enough to pay off the debts, but it is not clear when that transaction will occur.

Woods' proposals

Shoup said he and Hix met Woods after Woods made an unsolicited offer to buy out their Crystal Palace project.

Woods never followed through on that plan but did tell Shoup and Hix his Atlewa Trust had $100 million to loan for condo projects, Shoup said.

"He asked us if we wanted Atlewa Trust to finance Bahama Island," Shoup said.

Woods also agreed to finance Crystal Palace.

Woods "seemed at the time to be a man with the wherewithal to finance the project," said Conway lawyer Tommy Brittain.

Brittain is representing Hix and Shoup in lawsuits filed against them by Bahama Island buyers.

"They needed someone who could get a lot of money to get the thing going," Brittain said.

Among the purported source of Atlewa's funds were bonds Woods said he could place with Euroclear, a securities clearinghouse based in Belgium.

Woods played the part of an international investor with deep pockets and a lot of clout, and his stories and paperwork seemed to check out, according to Brittain.

"As it turns out, it looks like none of that was a legitimate enterprise," Brittain said.

Woods helped form Atlewa Trust in July 2004 with two of his longtime business partners - Harris and Ancil Garvin, a former Myrtle Beach resident.

The three men had been involved in a series of business failures, some of which led to federal lawsuits, before they teamed up to form Atlewa.

The trio and some of the companies they have formed are named as defendants in the Bahama Island case because lawyers think some of the missing money might have found its way to them.

Woods' background

Atlewa's initial asset was supposed to be a $175 million timber deal with Aspire Holdings LLC, a Miami company that had no known assets when it was incorporated in February 2004.

Harris told The Sun News in October that the timber deal fell through and he severed his ties with Atlewa later that year.

Atlewa seemed to be the culmination of years' worth of questionable business practices for Woods and Harris, according to court documents and the SEC.

Prior to Atlewa, Harris had been an officer in Enhancement Holdings LLC, a shell corporation formed in Surfside Beach that wound up in federal court when a merger partner accused Harris of fraud, negligent misrepresentation and breach of contract.

Harris, who went by the name Paul R. Harris at the time, claimed Enhancement had $100 million worth of insurance guaranty bonds. He used those bonds as an incentive to get Broadband Wireless International Corp. to agree to a merger with his company, according to court documents.

Broadband, which was emerging from bankruptcy at the time of the merger, later claimed in court papers that the bonds were backed by insolvent companies in the Philippines and proved to be worthless.

Broadband dropped its lawsuit in January 2005 after it became clear that Harris and his Enhancement partners had no assets, court documents show.

Before that lawsuit was dropped, Harris had teamed up with Woods to form another company called Waatle Corp.

Waatle had one asset, according to the Securities and Exchange Commission - a purported $170 million bond backed by phony real estate liens.

The two men and Garvin also formed Atlewa, which is an anagram for Waatle, to carry out the purported timber deal.

Harris told The Sun News in October that he and Woods had a falling out in the months after Atlewa was formed and that Woods left Waatle to do business on his own using the Atlewa name.

Lawyers representing Bahama Island's buyers, however, say they think Woods and Harris might still be doing business together.

Harris ran into more legal trouble in 2006 related to a publicly traded company he formed called Conversion Solutions Holding Corp., which merged with Waatle and took on that company's bond backed by the phony real estate liens.

The cowboy hat-wearing Harris, whose colorful image included business meetings at Hooters restaurants, had a devout following among penny-stock pickers on Internet discussion boards.

Harris and other Conversion Solutions executives used those discussion boards and news releases to tout a wild array of assets, including nearly $8 billion in foreign bonds and the rights to harvest all of the logs at the bottom of the Amazon River and its tributaries.

Harris said his company's bonds were listed on Euroclear, the same foreign bank Woods said he could use to finance the North Myrtle Beach condos.

Conversion Solution's assets appeared too incredible to the SEC, which halted trading of the company's stock in September 2006. The agency later filed a civil lawsuit against Harris, accusing him of trying to artificially inflate his penny stock's share price.

Harris denies the allegations and the lawsuit is pending.

Deals collapse

Financing never was provided for Bahama Island, Brittain said, although documents show Woods tried to make the deal work through a proposed series of unconventional real estate transactions.

Conway lawyer Richard Lovelace outlined Woods' plan in an Oct. 17, 2006, e-mail to Smith, Woods' assistant. That e-mail was among Atlewa documents obtained this month by The Sun News.

Lovelace said in the e-mail that Woods wanted to hold real estate closings on each of the Bahama Island units, even though none of the units had been built, there was no legal deed for the property and none of the buyers had agreed to sign mortgages for nonexistent condos.

Lovelace told Smith the plan was illegal and that he would not help Woods with the false real estate closings.

Lovelace would not comment on the e-mail or why Woods wanted to obtain closing documents for unbuilt condos.

Harris, however, told The Sun News in October that Woods was trying to find investors for bonds supposedly backed by mortgages on real estate developments in South Carolina and other states.

"He said he had $750 million in bonds loaded on Euroclear and he wanted me to help him find investors," Harris said.

The bonds would have been difficult to sell without closing documents indicating the projects were already built.

Lovelace, who specializes in real estate law, said he doubts Woods' plan would have worked anyway because bond investors would have required title insurance and appraisals on each unit, something Woods could not obtain.

Without title insurance and appraisals, Lovelace said, investors would run the other way.

Lovelace spent four months trying to find a legal way to make the Bahama Island deal work, according to the Atlewa documents.

Finally, in late October 2006, Lovelace told Woods in a face-to-face meeting in Conway that he would not help him with the proposed real estate closings.

"I told him we have nothing further to discuss," Lovelace said.

Lovelace said that was the last he heard from Woods.

The project languished without financing for a couple more months before buyers started asking for refunds of their deposits.

By last February, the Bahama Island and Crystal Palace deals had collapsed and Woods had disappeared, Shoup said.

A series of lawsuits have been filed in both cases and state regulators permanently revoked the sales license for Ocean Front Real Estate's broker, but law enforcement has declined to investigate any possible criminal activity that might have taken place.

Contact DAVID WREN at 626-0281 or [e-mail].