MARKET SCAMS

[thepennyking]

Rock Hill bank wins $24 million in lawsuit

The Associated Press


ROCK HILL - Two men have been ordered to pay Rock Hill Bank and Trust $24 million for duping customers in an investment scam.

U.S. District Judge Joe Anderson's ruling, issued late last month, involved a civil lawsuit brought by the bank. It alleged Donald Hughes, Douglas Smith and former bank trust officer Robert Yoffie tricked bank customers out of $9.5 million.

However, it's doubtful that the money will ever be paid. Anderson's ruling came after Hughes and Smith did not appear in court to defend themselves.

The lawsuit claims Hughes and Smith lured customers with assurances of a 150 percent profit through "risk-free" trades on the European financial markets and promises that part of the profits would aid humanitarian projects in Venezuela and other poor countries. The money ended up in accounts Hughes and Smith controlled, according to the suit.

Customers sued the bank when they couldn't recover their money. The bank settled with them in 2001 for $7.6 million and then sued Yoffie, Hughes, Smith and three companies associated with them to recoup the money.

Last month, the bank agreed to dismiss Yoffie from the civil suit in exchange for his cooperation in future legal action.

Yoffie pleaded guilty in 2002 to one count of misapplying bank funds for an unrelated incident in which he improperly released collateral securing a $200,000 loan. He served a year in prison and was released in August.

His lawyers said the charge was unrelated to those leveled in the civil suit.

"We're just glad to put it behind us," Yoffie's attorney Richard Fennell said.

Rock Hill Bank and Trust lawyer Steven McKelvey said the corporation's next step is to try to collect though he isn't sure where either defendant is living.

"We will pursue the avenues available to us," he said.

The suit says Hughes lives in Florida and Smith in the Bahamas.

Rock Hill Bank and Trust endured two major unrelated scandals before South Financial Group of Greenville bought it at a bargain price in 2002.





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