NORTH MYRTLE BEACH -- One of the men accused of bilking investors out of $5.4 million in the failed Bahama Island condominium resort here allegedly sold at least one deposit this year for another project he purportedly plans to build in the Cayman Islands, according to a court document filed Friday in Conway.
Jeff Shoup - one of the partners in T&J Development of North Myrtle Beach - is accused of taking $100,000 from a woman who lives in the Prestwick subdivision in Surfside Beach for a unit at a condo project he allegedly claimed will be built across from the Hilton hotel on Grand Cayman Island, according to an affidavit filed by the Mullins Law Firm, which is representing the Bahama Island investors. The transaction occurred in August, the affidavit says.
There is no Hilton hotel on Grand Cayman Island, according to that hotel chain's Web site.
Shoup told The Sun News on Friday that the allegations are not true.
"It's completely false," he said. "I've been to the Cayman Islands twice, but I've never bought or sold anything there."
The affidavit comes nearly six months after a spokesman for the U.S. attorney's office in Columbia said criminal charges could be weeks away for Shoup and Tommy Hix, the other partner in T&J Development.
Kevin McDonald, an assistant U.S. attorney, said in May that the FBI has given his office some of the results of an ongoing criminal probe into Shoup and Hix. McDonald said the U.S. attorney's office is "very active in the investigation, and all I can say is that indictments are possible."
McDonald could not be reached for comment last week.
Randy Mullins and Jarrod Ownbey, lawyers with the Mullins Law Firm, said they are worried that investigators are dragging their feet in the case.
"I don't know what the big holdup is," Ownbey said. "We have information that Shoup is doing the same thing now that he was doing with Bahama Island, but nobody has done a thing to stop him. Somebody needs to step up to the plate or this kind of thing is going to keep happening."
Gary Roberts, broker-in-charge at Coldwell Banker Chicora Real Estate and owner of the Ragtops and Roadsters restaurant in Murrells Inlet, said in the affidavit that he received a telephone call in late August from Shoup.
"Shoup expressed that he was in the company of a woman who visits my establishment by the name of Beverly Davidson," Roberts said in the affidavit. "During the conversation, Mr. Shoup told me that he had just sold Mrs. Davidson a condominium unit in a project to be built across from the Hilton Hotel in Grand Cayman" for a $100,000 deposit.
Roberts said in the affidavit that Shoup and another man visited Ragtops and Roadsters later that evening.
"While Mr. Shoup was at my establishment, he again confirmed selling the unit in the Cayman Island project to Mrs. Davidson, and described the project as including a marina, boat slips and condominium units," Roberts said in the affidavit. "I asked Mr. Shoup how much of a return she could get on the investment to which he replied that she could expect $4 million profit on the investment.
Davidson could not be reached for comment and Roberts did not return telephone messages left at his restaurant and real estate office.
Shoup said he does not know why Roberts would make the statements.
"I have no idea except that maybe he is confused," Shoup said. "There is no truth to any of it."
Ownbey said he forwarded a copy of Roberts' affidavit to the FBI for their investigation.
The plot thickens
Meanwhile, conversations between Ownbey and a San Diego man and in a series of e-mails that were sent to The Sun News in early 2008 appear to link a Georgia man accused of criminal conspiracy and securities fraud to the Bahama Island case.
Rufus Harris of Adairsville, Ga., was indicted this month on federal conspiracy and fraud charges related to a company he founded called Conversion Solutions Holding Corp. The indictment accuses Harris and two business partners of making false claims about the publicly traded company - such as its purported ownership of billions of dollars in Venezuelan bonds - to inflate its stock price in late 2006.
Conversion Solutions stock, which had been trading for less than $1 per share, appreciated to more than $3 per share in the weeks after those claims were made. Federal officials say Harris and his partners then sold millions of shares they owned in the company before the claims were proved false and the stock became worthless.
The criminal charges follow a 2006 civil judgment against Harris in a case filed by the U.S. Securities and Exchange Commission. Harris was ordered to pay $1.1 million in fines but has not yet paid the money.
As part of his defense in the SEC case, Harris claimed in a November 2007 court filing that he did not have access to company records because his e-mail account had been "illegally seized by James Gee," a San Diego man who was the former chairman of Conversion Solution's shareholders.
Two months after Harris' claim that his e-mail account had been stolen, The Sun News began receiving dozens of e-mails about Bahama Island and other condo projects - including those in Mexico, Florida and Las Vegas - from an unidentified person who claimed to be from San Diego. "Harris is knee deep in this just like everyone else," the writer said in one of the e-mails.
Those e-mails included bank records, the loan applications for Bahama Island buyers and other financial information that only the developers or financiers would have.
At about that same time, a man calling himself "James" sent some of the same information to the Mullins Law Firm, according to Ownbey. That man, who also claimed to be from San Diego, told Ownbey that he had hacked into an e-mail account belonging to Harris, Ownbey said.
"When he asked for money in exchange for information, I told him no," Ownbey said. "He stopped calling after that. My question is this: Why would Rufus Harris have information about Bahama Island if he wasn't involved?"
Harris and Gee did not return telephone calls seeking comment.
Harris told The Sun News in October 2007 that a former business partner named Duwayne Woods had approached him about finding investors for bonds backed by real estate projects in South Carolina, Florida and other places. Harris said he declined to help Woods.
Shoup has said Woods promised to finance the Bahama Island project through a company called Atlewa Trust, which was formed in 2004 by Woods, Harris and former Myrtle Beach resident Ancil Garvin. Atlewa Trust was supposed to get money for the project from another Woods-affiliated company called Sequoia Asset Management
Woods and Garvin could not be reached for comment.
Alana Black, an SEC lawyer in Atlanta who prosecuted Harris in the civil case, said she was "tangentially aware" of the Bahama Island project but she did not pursue it because the agency's jurisdiction was limited to securities violations.
"We heard some things about a condo deal, but it was outside the scope of what we were looking at," she said.
The SEC deposed Gee as part of its case against Harris, but Black said "we did not talk about Bahama Island."
Busted investors
Shoup and Hix, who sold Bahama Island condos through their Oceanfront Real Estate company in North Myrtle Beach, were supposed to keep the $5.4 million in buyers' deposits in an escrow account until their units were built. Instead, Shoup and Hix are accused of taking depositors' money and spending it on personal bills, salaries and other expenses not related to the project.
All of that money is gone, along with about $2 million from escrow accounts for other projects, and Bahama Island buyers are left without their deposits or condo units. Civil lawsuits filed by the Mullins Law Firm have stalled while the criminal investigation of Shoup and Hix drags on, Ownbey said.
Among the expenses paid by depositors' money, according to bank records obtained by The Sun News, was Shoup's personal tax lien totaling $266,300.
Woods, the purported financier for Bahama Island, received $2 million from the escrow account, bank records show. Shoup has told The Sun News that he and Hix thought they were sending the depositors' money to Woods as part of a construction loan that never was funded. Woods' assistant has told The Sun News that the $2 million was repayment for loans Shoup and Hix had received from Woods.
Bahama Island was supposed to have 320 condo units and a marina along the western edge of the Intracoastal Waterway near Old Crane Road in North Myrtle Beach. It was one of several condo projects Shoup and Hix said they were building along the Grand Strand. National Bank of South Carolina, which had loaned money for the marina construction, foreclosed on the 22.2-acre Bahama Island property last year when the developers failed to repay loans totaling $9 million.
Earlier this year, Mullins obtained a court-ordered attachment against some of Shoup's property, including a 2004 Hummer, two BMW automobiles, two motorcycles, two Rolex watches, a 28-foot boat, a coin collection, a watch collection and three guns. Mullins has said those items might be sold to help raise money for investors who lost deposits in the Bahama Island case.
Friday, Mullins filed an additional motion asking a state judge for an attachment of all property, real and personal, owned by Shoup, Hix and any of their business entities. No court date has been scheduled for that motion.
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