An attorney for a former executive involved in one of the biggest bankruptcies ever in South Carolina told the state Supreme Court Tuesday that prosecutors never proved their case against former HomeGold Chairman Jack Sterling and his securities fraud conviction should be overturned.
"There is no evidence to support his conviction," Greenville attorney William Wilkins said. "Jack Sterling is an innocent man."
Sterling, 73, has been free on $100,000 bail since a jury found him guilty of securities fraud in 2009. He declined comment to reporters as he left a packed courtroom.
Sterling was one of six executives who had been convicted or pleaded guilty after HomeGold's subsidiary Carolina Investors went bankrupt in 2003, leaving more than 8,000 investors with a combined loss of about $275 million.
Carolina Investors started off by making loans for people to buy cemetery plots in the 1960s. Handsome investment returns spread word-of-mouth among investors in the state before HomeGold took over the company in 1995. Three years later, the market for HomeGold's high-risk mortgages began struggling and the company started taking more of Carolina Investors' money to stay afloat. By 2002, HomeGold owed more to depositors than the firm was worth, leading to the collapse of Carolina Investors months later.
Wilkins argued that while other Carolina Investors executives may have made false statements to investors, the record in the case did not show that Sterling was aware of such statements.
Assistant Attorney General William Blitch argued that Sterling's conviction was proper, saying Sterling was a primary figure in several events leading to the collapse of the investment firm and that prosecutors had put that information before the jury. He also said Sterling had opportunities to inform investors of what was happening but didn't make use of them.
"There was a scheme to defraud. There was a scheme set up by Jack Sterling and others to keep investors in the dark," Blitch said.
Wilkins said Sterling tried to take action to save HomeGold and its subsidiary Carolina Investors and the law didn't require him to explain to investors why he took the actions he did _ even though those steps didn't succeed.
Wilkins also argued that Judge Edward Cottingham should not have allowed emotional testimony from investors who lost nearly everything, saying that testimony had no bearing on Sterling's guilt or innocence. The attorney noted one investor testified he had to go on food stamps and that he lacked the money to bury his wife, having her remains cremated instead.
Wilkins said it wasn't fair to include such testimony against Sterling because those who testified had no contact with him _ even though they may have spoken to other executives at Carolina Investors.
Blitch said the testimony was relevant to the case because the investors would never have continued to put money into Carolina Investors if Sterling and others had let them know the company's true financial picture.
Two of the other executives convicted in the case have already had their appeals rejected by the state's Supreme Court.
The justices are to rule on the case at a later date.