2 Real Estate Developers Plead Guilty

Allison Tussey —  November 9, 2010 — Leave a comment

Jeffrey Todd Shoup, 45, and David Thomas Hix, Jr., 49, of both of Myrtle Beach, South Carolina, pled guilty in federal court to conspiracy to commit mail, wire, and bank fraud, a violation of Title 18, United States Code, Section 1349. United States District Judge Terry L. Wooten accepted the pleas and will impose sentence after he has reviewed presentence reports prepared by the U.S. Probation Office.

Evidence presented at the change of plea hearing established that in 2006, Jeffrey Todd Shoup and David Thomas Hix were involved in real estate development businesses in the Myrtle Beach area including but not limited to T&J Development Company, T&J Development Company, LLC, and Ocean Companies, Incorporated, dba Ocean Front Real Estate Company. Shoup and Hix were involved in the development, marketing, and sale of condominiums called Bahama Island and Crystal Palace and the sale of boat slips for Ship-A-Hoy Marina. They solicited pre-construction sales from numerous investors for condominium units at Bahama Island and Crystal Palace and boat slips at Ship-A-Hoy Marina. Shoup and Hix required that the investors put down deposits, falsely promising investors that these funds would be held in escrow. When construction funding could not be obtained for these projects, instead of refunding investor deposits, Shoup and Hix caused these funds to be wire transferred in October 2006 out of a NBSC Bahama Island account in the amount of $5,886,000 and out of a Bank of America Crystal Palace account in the amount of $988,279.60, for a total of $6,874,279.60 to purported financier DuWayne WoodsWells Fargo account in San Diego, California. From October to December of 2006, Woods returned via wire transfer $1,877,500 to the T&J Development Beach First account. Hix and Shoup ultimately used these funds via wire and check transfers for working capital, personal expenses, and operating expenses.

Additionally, Shoup, in an effort to obtain a $750,000 loan from the Glenn Michaels’ Group of Arizona, submitted a 2005 financial statement purportedly prepared by Larry Phillips, CPA. Shoup also submitted a 2006 financial statement purportedly prepared by Larry Phillips, CPA, to the Glen Michaels’ Group when obtaining a $1,200,000 loan to be used for developing Lambert Beach, Tortolla, British Virgin Islands. Larry Phillips, CPA, was interviewed and confirmed that he did not prepare the 2005 or 2006 financial statements.

United States Attorney Bill Nettles announced the guilty pleas.

“Shoup and Hix knew where the proverbial soft spots were and purposefully took advantage of the vulnerabilities in the system. Over 50 investors lost about $7 million dollars and three banks lost $ 2.2 million. That’s wrong, and prosecuting this sort of fraud will continue to be a priority for the U.S. Attorney’s Office,” said U.S. Attorney Bill Nettles. Mr. Nettles stated the maximum penalty Shoup and Hix can receive are fines of $250,000.00 and/or imprisonment for 20 years, plus a special assessment of $100.00.

The case was investigated by agents of the Federal Bureau of Investigation. Assistant United States Attorney William E. Day, II of the Florence office handled the case.

 

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Allison Tussey

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