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Five plead not guilty in real estate conspiracy
By Rachel Pleasant
Staff Writer
Five suspects facing charges that they ran an elaborate real estate scheme and pocketed thousands of dollars were arraigned late last month. All five pleaded not guilty.
Judge Robert Carr released Tom Cannon, Ralph Miller, Samantha Watford, Anne Dodson and Jeffrey Spell on non-secured bonds, meaning no one had to front any cash.
The bonds require the suspects to appear before the court when required. They are also not allowed to change their mailing addresses without permission from the court and cannot get into any trouble; if any of the suspects violates the law, he or she will be arrested.
In addition to the basic bond restrictions, Carr also stipulated that none of the defendants are to have any contact with each other or anyone else who may be a victim or a witness in the case.
Additionally, Dodson was told to refrain from excessive use of alcohol and drugs and is not allowed to participate in any mortgage or broker-in-charge transactions.
Miller was also banned from excessive use of alcohol and drugs and was told to submit to drug testing.
In August, federal prosecutors filed an indictment against the five defendants, alleging they falsified documents and inflated the sales price of properties, while pocketing $286,674.04 for their personal gain.
According to the indictment, Cannon is a loan originator at Direct Mortgage and AAA Mortgage in Charleston; Watford is vice president of Direct Mortgage and a loan originator at both that company and AAA Mortgage; Anne Dodson is a real estate agent and owner of Associated Realtors in Summerville; Jeffrey Spell is a real estate attorney and owner of Lowcountry Title Services in North Charleston; and Ralph Miller is a businessman.
Cannon, Miller, Watford, Dodson and Spell could each receive five years in prison, fines of $250,000 and three years probation. The case has been assigned to Judge David Norton.
Spell had previously said he planned to plead guilty to the charges. His attorney, Bart Daniel, said that is still correct. Because Carr, who handled the arraignment, is a magistrate judge, he cannot take a guilty plea, Daniel said.
“It’s a formality,” he said.
In coming weeks, the defendants will have the opportunity to change their pleas or face a trial. Daniel added that his client is voluntarily not practicing law at this time.
Bill Runyon, Watford’s attorney, said this case is “not necessarily all that interesting but an examination of the industry is interesting.”
“This whole situation really occurred because of the go-go mortgage business and frankly, the pressure on lawyers to close things,” he said, adding that in the past several years, the mortgage business has become somewhat like the credit card industry, which solicits customers through the mail and advertising.
The mortgage industry, Runyon said, should have safeguards to protect against losses.
But “that doesn’t excuse anyone if they have done anything improper or illegal,” he added.
Cannon’s attorney, Paul Thurmond, said his client is distressed over the charges.
“Tom has been in this community for 40 years, and he found these charges to be shocking and serious. He looks forward to having them resolved in a quick manner,” he said.
Dodson’s attorney, Andy Savage and Miller’s attorney, Jerry Theos did not return phone messages.
The indictment, filed last month, alleges a string of misdeeds involving three Charleston properties that began in 2002 and ended in 2004.
Among the charges in the indictment is that more than $9,000 was taken from the seller of property at 35 Cypress St. for the purpose of making repairs.
To cover up the $9,000, Dodson allegedly created false repair invoices.
In the same transaction, the indictment alleges more than $44,000—the difference between the purchase price and the amount to pay off the seller’s mortgage—was divided between Miller, an unindicted co-conspirator and the son of the owner of 35 Cypress St.
Two months later, according to the indictment, 35 Cypress St. was sold again, this time for $75,000 more than it had previously, despite the fact no repairs had been made.
In a deal centered around property at 432 Sumter St., prosecutors allege Cannon inflated the income of an unindicted co-conspirator in order for him to qualify for a loan to purchase the property.
Meanwhile, Miller, Spell and the co-conspirator allegedly inflated the purchase price of the property by $35,000, in order to make repairs. Those repairs weren’t made, and the $35,000 was split between Miller and the co-conspirator.
The final piece of the conspiracy deals with property at 289 Sumter St. Prosecutors allege that Miller, Watford, Dodson, Spell and an unindicted co-conspirator increased the purchase price of the property by more than $123,000, again for the purpose of making repairs.
As previously alleged, repairs weren’t made and Miller, Dodson, Watford and a co-conspirator split much of the cash. Dodson again is alleged to have created bogus repair invoices.
Mortgages on the properties involved in these schemes were written by California-based WMC Mortgage and Maryland-based Fieldstone Mortgage and totaled $874,272.
Rachel Pleasant is a staff writer for the Business Journal. E-mail her at rpleasant@charlestonbusiness.com.
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