COLUMBIA -- The former chief executive officer of HomeGold Financial Inc., parent company of Carolina Investors Inc., was indicted by the state grand jury on 10 criminal counts, including securities, bank and insurance fraud, Attorney General Henry McMaster said Thursday.

Ronald J. Sheppard, 48, of Lexington, also committed conspiracy, forgery, perjury, breach of trust and obtaining goods under false pretenses, according to his indictment. He faces up to 57 years in prison if convicted and could be fined $165,500 for his role in the Carolina Investors collapse, McMaster said.

Government prosecutors intend "to prove that Mr. Sheppard did knowingly and willfully participate in the large-scale securities fraud and conspiracy which led to the financial collapse of Carolina Investors," McMaster said.

His attorney, Jim Griffin of Columbia, said Sheppard will plead not guilty to all charges. A bond hearing is set for Tuesday at 12:30 p.m. at the Richland County Courthouse.

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"We will fight with all we have to be sure that Ronnie Sheppard's involvement with HomeGold and Carolina Investors is truthfully and accurately told," Griffin said in a statement.

An estimated 12,000 people, mostly from the Upstate, lost $278 million when Pickens-based Carolina Investors failed in March 2003. It subsequently joined HomeGold in filing for bankruptcy protection.

McMaster emphasized to reporters that Sheppard's indictment does not close the state grand jury's criminal investigation into HomeGold and "related entities."

"We continue to follow the evidence wherever or to whomever it is leading us," McMaster said.

Sheppard's fraudulent conduct began about the time of HomeGold's combination with HomeSense Financial Corp. in a merger of mortgage companies in 2000, according to the indictment.

The financial slide for HomeGold, once known as Emergent, began in 1998 when the market for high-risk mortgages crashed. HomeGold found itself going deeply into debt and by 2002, it owed more to Carolina Investors' depositors than the company was worth, according to prosecutors.

Sheppard led "an extravagant lifestyle" that "exhausted funds at a rate unprecedented by other corporate officers and directors at HomeGold or Carolina Investors," according to the indictment.

According to company records, Sheppard had been CEO of HomeSense, a privately owned mortgage lender. For his interest in HomeSense, Sheppard, among other things, received a $5.7 million loan in the form of $4 million in cash and HomeGold's assumption of $1.7 million in personal debt, according to the indictment.

But no payments were ever made on the loan and it was still outstanding this year, according to the indictment.

Sheppard, as CEO of HomeGold Financial "knew that the business had a strong potential to fail" but still spent large amounts of money "in a claimed attempt to expand the business," according to the indictment.

While HomeGold Financial's losses continued in 2001 and 2002, and Carolina Investors' debt grew substantially, Sheppard's compensation averaged about $1.3 million, the indictment alleges.

In addition, after Sheppard and other unidentified people learned in March of 2002 that auditors had concluded there was substantial doubt the company would survive, HomeGold paid more than $1 million for a new motor home owned by a Montana company organized by Sheppard, according to the indictment.

Without prior approval of the board of directors, Sheppard also incurred expenses of approximately $102,499 for a personal trainer between May and December of 2002, according to the indictment.

"He treated these companies as his personal bank account, without any regard for the impact these tremendous expenditures" had on the holders of Carolina Investors' subordinated notes and debentures, the indictment alleges.

Sheppard was president and chief executive officer of HomeGold from May 1, 2000, through Dec. 18, 2002, according to court records. He also was a member of the board of directors from May 1, 2000, through Nov. 19, 2002, court records show.

Sheppard also was on the Carolina Investors board.

Sheppard's indictment marked the second of a former HomeGold executive and was the fifth criminal action resulting from the state's investigation into the failures of HomeGold and Carolina Investors, a wholly owned subsidiary.

According to his indictment, Sheppard and other unidentified people, after learning that auditors of HomeGold and Carolina Investors had substantial doubts about Carolina Investors' ability to stay in business, met with officers, directors and employees of Carolina Investors and downplayed the negative information about the company. They also put a "positive spin on HomeGold's speculative efforts to return to profitability," according to the indictment.

The indictment alleges Sheppard misrepresented the value of his assets on a business credit application to a bank and submitted false information on a corporate liability insurance policy.

Further, Sheppard committed perjury by giving "false, misleading or incomplete" testimony under oath at a deposition during bankruptcy proceedings, according to the indictment.

Sheppard was among more than two dozen former HomeGold and Carolina Investors officers and directors sued by bankruptcy trustee Ralph McCullough, who alleged they allowed the companies to "fall into deepening insolvency" and bankruptcy, obscured and covered up the firms' deteriorating financial condition, and advanced their own investment and business interests, according to court records.

The former officers and directors, including Sheppard, reached a mediated civil settlement with McCullough for $41.7 million without admitting any wrongdoing.

HomeGold was a Columbia-based specialty finance company engaged in the business of originating, selling and servicing sub-prime first and second-lien residential mortgage loan products. HomeGold used Carolina Investors' high interest unsecured investments to fund its volatile sub-prime mortgage lending activities, prosecutors said.

Also indicted by the state grand jury as part of the HomeGold and Carolina Investors investigation was Karen Miller, HomeGold's former chief financial officer, who in September pleaded guilty to conspiracy in filing misleading reports with the Securities and Exchange Commission and withholding key information from Carolina Investors board members.

Circuit Judge James W. Johnson Jr. deferred sentencing for Miller, 52, of Lexington, who was released on bond. She faces up to five years in prison and a fine up to $5,000. As part of her agreement to plead guilty to one felony count of conspiracy, Miller agreed to testify before the state grand jury and cooperate "fully and completely" with prosecutors, government attorneys said.

Others indicted included former Carolina Investors president Larry Owen, 62, who pleaded guilty on July 22, 2004 to 22 counts of securities fraud. He is serving an eight-year prison sentence.

Former Lt. Gov. Earle Morris Jr., 77, was convicted on Nov. 18, 2004 on 22 counts of securities fraud. Morris, Carolina Investors' former chairman, was sentenced to 44 months in prison. He is free on bond pending an appeal.