Morris says he was deceived

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"I'm not guilty, so that's what I have to prove," the former Carolina Investors Inc. chairman told The Greenville News.

He plans to testify as part of a vigorous defense that will show he was kept in the dark about the company's true financial condition and that of its parent, HomeGold Financial Inc.

"There's no question but that the HomeGold Financial directors wrecked the company," Morris said. "That's part of my defense. I didn't know what they were doing. They never told me, and not a single one of them has faced any kind of charge. If that's justice, that's Soviet Russia or Nazi Germany, to protect the guilty."

Morris says he's almost had a nervous breakdown "because I haven't had a day of peace since HomeGold went bankrupt. I cry every day about people who lost money, who trusted me, and they had no reason not to, but I trusted the HomeGold officers and directors, and of course, they deceived me, and, thereby, all those investors."

"We want to get it over," he said of his trial. "We have a good defense."

No HomeGold officials have been charged, and prosecutors strongly disagree with Morris' claim of innocence.

"There are witnesses, victims, that are listed in the indictment, and our intention will be to call those witnesses and let them tell their story," said Attorney General Henry McMaster.

McMaster said prosecutors believe Morris "knowingly and willfully participated in a large scale securities fraud scheme, which he facilitated by intentionally making false misrepresentations while pressuring investors not to withdraw their money or to invest more money" in Carolina Investors.

That sets the courtroom stage for Morris, whose case will be the second test of whether crimes were committed at the company. It also will bring together attorneys who were involved in the state's Lost Trust corruption scandal more than a decade ago.

Sherri Lydon, chief of the state grand jury that indicted Morris, will help argue the prosecution's case and sit in the courtroom directly across from Joel Collins, Morris' attorney. Lydon was on the team that prosecuted Lost Trust defendants, while Collins represented one of them, Luther Taylor of Richland County.

An estimated 8,000 account holders, and 12,000 people, many elderly, retired and living in the Upstate, lost about $278 million when Pickens-based Carolina Investors ran out of money and closed its doors in March 2003.

The company, and HomeGold, a Columbia-based mortgage company, subsequently filed for bankruptcy protection. Carolina Investors' former president, Larry C. Owen, 61, abruptly ended his trial in July and pleaded guilty to 22 counts of securities fraud in connection with the company's collapse. He is awaiting sentencing.

His wife, Anne, Carolina's Investors' former senior vice president for investments, is awaiting trial on securities fraud charges. She has pleaded not guilty.

Meanwhile, many investors simply shake their heads and shrug at what has happened. They are struggling with life, unable to pay their bills and buy needed medicine and are left without money they had hoped to leave for grandchildren and college funds. They stand to recoup about 18 cents for every dollar they had with Carolina Investors based on the bankruptcy trustee's anticipated liquidation of the company.

"Larry Owen was a friend of mine for a number of years, and had it not been for Larry, neither myself nor my brother probably would have had any money in Carolina Investors because I knew him, I trusted him for many years," said Ernest Bryant, 70, a Carolina Investors account holder who lives near Six Mile. "He assured me everything was fine and dandy. So I took his word for it. I shouldn't have."

His wife, Nell, lost $40,000 in Carolina Investors, Bryant said.

"That's not big-business money," he said. "That was a lot of poor people's money that went away."

The state grand jury in January indicted Morris, a former lieutenant governor, comptroller general and state legislator, on 24 counts of securities fraud. Prosecutors allege he planned to defraud investors, make untrue statements or omit key facts to investors who bought the company's floating notes or debentures. He pleaded not guilty.

McMaster says Morris, 76, faces 233 years in prison and more than $1 million in fines if he is convicted on all counts.

His fate lies with a jury to be selected Monday in Florence County and brought to Greenville for the start of his trial the next day at the Greenville County Courthouse. It will begin 19 months after Carolina Investors failed.

Morris, who earned $50,000 a year as chairman, has said he was no more than a public relations spokesman for Carolina Investors and had no input in any decision made by the company.

HomeGold was a finance company that specialized in originating, selling and servicing subprime first- and second-lien residential mortgages. Its business was funded through loans from Carolina Investors, which sold unsecured notes and debentures, according to Securities and Exchange Commission documents.

"All the information I got was from the accountants and the law firm, and they never came into an office of Carolina Investors," Morris said. "We never saw them. Everything was done by and through HomeGold Financial."

"I believed the money was safe," Morris said. "I was told it was, and we have all that in documentation."

Morris said while he talked to "very few" people, he emphatically denied he misled any investors.

Morris said he personally lost about $100,000 in combined HomeGold stock and Carolina Investors deposits when the companies closed. They simply failed when they ran out of money, he said.

Morris, a Democrat, also has said the charges against him are politically motivated by McMaster, a Republican. McMaster has denied the claim.

McMaster said his investigation into the two firms' collapses is continuing. "There's a lot of work still to be done, and the investigative and prosecutorial team is working hard to gather information from every source, to analyze it and to move forward to see that all that should be brought to justice are brought to justice," he said. "Our plan is to present our witnesses and the evidence and to make the cases (as) forcefully and properly as we can."

For his part, Morris, said, "I believed that the company was safe. I wouldn't have been there if I didn't."

He added, "I guess I'll be knocked off the front pages for a week because of the election. I guess it (the trial) comes at a good time."