Investors say Morris allayed concerns

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"We had worked like brothers for 40 years," said Columbia resident Donald Capps, 76, a senior member of the National Federation of the Blind's board of directors. "He was my linkage to Carolina Investors."

On the fourth day of Morris' criminal proceeding in Greenville, 10 investors testified they became concerned about their investments once they heard from friends or news reports that Carolina Investors and its Columbia-based parent company, HomeGold Financial Inc., were struggling financially. But most said they left their savings with Carolina Investors after Morris, the company's chairman, assured them their money was safe.

Defense attorneys have said Morris, 76, didn't know the depth of the Carolina Investors'troubles. They questioned investors Friday as to whether they had seen a prospectus, a formal written offer to sell securities that outlines the risks involved. Some said no, but defense attorneys showed the court they had signed receipts and registration statements indicating they had received a prospectus.

An estimated 12,000 people, many retired and mostly from the Upstate, lost about $278 million, when Pickens-based Carolina Investors ran out of money and suddenly closed its doors last year. They stand to recoup about 18 cents for every dollar invested once a bankruptcy trustee has sold its assets and liquidated the company.

Investors who testified Friday included men and women, married couples, farmers, widows and widowers, a retired auto mechanic with a sixth grade education, a hairstylist, a financial services representative and a former textile plant worker. They said they lost between $20,000 and $223,000 when Carolina Investors failed.

"Everybody knew him well," Sue Spearman, 66, of Pickens said of Morris. "I felt he would give me honest answers."

Her family bought property and groceries from Morris' father, a wholesaler, and have lived a quarter-mile from his son.

"He was someone my mother knew my whole life," Easley resident Paula Leslie, who tends a farm raising cows and goats with her husband, said of Morris. "He is someone I heard about and respected and trusted."

Capps, a retired insurance claims administrator who is blind, said he and his wife, Betty, deposited $100,000 with Carolina Investors after being encouraged by Morris, who has a long history of supporting programs for the blind in South Carolina. Morris, also a former state comptroller general and state legislator, chaired a nine-member joint legislative committee that unanimously recommended creation of an independent agency to enhance training and opportunities for the blind. That agency, the state Commission for the Blind, was formed in 1966.

An administration building at the Rocky Camp of the Blind in Pickens County is named after Morris.

But Capps, like the other investors, told prosecutors once they became nervous about their investments, Morris tried to calm them without revealing that HomeGold's operating losses were mounting and auditors had doubts about Carolina Investors' ability to survive. It was only after Carolina Investors closed and filed for bankruptcy protection that he learned the company's true financial condition, Capps said.

"I had no inkling," he said.

Carolina Investors sold notes and debentures, which weren't insured by any federal agency, to the public and used the proceeds to support HomeGold Financial and another subsidiary, HomeGold Inc., according to court records.

Morris, charged with 22 counts of securities fraud as a result of Carolina Investors collapse, listened attentively but impassively as the witnesses talked about losing most of their life savings.

Morris has said he was little more than a public relations spokesman for Carolina Investors, earning $50,000 a year, and he was kept in the dark about the company's poor condition. Morris also said he lost $100,000 in combined HomeGold stock and Carolina Investors deposits when the companies failed.

A former accountant for Carolina Investors has testified Morris attended a meeting when auditors warned about the company's weakening financial state.

Garry Rank of Elliott Davis testified Thursday that Morris and former company president Larry C. Owen attended a March 14, 2002, meeting in which auditors spelled out HomeGold's financial distress for HomeGold and Carolina Investors officials. At the end of the meeting, Morris said they had faced difficult situations in the past and "they would face these matters," according to Rank.

Owen pleaded guilty in July to 22 counts of securities fraud in the case. He is awaiting sentencing and is on the state's witness list to testify against Morris, according to court records.