Another exec indicted in collapse case

COLUMBIA -- The former chairman and chief executive of HomeGold Inc. has been indicted by a state grand jury on three criminal counts, South Carolina Attorney General Henry McMaster said Thursday.

John "Jack" Sterling Jr. was indicted Wednesday on two counts of securities fraud and one count of conspiracy in connection with one of the largest bankruptcies in state history.

HomeGold, the parent company of Carolina Investors, filed for bankruptcy in the spring of 2003. About 8,000 people lost $275 million when Carolina Investors closed its doors about the same time.

Specific charges

Sterling, a longtime Greenville businessman, is accused of lying to investors, rewarding employees who misled investors and continuing to market Carolina Investors securities despite the company's deteriorating financial condition.

In a statement, Sterling's attorneys said he is innocent of the charges.

Sterling was a board member at both companies. He resigned from the Carolina Investors board in December 2002 and left the HomeGold position March 20, 2003, less than a week before the company abruptly closed its doors.

Sterling is the sixth top executive of Carolina Investors and HomeGold to be indicted since the state grand jury began its investigation.

If convicted, Sterling faces up to 25 years in prison and more than $105,000 in fines. He has a bond hearing Monday.

Lexington-based HomeGold specialized in selling high-risk residential mortgages. Its business was funded through loans from Carolina Investors. The indictment calls Carolina Investors the "alter-ego" of HomeGold.

"Homegold, the parent company to Carolina Investors, as we now know used Carolina Investors' unsecured investments to fund its very volatile sub-prime lending activities," McMaster said.

Each of the securities fraud counts is punishable by ten years in prison and a fine of up to $50,000. The conspiracy indictment is punishable by five years in prison and a $5,000 fine.