Examiner: Carolina Investors kept HomeGold afloat

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After a month of studying Carolina Investors' records and interviewing its principals, examiner Bill Perkins reported that "it appears that (after 1995) CII's operations were devoted almost exclusively to the sale of debt instruments to raise funds" for its parent company and its other subsidiaries.

Earle E. Morris Jr., Carolina Investors' chairman, declined to comment on Perkins' report. Larry Owen, the company's president, could not be reached for comment.

Both Carolina Investors and HomeGold Financial filed for bankruptcy protection this spring, with HomeGold owing an estimated $282 million, according to court documents, mostly to Carolina Investors; and Carolina Investors owing an estimated $275 million to its customers.

Perkins was retained initially by the U.S. Bankruptcy Court in Columbia to examine HomeGold's finances, and was later assigned to do the same for Carolina Investors.

In his 31-page report and five-page addendum, Perkins noted that since becoming a publicly traded company in 1995, HomeGold and its several subsidiary companies had total revenues of $466.3 million, but total expenditures of $720.1 million.

According to the report, former HomeGold chairman and chief executive Ronald Sheppard received an average annual compensation of $1.9 million while the company reported losses of more than $128.7 million in 2001 and 2002.

The report also said that Sheppard had "exclusive use" of a string of motor coaches valued at more than $1 million each that were carried on corporate books.

Sheppard could not be reached for comment. Jim Griffin, his attorney, on Wednesday questioned Perkins' inclusion of the motor home information in his report, noting that it was a condition of the merger between HomeGold and Sheppard's privately owned HomeSense Financial Corp. in 2000.