COLUMBIA--S.C. Attorney General Henry McMaster said Friday he is launching an investigation of Carolina Investors Inc., which closed its doors earlier this week.

"There are just too many unanswered questions surrounding recent events with Carolina Investors and HomeGold," he said. "As a result, I have determined that a thorough investigation is now warranted."

McMaster wants investors to file complaints and tell his office of their dealings with the Pickens-based company.

Since 1995, money put into Carolina Investors was used to support lending operations at its parent company, HomeGold Financial, said Larry Owen, the company's chief executive officer.

HomeGold offered mortgages, including higher-risk refinancing.

Part of the earnings from HomeGold's mortgages were returned to Carolina Investors.

That stopped with a phone call March 21, Owen said.

HomeGold's representatives basically said they "were out of money" and that Carolina Investors "needed to seek protection" through receivership or bankruptcy courts, he said.

The 39-year-old company is working with its lawyers to develop a plan to return money to investors, Owen said.

All options, including bankruptcy court protection, are being considered, he said.

War fears were one reason for the company's problems, according to Carolina Investors Chairman Earle E. Morris Jr.

The former lieutenant governor and state comptroller general said earlier this week that the company paid out as much as $50 million in the past three weeks to investors scared by shaky markets and war with Iraq.

McMaster said he hopes investors will recover their money. But, he said, "we must move quickly to establish whether anything improper, unethical or illegal was or was not done."

Owen said he wasn't familiar with the nature of the attorney general's investigation.

"It wouldn't be unusual for the attorney general's office to do some investigating" if investors lost money and filed complaints, he said.

"It's been a rude awakening," Owen said. Investors "know it wasn't our fault."