A three-member state panel would have sent the wrong message to thousands of people affected by corporate fraud at Carolina Investors Inc. if it had released the former company president early from prison, a parole official and a legal expert said Monday.

"This was an enormous case of white-collar crime that impacted many, many, many, many people," said Marlene McClain, part of the three-member parole panel that denied freedom for Larry C. Owen last week.

"To parole someone with that number of lives that had been touched, with the number of victims that were impacted in this case, we felt would send the wrong message," she said.

An estimated 12,000 people lost $278 million when Pickens-based Carolina Investors, which sold subordinated debentures and floating rate notes to the public, collapsed in March 2003.

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Most of the investors were from the Upstate and they will recoup about 18 cents for each dollar invested once company assets have been sold or liquidated, bankruptcy officials have said.

If Owen, 62, had been paroled, it would have amounted to a "slap on the wrist," said John P. Freeman, a University of South Carolina law professor.

"How would you interpret that as being anything other than crime pays?" he said.

"The whole crime itself is deplorable and the good thing about the prosecution is that it happened, led to a conviction and a wrongdoer in Owen's case got punished. I feel sorry for him and his family and all, but that's the way it is."

McClain's panel unanimously denied parole for Owen, eliminating the need for his case to go to the full seven-member state parole board.

The panel also included J.P. Hodges of Bennettsville and Orton Bellamy of Conway. Hodges declined comment Monday, and Bellamy couldn't be reached.

But John McCarroll, a member of the full parole board and retired executive director of the Phyllis Wheatley Association, a Greenville nonprofit organization, said, "Crime is crime and whether it's white collar or whatever, it needs to be seriously considered and dealt with."

Owen's attorney, Jim Bannister of Greenville, had no immediate comment.

Owen is serving an eight-year prison term for pleading guilty in July 2004 to 22 counts of securities fraud for lying to investors about the safety of their money in a company that was sliding toward bankruptcy.

Owen, a former bank examiner, has served about 22 months of his sentence.

He told the parole panel last week about his work in the prison library, teaching reading and writing. He also told the group about advising fellow inmates how the stock market works and providing instruction in financial planning and investing in real estate. He then tearfully pleaded for his release.

That plea was backed by many investors and family members, but opposed by other investors who have recounted to prosecutors how they lost their life savings when the company closed.

"He had a good record in prison, and had obviously attempted to do things that would help himself while he's incarcerated," McClain said.

"But the seriousness of the offense, the enormity of the lives that were touched" meant Owen should stay in prison, she said.

"Usually, when we have victims of crime we have a victim or a few victims, but this was certainly -- since I've been on the board -- it was the largest number of people, by far, that had been impacted by one particular case," said McClain, who is from Anderson and who has been on the parole board since 1999.

Freeman, a former special counsel analyzing mutual fund issues for the Securities and Exchange Commission, said prosecutors' efforts in the Carolina Investors case amount to "the biggest white-collar crime prosecution that we've had in South Carolina."

"But it's one of the ugliest crimes, too," he said. "It's ugly because of the amount -- the huge amount of money -- that was lost. Who lost it? Innocent, trusting, God-fearing people who were induced to believe that they had a safe investment and were investing, essentially, their family nest eggs or retirement savings."

Attorney General Henry McMaster's investigation has led to the indictment of six former officers of Carolina Investors or its parent company, HomeGold Financial Inc.

Four of the former officers, including Owen and his wife, Anne, have been convicted or have pleaded guilty. Two are awaiting trial.

Anne Owen, Carolina Investors' former senior vice president of investments, is serving a 90-day jail term for pleading guilty to securities fraud.

McMaster has said she and Larry Owen have cooperated with prosecutors. A spokesman said Monday that McMaster's investigation is continuing.

One of those awaiting trial is John M. "Jack" Sterling Jr., former HomeGold chairman and chief executive officer.

He was indicted by the state grand jury in April on charges of securities fraud and conspiracy for what McMaster said was his role in the Carolina Investors collapse. Sterling has pleaded not guilty.