Three men entered guilty pleas in federal court last week for their role in a scam that reportedly cost several local banks millions of dollars.
Kevin S. Dempsey, Henry A. Dorn and C. Jody Hazel were each indicted by a federal grand jury on one count of conspiracy to defraud a financial institution in November 2015. John D. Harrison Jr. was also indicted by the grand jury last November.
Dempsey, Dorn and Hazel all filed guilty pleas in federal court last week.
According to court documents, the three men each agreed to plead guilty to “count 1” on the indictment, though the exact charge to which they pleaded guilty is unclear. The three men will each pay an as of yet undetermined amount of restitution based on the amount of money each obtained fraudulently.
Hazel’s restitution amount is based on a range of $250,000 to $550,000. Dorn and Dempsey each have a range of $550,000 to $1.5 million.
The indictments contain specific allegations that Harrison “significantly understated his debt” and “significantly overstated his income” as part of a scheme that cost local banks, including CountyBank and Palmetto Bank, nearly $7 million.
According to the indictments, Harrison enlisted the help of Dorn, Dempsey and Hazel, in their roles as his accountants, to obtain loans for real estate development from local banks and private investors. Harrison would pay all interest on the loans and then pay the other three men 3 percent of the original loan amount when the property was developed and sold.
The indictment says the scheme began in 2000, or possibly earlier, and continued until 2013 when Dorn, Dempsey and Hazel were sanctioned by Department of Labor, Licensing and Regulation’s Board of Accountancy.
The sanctions called for the permanent revocation of the licenses held by Dorn and Dempsey. Hazel was given a six-month suspension and five-year probationary period where he must work directly for a licensed CPA in good standing. All three were also fined.