Broken Hearts, Wallets, In S.C.

Pickens, S.C., was hard hit by the closing of a trusted lending firm. CBS

In Pickens County, South Carolina, the mortgage lending company Carolina Investors was king.

Customers told CBS News Correspondent Mika Brzezinski that they always thought their money was safe.

"We felt our money was safe,'' said one investor.

Four branches and almost 40 years in business, Carolina Investors was a place where people here could grow their money faster than at the local bank. Carolina Investors was a cornerstone in the community, and its CEO - a home town hero.

"We knew Earle Morris personally," said one investor.

Earle Morris, Jr. was the former state comptroller, the former lt. governor, and he even had a highway named after him. He also knew how to handle money.

So when word spread that the company was in trouble, it was Earle Morris who personally assured investors that their money was safe.

"We are not going into bankruptcy," he said.

But days later, that's just what happened. On April 9, Carolina Investors closed its doors. And 8,000 investors were wiped out.

It was a devastating blow to the people of Pickens. A group of investors described their losses to Brzezinski. "We lost a little over $200,000,'' said one investor. "Over $36,000,'' said another. "A substantial amount!,'' said a third.

Larry Madden is now selling off his business to get by. When his daughter Carey was hit by a drunk driver, Madden needed to pay off a mountain of medical bills. So he put his money into Carolina Investors, where the return consistently had been 8 percent. He's now 100 percent broke.

In fact, more than one half the people of Pickens had some or all of their money in Carolina investors. Total losses: $275 million.

"Thats over a quarter billion dollars ... that's taken out of a small community," said Mayor Ted Shehan.

With abandoned mills and more businesses due to shut down, it was the last thing this little town needed.

"It's gonna be tough. There's no question about it," said Mayor Shehan.

Tough also to find out who's to blame. Every bankruptcy hearing draws a huge crowd but few answers.

"I believe there is hope to get some money back," said Geoff Levy, attorney for Carolina Investors. "How much remains to be seen."

Attorneys for Earle Morris say he didn't lose the money, and suggest investors look to the company that bought Carolina Investors, HomeGold, and to Ron Sheppard, former CEO of HomeGold, for answers.



Part 2: Where Did $380 Million Go?
  • Justine Blau

Comments

Follow Us