SFG case nearing a conclusion

ON BUSINESS

Before former Charleston Southern University economist Al Parish was busted for bilking investors out of tens of millions of dollars through his $66 million Ponzi scheme, there was Southern Financial Group Inc.

And while the high-profile case against Parish was wrapped up in relatively short order — it took slightly more than a year to seize and sell most of his ill-gotten assets — the lesser-known SFG matter has been quietly winding its way toward a legal resolution and payout for victims for more than six years.

The end appears to be near.

Columbia accountant Christian Stormer, SFG's court-appointed receiver, is seeking court approval to distribute $2 million to dozens of investors who were duped by the now-defunct company and two related entities. A hearing is set for Tuesday.

The list of investors who filed claims totaled more than 200. Funded by the sales of SFG assets, the proposed distributions range from nothing to just over $172,000 for a man who lost $1.2 million in the scam.

The payouts are equal to 14 percent of the each eligible claim, probably more than most investors thought that they'd ever recover.

Southern Financial folded in May 2002 after the Securities and Exchange Commission sued the ringleaders for selling promissory notes that touted returns of 10 percent interest a month. Working largely from a Summerville office, the firm allegedly operated a ponzi scheme by taking money from new investors to pay off funds due to earlier investors.

Most of the missing funds were tied to the IOUs sold between 1999 and 2002, mostly on behalf of a real estate venture called U.C. Properties. Its projects included a Blythewood golf and housing development that had been marketed to University of South Carolina alumni and Gamecocks fans.

While the notes had a face value of $89 million, the SEC found the actual amount SFG took in was about $25 million. The company's three top executives each settled the SEC lawsuit individually without admitting or denying the allegations against them. While Parish is spending 24 years for his misdeeds, no criminal charges were ever brought in the SFG case.