LEXINGTON — The former chairman of HomeGold Financial Inc. quietly and calmly told his lawyer Wednesday that he never lied, cheated or stole from investors in the South Carolina company.
But prosecutor Jennifer Evans said it's what Jack Sterling didn't tell investors that should lead to his conviction on securities fraud charges in the collapse of HomeGold and its subsidiary, Carolina Investors, nearly six years ago. Evans said Sterling attempted desperate and unsuccessful deals to try to keep the companies afloat and didn't tell investors how bad things were.
"A half truth is a whole lie," Evans said during closing arguments after more than two weeks of testimony.
Jurors deliberated for about two hours Wednesday before breaking for the night, and were to resume their discussions this morning.
About 8,000 investors lost $275 million when the two companies went bankrupt in 2003.
Defense lawyer Bart Daniel said Sterling was deceived by five other executives who have either been convicted or pleaded guilty in the collapse, leaving him "too tired, too old, too powerless" to fight back.
"Jack Sterling cared for those investors. That's why he tried every waking day to get them paid back," Daniel said.
Jurors began deliberating Wednesday evening. If convicted, Sterling faces up to 25 years in prison.
Earlier in the day, Sterling testified in his own defense.
The 70-year-old emphasized how he was becoming less involved with the businesses as they lost money, but prosecutors tried to show he still had his hands deep in the company he took over in 1991.
The moment of high drama came at the end of Daniel's questioning. The attorney asked Sterling a string of questions about whether he ever intentionally defrauded, submitted false documents or conspired in a scheme to deceive investors, which ended with his voice booming across the courtroom packed with about 100 witnesses, most of them either Sterling's family or people who lost money.
"Did you ever, Mr. Sterling, lie, cheat or steal while you were at Carolina Investors or HomeGold?" Daniel said.
"No sir, I did not," Sterling replied.
The defense has placed much of the blame for the collapse on CEO Ronald Sheppard, who took over HomeGold's day-to-day operations in 2000. Sheppard was convicted of securities fraud in 2007 and is serving 20 years in prison.
Sterling recalled a board meeting just days before the collapse where HomeGold Chief Financial Office Karen Miller said the company needed an infusion of cash or it wouldn't make it through the week.
"I really felt like I had been kicked in the stomach. I had no prior information about that," said Sterling, who gave short, calm answers to almost every question posed to him in five hours of testimony.
Sterling said he did everything he could to try to save the money put into Carolina Investors. The company started off making loans for people to buy cemetery plots in the 1960s. The firm's returns of up to 8.5 percent spread through word-of-mouth at churches and ball fields around Greenville. Children invested in the same accounts their parents opened a generation ago.
HomeGold took over the company in 1995. Three years later, the market for HomeGold's high-risk mortgages started struggling and the company started taking more of Carolina Investors' money to stay afloat. By 2002, HomeGold owed more to Carolina Investors depositors than the company was worth, and everything collapsed months later.
In the end, bankruptcy attorneys managed to get back about 18 cents for every dollar invested. "A lot of good people lost all their money," Sterling said.
Sterling is the last executive of the two companies to stand trial. The other five officials have all been convicted.
During cross-examination, Evans pored over documents from HomeGold and Carolina Investors, trying to point out Sterling knew about lies told by other executives.
But Sterling said those officials were doing things behind his back, like taking secret pay raises or lying about the shape the companies were in. "We had been losing money for some time. We had been working to fix things. It was all public information," Sterling said.