COLUMBIA, S.C. (AP) — The former chairman of Carolina Investors is being released from prison after serving less than a year of his sentence for securities fraud, the South Carolina Parole and Pardons Board voted Wednesday.
It could take up to a week to process Jack Sterling for release, and he’ll be on home detention for six months, agency spokesman Peter O’Boyle said.
“We have to confirm post-prison plans. We have to see where he’s going to live,” O’Boyle said. “Normally, we like to see employment, but since he’s 75 years old, that won’t be an issue here.”
Sterling was chairman of HomeGold Financial Inc., the parent company of Carolina Investors. About 12,000 people lost $275 million in the companies’ 2003 demise, one of the biggest bankruptcies in South Carolina history.
Carolina Investors initially offered investors returns of up to 8.5 percent, guaranteeing most of its loans only went to people who had enough collateral. But the company was taken over by HomeGold in 1995, and the new firm used the money from Carolina Investors to make high-risk mortgage loans nationwide.
Within four years, HomeGold owed more to Carolina Investors depositors than the company was worth. After the collapse, the investors got back just 18 cents on the dollar after authorities seized bank accounts and sold off assets.
In all, six executives were convicted after the firms went under. Ronnie Sheppard, HomeGold’s former CEO, has twice been denied early release from his own 20-year prison sentence.
Sterling was convicted of securities fraud in 2009 for his role in the collapse but remained free on bail for about three years while he appealed his conviction. He began serving a five-year sentence last April at a minimum-security prison in Spartanburg.
Sterling has said he never knew other company officials were lying to investors. He said he tried to save the companies, but his bad decisions didn’t work and the law didn’t require him to disclose why he took those actions.
Prosecutors said Sterling was the primary figure in several events that led to the companies going bankrupt. The Supreme Court agreed, saying in its denial of his appeal that investors wouldn’t have kept putting money into Carolina Investors if they knew the company’s complete financial picture.
The parole board ordered that Sterling have nothing to do with the financial industry, O’Boyle said. He also must perform 200 hours of community service.
The Corrections Department had said Sterling likely would have been released in September 2014. In a statement, Sterling’s attorney said his client was humbled.
“Jack and the Sterling family continue to be mindful of investors who were victimized by the collapse of HomeGold and Carolina Investors,” said Jon Ozmint, a former director of the state prison department. “He deeply regrets those losses.”
A spokesman for Attorney General Alan Wilson said the prosecutor disagreed with the board’s decision and Sterling should have served his full sentence.