SC justices: Witnesses may testify against ex-HomeGold exec

The court unanimously overruled a lower court's decision preventing four former Carolina Investors officials from testifying at the trial of former HomeGold chairman Jack Sterling.

More than 8,000 investors lost about $275 million when Carolina Investors and parent company HomeGold Financial collapsed in 2003 in one of the largest bankruptcies in South Carolina history.

Sterling's attorneys had argued that his securities fraud indictment should be thrown out because Sterling had been represented by Bill Bannister, an attorney who later represented the Carolina Investors officials when they testified before a grand jury.

The Supreme Court disagreed. Chief Justice Jean Toal wrote that Sterling failed to show that Bannister operated under a conflict of interest after the criminal case had started.

In March, Sterling's current attorneys had argued that their client was deprived of his right to counsel because of a conflict of interest. Prosecutors said no conflict existed because Sterling hired a new legal team long before he was indicted and there is no proof Bannister improperly shared information from Sterling with his other clients.

Bart Daniel, an attorney representing Sterling, did not immediately return a phone message left at his office.

The executives blame Sterling for the failure of Carolina Investors and HomeGold. They are former Carolina Investors board members Don Bobo and Danny Sharpe, who were never charged in the case, and former president Larry Owen and his wife, former vice president Anne Owen. The Owens have both pleaded guilty to securities fraud.

Sterling has pleaded not guilty to three counts of securities fraud and could face up to 25 years in prison if convicted. His trial has been delayed pending the Supreme Court's ruling.

Sterling is the sixth former executive of Carolina Investors and HomeGold to come to trial on fraud charges. The five others have pleaded guilty or been convicted, including former South Carolina Lt. Gov. Earle Morris, who was sentenced to 44 months in prison after his 2004 conviction on 22 counts of securities fraud.