Ex-Emergent CFO Testifies In HomeGold Fraud, Conspiracy Case

The financial workings of Carolina Investors and its parent company HomeGold were under scrutiny today in court.

During the second day of the Jack Sterling trial in Lexington the former Chief Financial Officer for the company testified for seven hours.

Kevin Mast told the jury he was concerned with the merger with HomeSense because he found problems in that company's books.

Mast said CEO Jack Sterling still pushed the merger through, creating HomeGold, and when he continued to detect problems he wanted to get out.

"As I continued to see things and find things and struggle against what Ronnie wanted,” Mast said, “Ronnie decided he did not want me there any longer and I think he approached Jack and Bill long and asked them to meet with me and we mutually agreed to my leaving."

Mast says he believes HomeGold may have begun "doctoring its books" as early as the second half of 2000.

The state says although Sterling was chairman of the board and no longer directly running HomeGold he was still telling CEO Ronnie Sheppard what to do.

After 7 hours of testimony, Mast finally stepped down.

Keith Giddens, a former Carolina Investors CPA and later Pres. of Emergent Group from 1991 to 2000, took the stand after him for the state.

Giddens says company's books were in worse shape than what he was told before taking the job.

Giddens told the court the average person who invested at CI was person near retirement, in their 60's.

He says underwriting standards were not uniform and some of the loans were not performing. Also, some loans were made on houses and the houses did not exist when they went to look at them. Giddens says there was a "lack of control" at Carolina Investors.

As a results, Giddens says they created a committee to closely oversee what was loaned and how.

He says then CI became more profitable in the years following 1991, and says Jack Sterling then became more involved in the company. Giddens says he found it "odd" Sterling apologized for "being so absent in the past."

The State says Sterling only became interested because Carolina Investors started to make money.

Sheppard was already convicted for his role in the conspiracy.

Click here to read the complete indictment against Sterling.

There have been five convictions including former HomeGold Chief Executive Officer Ronald Sheppard. He's serving a 20 year prison sentence.

Former Carolina Investors Chairman Earle Morris, once South Carolina's Lieutenant Governor is serving more than three years at Perry Correctional Institution.

Larry Owen former president of Carolina Investors, served about half of his eight year sentence on 22 counts of securities fraud. Owen was released from prison in August, 2008.

Anne Owen, former Carolina Investors Vice-President pleaded guilty in 2005 to eight counts of securities fraud. She was sentenced to 10 years suspended to 90 days in jail time. Owen was also sentenced to 5 years probation.

Karen Miller, former Chief Financial Officer of HomeGold Inc. pleaded guilty in 2005 to one count of conspiracy.