News: CJ Exclusives

Rand Key Player in Easley Property Swap

It’s unclear how Easley paid for his house on Bald Head Island

New information developed by Carolina Journal shows that former Gov. Mike Easley’s 2005 Cannonsgate real-estate deal was not the first time Easley was involved in a deceptive land transaction.

The information shows that Easley acquired a lot and a home on exclusive Bald Head Island some years earlier with the assistance of state Sen. Tony Rand of Fayetteville.

In addition, it’s unclear from the public records how much Easley paid for the property. In 2007, CJ reported that Easley paid less for his Bald Head Island home than a nearly identical house sold for at the same time.

These revelations follow an April 2006 report by Carolina Journal showing that Easley got a favorable deal on his Cannonsgate lot, and a September 2009 report in The News & Observer of Raleigh that showed Easley received an additional 25 percent discount, $137,470, from the publicly stated purchase price of $549,880.

That discount is not mentioned in any publicly recorded documents and was disclosed only when The News & Observer acquired a copy of the closing statement.

Bald Head Island, located in Brunswick County, is considered one of North Carolina’s most exclusive resort areas. Only 2,000 of its 12,000 acres are scheduled for development. The undeveloped property will remain natural areas. There are no high-rise buildings and no billboards. With the exception of a few construction and emergency vehicles, no cars are allowed on the island. Transportation on the island is by foot, bicycle, or golf cart.

In November 1992, just after being elected to his first term as North Carolina’s attorney general, Easley transferred ownership of Lot 619 on Bald Head Island to his friend Rand, who, according to records, paid Easley $40,000 for the property. But in a recent phone interview, Rand told CJ he didn’t pay Easley anything and Easley continued to control the property.

Three years later, at Easley’s request, Rand said he transferred Lot 619 to a developer who was building a home for Easley on another parcel on the island. “He said you convey it back to them and they will give me credit for it, so that’s what I did,” Rand said Easley told him.

Public records show that Easley and his wife Mary jointly owned Lot 619 with another couple, Tom and Susan Rabon. Easley, his brother Henry, and their wives are listed as the owners of the new home, referred to in records as Unit 23, Flora’s Bluff.

Rand: No money at time of sale

Public records indicate the developer — Bald Head Island Limited — paid Rand $80,000 for Lot 619, but Rand said he received no money for the sale. He said he understood that the developer applied the value toward Easley’s purchase of the newly built home.

Rand said his original involvement with Easley revolved around discussions of jointly building a home on the coast. “Easley and I were talking about doing something. I was talking about doing something. We didn’t know what we were going to do,” Rand said. “We talked about doing a place together. We never could come to an agreement on what we were going to do.”

“I never put any money in the deal. I was going to do it and then decided not to. Nobody paid me $80,000,” he said.

Public records indicate Easley paid $250,000 for the new home when he took title in June 1996. The completed home was added to the Brunswick County tax records with an assigned value of $329,440, or $79,440 more than the amount public records indicated the Easleys paid for the home.

No proof of Easley mortgage

There is no recorded deed of trust associated with the transaction, which would be required if Easley had obtained a mortgage. It’s not clear where Easley acquired the money to pay for the Bald Head Island house and property.

Brunswick County tax records currently list the tax value of the Easley Bald Head Island home at $979,270.

In another unorthodox arrangement, after Rand transferred Lot 619 to the developer another eight months passed before the deed was recorded. Rand acknowledged the delay to CJ but didn’t explain it. How much credit Easley received for the lot is not known because representatives from Bald Head Island Limited refused to discuss the transaction with CJ.

Company employee Judy Ward, who returned calls from CJ on behalf of Bald Head Island Limited President Kent Mitchell, acknowledged reviewing the files on the Easley and Rand transactions but would not discuss the details. “The details of that transaction are between the parties of that transaction,” she said.

Asked if she could explain the transactions involving Bald Head Island Limited and the then-attorney general, she said, “I have no desire in helping you explain anything.” Asked if she was speaking for the company’s owners, she said, “I am speaking for Bald Head Island Limited.”

The Easley home at Bald Head Island comprises 1,336 square feet and has four bedrooms. It sits on a bluff and has an ocean view from the second floor. A state-owned maritime forest preserve adjoins the rear of the property. A virtual tour of the home can be seen here.

The day after the Easley deed was recorded, a deed was filed from Bald Head Island Limited to Donald C. Kolasch of Maryland for a 1,348-square-foot, four-bedroom house. The Kolasch home was also new construction, was from the same developer, and is situated on the same street as the Easley house. Based on square footage and county tax records, the Kolasch home was a comparable home. Records show, however, that Kolasch paid $327,000 — or $77,000 more than Easley.

CJ was unable to confirm Rand’s version of the transaction from any other sources. Easley did not respond to a message left with his assistant at the McGuire Woods law office in Raleigh. Calls to Thomas Hicks of Wilmington and Wade Byrd of Fayetteville, lawyers believed to be representing Easley, were not returned. A message left for Easley’s brother Henry Easley, a Chocowinity physician, also was not returned.

In addition to their half-interest in the Bald Head Island home, public records show that Mike and Mary Easley own a waterfront home in Southport located less than four miles across the Cape Fear River from Bald Head Island, a home in Raleigh, and the waterfront lot in the Cannonsgate subdivision near Emerald Isle.

The Easleys offer the home, known as the Maritime Cottage, for rent through Bald Head Island Limited. Easley did not declare any rental income from the property on his economic interest statements. In peak season, the house rents for $607 a day.

Bald Head Island

Bald Head Island is an incorporated village with its own municipal government. The village is normally accessible only by private boat or a 20-minute ride across the Cape Fear River on a private passenger ferry from Southport.

Bald Head was a separate island until 1999 when Hurricane Floyd deposited enough sand to turn it into an extension of the Fort Fisher State Recreation Area. It is now connected to the southern end of New Hanover County by a thin strip of land. Four-wheel-drive Bald Head Island Police vehicles periodically patrol the connecting strip of beach, but signs warn private vehicles to stay away.

In 1983, Bald Head Island Limited, owned by the George P. Mitchell family, took control of the island. The Mitchells bought the undeveloped land from oil mogul and philanthropist Walter Davis and his partner, James Harrington.

The company has more than 300 employees involved in real-estate development, sales, and island operations.

Public record details

In February 1986, Easley, his wife Mary, and Tom B. Rabon Jr. bought Lot 619 from a woman named Susan Harris. At the time, Mike Easley was the local district attorney and Mary was an attorney with a private practice in Southport. Rabon, a former state House member from Southport, was a lobbyist for AT&T.

The excise tax stamps indicate a purchase price of $40,000. The Easleys and Rabon signed a deed of trust for $40,000 to United Carolina Bank. Southport attorney William F. Fairly prepared the documents.

The Easleys and Tom Rabon signed a new deed in March 1992 to add Tom Rabon’s wife Susan as an owner of Lot 619. Susan Rabon, an attorney, recorded the deed. Records also show that the $40,000 loan to UCB was paid off the same month.

The Easleys and Rabons sold Lot 619 to Tony Rand on Nov. 19, 1992, just two weeks after Easley won his first election as state attorney general and Rand won election returning him to the state Senate after having been out of office for six years.

Susan Rabon recorded the deed the following day and paid an excise tax indicating that Rand had paid $40,000 for the property. Based on the public records, the Easleys and Rabons made no gain on the sale of the lot they had owned for six years.

On Nov. 1, 1995, Rand signed a deed transferring Lot 619 to the Bald Head Island Limited development company. But eight months would pass before that deed was recorded. Attorney Fairly recorded it on June 27, 1996, and then immediately recorded a separate deed from Bald Head Island to Mike Easley, Mary Easley, Easley’s brother Henry, and Henry’s wife Judy for a lot and new home known as Unit 23, Flora’s Bluff.

The excise tax stamps indicate that Bald Head Island Limited paid Rand $80,000 for Lot 619 and that the Easley group paid Bald Head Island $250,000 for Unit 23. The source of funds to pay for the new home is unclear because there is no deed of trust recorded. There are no public records to show that the Easley group paid anything for the new home.

Bald Head Island Limited sold Lot 619 to another buyer in October 1997. Tax stamps indicate a price of $131,000.

Easley’s apparent conflict

Easley’s Bald Head Island home negotiations were under way in the fall of 1995 as evidenced by the Nov. 1 date beside Rand’s signature on the deed to Lot 619.

Earlier in 1995, Attorney General Easley settled a lawsuit and granted exceptions to state beach-erosion laws for homeowners at Bald Head Island.

Walter Davis, who was seeking to stop beach erosion at his Bald Head Island home, filed the lawsuit against the state. In settling the lawsuit, the state made an exception to environmental laws by agreeing to allow permanent beach protection structures to be installed.

The properties owned by Davis, other beachfront homeowners, and Bald Head Island Limited — and their property values — were protected from potential storm damage when the attorney general’s office settled the lawsuit.

Bald Head Island’s beach erosion issues were detailed in a 1996 report by the nonprofit, nonpartisan group Democracy North Carolina, “The Pollution Lobby: Shoreline for Sale, Whatever happened to the Year of the Coast?” The report charges that the state’s settlement occurred after Davis put pressure on key state policymakers.

The report made no mention of the Easleys’ real-estate transaction. Bob Hall, executive director of Democracy North Carolina, said he did not know about the Easleys’ home purchase until a reporter from CJ told him in 2007. The 1996 report can be found on the organization’s Web site.

The Democracy North Carolina report says campaign reports show that Bald Head Island landowners donated at least $800,000 to state-level politicians from 1989 to 1995. Gov. Jim Hunt received $100,500, and Easley received $50,600. Davis gave $169,500 during that period, including $12,500 to Easley.

The southern beach of Bald Head Island was eroding rapidly because of natural forces, possibly combined with the regular dredging of Wilmington’s shipping channel. Davis and other Bald Head leaders advocated periodic sand renourishment and the construction of hard structures, or groins, to impede the erosion.

North Carolina had banned sea walls and other hard structures since 1985, and only a few exceptions had been made. Frustrated with efforts to protect the beach in front of his house, Davis sued the state in 1994. Easley’s office led the state’s defense.

The same year, Bald Head Island’s government applied for a permit to renourish the beach. The state agreed to allow renourishment, but not the construction of groins. In early 1995, Davis met with Hunt to make his case for the hard structures.

Later, Davis met privately with the lawyer from the attorney general’s office leading the state’s defense. An agreement was worked out in which Davis agreed to drop the lawsuit and the state agreed to allow the groins along the beach, as well as to lobby the U.S. Army Corps of Engineers to provide the sand.

By May 1996, the sand and 16 groins were in place. A month later, after being held in limbo for eight months, Rand’s Lot 619 deed was filed and, almost simultaneously, Easley’s deed for the new house on Bald Head Island was recorded.

Beach erosion issues continue to be a major concern for the Army Corps and the village on Bald Head Island.

Troubles mount

This discovery comes as a federal grand jury in Raleigh is investigating a series of suspicious actions by Easley, his family members, former staff, and major campaign donors.

In addition to the Cannonsgate transaction, the grand jury is believed to have heard testimony regarding appointments to state regulatory agencies that Easley provided top donors; free and unreported flights given to Easley on private aircraft; the free use of automobiles by the governor’s family; a job for Mary Easley at N.C. State University that Mike helped arrange and a subsequent 88-percent pay raise; and an elaborate campaign fundraising scheme designed to let high-dollar donors pad Easley’s campaign coffers by skirting contribution limits.

The free flights and cars and the campaign finance irregularities were the subject of a November hearing by the State Board of Elections. The board fined Easley $100,000 and made a criminal referral to the Wake County District Attorney, concluding that Easley and other most likely others broke the law.

Jay Reiff, Easley’s 2000 and 2004 campaign manager, and the presumed author of several memos outlining the Easley fundraising plan, appeared before the grand jury at the federal courthouse in November. The elections board had attempted to subpoena Reiff but did not succeed because he was working in Virginia at the time and was outside the board’s jurisdiction.

Don Carrington is executive editor of Carolina Journal.

Easley Bald Head Island Timeline

February 1986: Mike Easley buys Bald Head Island Lot 619 for indicated sales price of $40,000.

November 1992: Easley elected attorney general and Tony Rand elected to state Senate.

November 1992: Easley sells Lot 619 to Tony Rand for indicated sales price of $40,000.

March 1995: Easley settles lawsuit with Walter Davis permitting hard structures to stop erosion on Bald Head Island.

1995: Easley negotiates purchase of new home from developer BHI Limited.

November 1995: At Easley’s request, Rand transfers Lot 619 to BHI Limited. Indicated sales price was $80,000. Deed was not recorded.

June 27, 1996: Easley attorney records deed from Rand to BHI Limited for Lot 619, and then immediately records deed from BHI Limited to Easley for a new home with an indictated sales price of $250,000.

November 2009: Rand tells Carolina Journal he didn’t pay Easley for Lot 619 and didn’t receive any money when he transferred it to BHI Limited.