Two lawsuits alleging fraud in the financing of two waterfront communities in eastern North Carolina link politically connected individuals to the developments.

The projects are Rose Pointe, a proposed waterfront community in Perquimans County, and Blue Water Cove in Tyrrell County.

Charlotte-based Bank of America is suing Loren Hamlin, a former vice president based at the bank’s Kitty Hawk branch, and four other businessmen and four companies. Hamlin helped orchestrate purchases of both developments, according to documents.

In a related lawsuit, two investors — Thomas Gordon of Potomac, Md. and James Gordon of Bethesda, Md. — are suing Bank of America and others. The lawsuit claims that Hamlin was a key participant in an alleged fraudulent scheme involving an investment the Gordons made in Blue Water Cove. The Gordons’ lawsuit claims some of their money was illegally diverted to purchase the Perquimans County property.

Financial institutions are required to report potential fraud schemes to federal authorities. One of the defendants told Carolina Journal the FBI was already involved. The Outer Banks Sentinel first reported the story Nov. 3.

The Rose Pointe project

Rose Pointe is a planned 580-acre residential development situated on the Perquimans River south of Hertford. The property also has frontage on Sutton’s Creek, a deep-water tributary to the river.

Randy Allen of Charlotte is expecting to develop the property, according to Perquimans County public records. Allen and four associates were listed as the applicants at an Oct. 30 meeting in Perquimans County that involved representatives of several local and state permitting organizations.

That meeting went forward even though Bank of America, on Oct. 24, filed a lawsuit in Mecklenburg County naming several people involved in the purchase of the property.

Perquimans County land records show that Allen does not own the land. The current owner, Blue Water Land Development Company, LLC of Nags Head, purchased the property April 3 from Rose Winslow, of Perquimans County, according to records. The purchase price was $13 million, but the deed was not recorded until May 10. Public records identify Michael Lam of Nags Head and Rex Tillett of Manteo as principals of Blue Water, but there might be other owners because North Carolina laws require only officers or managers, not all investors, to be identified in filings with the N. C. Secretary of State.

Reached by phone, neither Lam nor his lawyer, Ted Oliver of Raleigh, would comment. CJ was unable to locate Hamlin.

CJ has been unable to determine how and when Allen expects to eventually own or control the property. Allen did not return phone messages left at his office in Matthews.

Allen also is the developer of the new 525-lot Cannonsgate waterfront community in Carteret County and the 1049-home Summerhouse on Everett Bay project in Onslow County. In December 2005 Allen signed a deed to Gov. Mike Easley for a choice Cannonsgate waterfront lot. News stories by CJ and the Charlotte Observer showed that Easley got the lot for a favorable price. Easley’s press office and Allen have refused to respond to questions from CJ about the transaction. Easley appointed Allen to the N.C. Wildlife Resources Commission last year.

Blue Water Cove

Blue Water Cove is a 163-acre project situated on the Little Alligator River in Tyrrell County. The site is just east of Columbia and about 25 miles west of Manteo.

The development is to contain 105 canal-front lots, a 132-slip marina, and a 19,000-square-foot recreational facility. The Development Company of Columbia completed purchasing the property on March 2, 2006. Lam controlled that company at the time of the sale, according to records obtained from the N.C. Secretary of State’s office.

The Bank of America lawsuit

Bank of America filed its lawsuit in Mecklenburg County on Oct. 24. Named in the lawsuit were Hamlin, Lam, Tillett, John W. Dixon of Dare County, and Glenn E. Futrell of Wake County. Tillett, who recently lost an election for the Dare County Commission, is also a nephew of state Sen. Marc Basnight of Dare County.

Futrell is a real estate developer who has a major project in Dare County. Dixon is a real estate developer, who frequently partners on projects with state Sen. David Hoyle of Gaston County. Hoyle told CJ on Friday that he was not involved in the Rose Pointe project but that he knew Dixon was connected in some way.

The lawsuit alleges Lam and Hamlin solicited funds from Futrell and Dixon to purchase the Perquimans County land. Lam was to pay Tillett $500,000 for introducing Dixon and Futrell to the investment opportunity and Lam was to pay Hamlin $2 million for “spearheading the fraudulent scheme within Bank of America,” according to the lawsuit.

Further, the lawsuit alleges that:

• Futrell agreed to buy a $7 million six-month certificate of deposit for the purpose of “expediting the internal approval process” for a $13 million real estate loan to buy the property. In addition to earning interest from the bank, Futrell signed an agreement with Lam to receive $2.5 million from Blue Water for the use of his money.

• Dixon agreed to deposit $3.5 million with Bank of America to buy certificates of deposit and like Futrell, in addition to interest from the bank, was to receive a $385,000 payment from Blue Water. The certificates of deposit were not purchased because Hamlin diverted Dixon’s funds to cover overdrafts of other accounts associated with the purchase of Rose Pointe.

• On April 3, Blue Water purchased the property with a Bank of America cashiers check for $13 million. On Aug. 25 Blue Water contracted to resell the property for $32 million to Four Star Investors IV, LLC.

CJ was unable to locate that company or confirm that it even exists.

Bank of America alleges that Hamlin, Lam, Tillett, and Lam’s various companies converted more than $13 million to purchase the property and then attempted to avoid any obligation to repay the funds by filing a deed of trust with no promissory note. The bank also claims that it is not obligated to repay defendants Futrell and Dixon the value of their certificates of deposit, because they both were to receive large fees from the sale of the property. “At best, Futrell and Dixon are entitled to some part of the proceeds from the sale of the property,” stated the lawsuit.

Dixon and Futrell response and counterclaim

Futrell and Dixon, through their lawyer Bradley Herring, filed a response and counterclaim in Mecklenburg County on Nov. 13. They each claimed that they did nothing wrong, and that Lam and Hamlin fraudulently used money they had deposited with the bank to purchase the Rose Pointe property. They claim that their money was supposed to be in secure certificates of deposit and that it was not collateral for the land purchase.

Futrell and Dixon admit in their response that they were to receive certain fees from Blue Water when the property was sold again for a much higher price. Futrell and Dixon also want the case transferred to Dare County.

Futrell and Dixon did not claim Basnight’s nephew Tillett had done anything wrong. Tillett is a business partner on other projects of both Futrell and Dixon.

Dixon told CJ that the FBI was involved in investigating the matter.

The Gordon lawsuit

The Gordons filed their lawsuit in Dare County on Nov. 6. Named in that complaint is Bank of America; Lam; his lawyer, Dan Merrell of Dare County; Deepwater Development; and Blue Water Development — companies controlled by Lam. The Gordons allege that in late 2005, Lam prepared and distributed a prospectus to potential investors soliciting $2.5 million to develop 163 acres situated on the Little Alligator River near Columbia. The Gordons say they agreed to participate and entered into an agreement to partner with Lam in forming the Development Company of Columbia.

In January 2006 the Gordons say they sent $1.5 million to the trust account of Merrell. The Gordons say in the lawsuit that Lam had told them that the purchase price for the land was $1.45 million, but that Lam secretly acquired the property for only $727,000 using their deposit without their consent. They claim that Lam had secretly made more than a $1 million profit on the various land transactions to assemble the site. The Gordons claim that Lam rewarded Merrell with a $20,000 Harley-Davidson motorcycle, purchased with the Gordons’ money, for his assistance with the fraudulent scheme.

The Gordons also claim that Lam used some of their money to purchase the Rose Pointe property in Perquimans County. They claim that Bank of America violated a deposit agreement and was negligent for allowing the funds to be diverted without authorization. They claim in the lawsuit that all the defendants were involved in a racketeering activity.

Documents filed on Oct. 27 with the N. C. Secretary of State indicate that the control of the Development Company of Columbia has been transferred from Lam to Thomas Gordon.

Don Carrington is executive editor of Carolina Journal.

Timeline

2005

• Dec. 29 Lam forms Deepwater Development
• Dec. 30 Lam and Tillett form Blue Water Development

2006

• Jan. 23 Lam forms Development Company of Columbia
• Mar. 2 Development Company of Columbia buys Blue Water Cove in Tyrrell County
• Apr. 3 Blue Water purchases Rose Pointe property in Perquimans County
• May 10 Blue Water records deed to Rose Pointe
• Aug. 25 Blue Water allegedly contracts to resell Rose Pointe for $32 million
• Oct. 24 Bank of America files lawsuit
• Oct. 27 Thomas Gordon takes over Development Company of Columbia
• Oct. 30 Randy Allen, claiming to be the Rose Pointe developer, attends meeting in Perquimans County
• Nov. 6 Gordons file lawsuit against Bank of America
• Nov. 13 Futrell and Dixon file response and counterclaim

Who’s who

• Loren Hamlin, former Kitty Hawk Branch Bank of America VP and lawsuits allege he is involved in fraudulent activities.
• Michael K. Lam, of Nags Head purchased both properties and lawsuits allege he is involved in fraudulent activities.
• Rex Tillett, of Manteo, is Sen. Basnight’s nephew. Lawsuits allege he was to be paid $500,000 for securing Futrell and Dixon as investors in Rose Pointe.
• Glenn Futrell, of Raleigh, was to make $2.5 million from Blue Water for buying a $7 million, 6-month certificate of deposit from the bank.
• John Dixon, of Dare County, is state Sen. David Hoyle’s business partner. He was expecting to make $385,000 from Blue Water for purchasing two 6-month certificates of deposit totaling $3.5 million from the bank.
• Dan L. Merrell, of Dare County is Lam’s attorney. A lawsuit alleges he received a new motorcycle from Lam for his role in the Tyrrell County project.
• Randy Allen, of Charlotte, expects to develop the Rose Pointe project. Allen also developed Cannonsgate in Carteret County. In Dec. 2005 he sold a choice Cannonsgate lot to Gov. Easley for a bargain price.
• Bank of America, of Charlotte, filed a lawsuit claiming Hamlin, Lam and others fraudulently used its money to buy the Rose Pointe property.
• Blue Water Land Development Company, LLC, and its known principals Lam and Tillett now own the Rose Pointe property.
• Deepwater Development Company, a Nags Head company controlled by Lam, which lawsuits allege is involved in fraudulent activities.
• Development Company of Columbia, a Nags Head company controlled by Lam, which lawsuits allege is involved in fraudulent activities.
• Michael K. Lam Realty, a Nags Head company controlled by Lam, which lawsuits allege is involved in fraudulent activities.
• Thomas and James Gordon, both of Maryland, claim Lam, his attorney Merrell, and Bank of America violated a contract and committed fraud.