Utah Real Estate Developer Pleads Guilty to Wire Fraud and Tax Fraud involving Daufuskie Island Resort
- By solomon2day
- On 02/09/2021
- In News
Charleston, South Carolina --- Acting United States Attorney Rhett DeHart announced today that James Thomas Bramlette, 42, of Salt Lake City, Utah, pled guilty to Wire Fraud and Tax Fraud in violation of 18 U.S.C. § 1343 and 26 U.S. § 7202, before United States District Judge Richard M. Gergel. Bramlette will be sentenced at a later date.
The following evidence was presented at the guilty plea: this investigation involved Melrose Resort on Daufuskie Island, S.C. Bramlette was a real estate developer in Salt Lake City, Utah. In 2011, he borrowed $17.5 million from a Dutch investor to purchase the resort out of bankruptcy. This loan was a short-term bridge loan with high-interest rates. Bramlette did not put any of his own money into the purchase. Bramlette thought he could resale the resort soon after the sale, but his attempts to refinance or sell the resort failed repeatedly throughout the case.
In addition to the Dutch loan, Bramlette and a co-defendant raised more than $10 million from individual investors by issuing promissory notes with high-interest rates. The promissory notes were not secured by the resort. Most of the investors resided in the West.
The investment in the resort was difficult from the start. Bramlette could not make the mortgage payments to the Dutch lender, which led to a $27 million foreclosure judgment in 2014. Bramlette lost further control of the resort in October 2014 when he pledged ownership of the property to secure a separate $700,000 loan, which he later defaulted on.
Bramlette and his co-defendant struggled every month to raise money from new investors to pay the Dutch lender not to foreclose, to pay previous investors, and to pay employees, utilities, and taxes at the resort. From 2013 through 2017, Bramlette repeatedly told investors that the resort was on the cusp of being refinanced by a private equity firm. While several firms considered investing in the resort, none of these deals came to fruition.
After he lost control of Melrose Resort in late 2014, Bramlette was allowed to remain as manager of the resort due to his operational knowledge of the property. Part of his duties as manager included paying the property taxes for Melrose Resort.
Concerning the wire fraud charge, in September 2016, Melrose Resort owed $502,759 in past due to property taxes to the Beaufort County Treasurer’s Office. As a result of this tax delinquency, the Beaufort County Treasurer’s Office notified Bramlette that Melrose Resort would be auctioned at a tax sale if the property taxes were not paid.
On September 20, 2016, an employee of Bramlette emailed this notice and stated that “we have a week from this Friday, September 30th, 2016 to pay these taxes, which total $502,759.40 or the properties go up for sale on Monday, October 3, 2016.”
It was part of the scheme to defraud that, in order to prevent the resort from being sold at this tax sale, Bramlette created a fake wire receipt that falsely represented that Melrose Resort had wired $502,759 to the Beaufort County Treasurer’s Office to pay the property taxes. In reality, Melrose Resort had only $121.07 in its bank account at this time, and these funds were not wired as Bramlette represented.
It was further part of the scheme that Bramlette emailed the fraudulent wire receipt to one of his employees, and he caused this employee to send the fraudulent wire receipt to the Beaufort County Treasurer’s Office, in order to have Melrose Resort removed from the tax sale. After receiving the fraudulent wire receipt, the Beaufort County Treasurer’s Office removed Melrose Resort from the tax sale.
As to the tax fraud charge, Bramlette was required to collect and pay over federal payroll taxes from the wages of all employees at Melrose Resort. Bramlette collected payroll taxes from the Melrose employees, but he failed to turn over these taxes to the IRS. In total, Bramlette collected but failed to turn over to the IRS approximately $1 million in payroll taxes.
In addition to the fraud above, Bramlette used at least $1.8 million from investors for personal use, which was not disclosed to investors. Bramlette lived a lavish lifestyle, and he spent money on himself even when he failed to pay employees, vendors, and subcontractors. The accountant at his company urged Bramlette to draw a salary and not use investor money for personal use. Bramlette ignored this advice and failed to report this income to the IRS or even file income tax returns.
This case was prosecuted by Acting United States Attorney Rhett DeHart. It was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, and the Securities and Exchange Commission in Los Angeles.
Source: FBI
Also read-Legalizing Crime and Criminality
Fraud Federal Bureau of Investigation