July 30, 2007
Customers Claim Fees Paid, But Loans Not Received
By Nydia Han - ABC Channel 6 Action News
Some clients of a locally based company said they were duped into paying thousands of dollars for loans that never materialized.
The company promises what it describes as a brand new concept in funding - commercial loans with 100-percent financing. It's already taken thousands of dollars in application fees from clients across the country. So the question is where's the money?
Diane Spencer of Durham, North Carolina had big dreams.
"So my business plan and goal was to find brand new or nearly new homes in nice neighborhoods to rent exclusively to section 8 families," she said.
She said Heritage Capital Credit Corporation promised to fund her dreams with a $47 million loan. She had to pay a $40,000 application fee and $5,000 for appraisals.
"Everything seemed legitimate," said Spencer.
Bob Wyatt, who lives in Philadelphia's West Oak Lane section, thought the same way. He paid $9,500 for his commercial loan. John Hardy of Rydal, Montgomery County, gave Heritage a check for $30,000.
"What they didn't disclose to anyone is that they didn't have the money to fund the loans," Spencer said.
Spencer, Wyatt and Hardy paid Heritage in 2004 with the understanding the loans would close that year. But three years later, Heritage clients are still waiting.
"They destroyed a lot of people," said Wyatt.
Wyatt said he had to close his business; the Spencer's lost their company and their home.
"Our financial lives are pretty much ruined for the foreseeable future. Probably forever," Spencer said.
Action News went to the company in Wilmington, Delaware. Carol Johnson is Heritage Capital's named President and CEO.
"We are running a legitimate business and we are going to do what we promised them that we would do when they bring us a valid project to the table," Johnson said.
Victims said they gave project details with their cash payments. Johnson admitted she has taken fees from 26 clients totaling $288,000, but has not funded any loans.
"We're still working on that. We're still working on that," Johnson said.
Heritage clients also told Action News that Carol Johnson's husband, Ed Johnson, really runs the corporation.
Ed Johnson is a convicted criminal. He was convicted in 1990 for misapplication of funds when he was the CEO of a bank and three years ago the Securities and Exchange Commission held him liable for financial fraud.
"I haven't done anything to violate the court order," said Ed Johnson. "That's why I don't run Heritage."
Action News consumer reporter Nydia Han asked, "But you are actively involved in this company."
Johnson replied, "No I'm not, No I'm not. I'm not actively involved in this company."
Han then asked, "Then why are you here today?"
He answered, "I work over here."
Ed Johnson said he's an investor and advisor for Heritage, but works for a separate company, First Independent Financial Group. But both companies share the same office space, phone number and President, Ed's wife Carol.
Wyatt, Spencer and Hardy said they dealt with Ed for Heritage transactions.
"I gave him the $30,000 made out to Heritage Capital Credit Corp and he led me to believe that he was in charge of this operation," said Hardy.
The FBI is investigating Heritage.
Han asked Carol Johnson, "Any comment to that? I understand these offices have been raided."
Carol replied, "I have no comment regarding that."
Carol Johnson told us Heritage will not require application fees in the future and while she said she has spent time and money trying to secure loans for her clients she will give Spencer, Hardy, and Wyatt full refunds, although, they remain doubtful.
