transcript: sc real estate commission's jan. 23, 2013, administrative hearing re coral resorts

BEFORE THE SOUTH CAROLINA REAL ESTATE COMMISSION REC FILE NOS. TSP.893 & TSP.55 & TSP.57 & TSP.521 &

T.SP.791

In the Matter of: ) )

CORAL RESORTS, LLC, ) AND SUNRISE VACATION ) PROPERTIES, LTD. 1 ) D/B/A ISLAND LINKS HORIZONTAL ) PROPERTY REGIME ) REBASHARES, ) HILTON HEAD ISLAND ) DEVELOPMENT COMPANY, LLC. ) AND SUNRISE VACATION ) PROPERTIES, LTD., ) D/B/A PORT O'CALL HORIZONTAL ) PROPERTY REGIME ) CORAL HOLDINGS, LLC, ) HILTON HEAD ISLAND ) DEVELOPMENT COMPANY, LLC. ) AND SUNRISE VACATION ) PROPERTIES I LTD. I ) D/B/A CORAL REEF HORIZOKrAL ) PROPERTY REGIME ) CORAL HOLDINGS, LLC, ) HILTON HEAD ISLAND ) DEVELOPMENT COMPANY, LLC, ) AND SUNRISE VACATION ) PROPERTIES, LTD., ) D/B/A CORAL SANDS HORIZONTAL ) PROPERTY REGIME, )

) -----------------------------

ADMINISTRATIVE HEARING Wednesday, January 23, 2013

2:12 p.m. - 4:59p.m .

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CREEL COURT REPORTING, INC. 1230 Richland Street I Columbia, SC 29201

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Th e Adm i n i s tra t i v e H ea ri n g b ef o re t h e S ou t h

Ca ro lina R ea l E s t a t e C omm i s s i on was t ak en a t t h e

Syn ergy O f f i c e P a rk , K i ng s t ree B u i l d i n g , Ro om 1 05,

1 1 0 C en t erv i ew D ri v e, Co lumbi a , S ou t h C a ro li n a , on

th e 2 3 rd day o f Janua ry , 2 0 1 3 b ef o re S a r a

Quat t lebaum , Cou rt R ep o rt er and N o t a ry P ub l i c i n a n d

f o r t h e S t at e o f S ou t h Ca ro l ina .

CREEL COURT REPORTING, INC. 1230 R ichland Street I Columbia, SC 29201

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A P P EARANC E S :

BOARD MEMBERS:

Tony C o x , C h ai rm an Dav i d C ri g l er John ath an S t ac khous e H am l i n O ' K el l ey S arah T ak ac s W ayn e P op l i n Bucc i e H arl ey C arl Ed wards M anning B i gg ers

Nekki Shut t , E squire Ka

.thleen M . McDaniel , E squire

C al l i s on T i gh e 1 8 1 2 L i n c o l n S t reet C o l umb i a, S o u t h C aro l i n a 2 9 2 0 1 A t to rn ey f o r t h e P l ai n t i f f s

Sharon Dantzl e r , Esqu i re 4 0 0 8 V ern er S t reet C o l umbi a, S o u t h C aro l i n a 2 9 2 0 4 A t t o rn ey f o r t h e P l ai n t i f f s

Jam e s E. Sm i t h , Jr . , E squire J am es E . Smi t h J r. , P . A . 1 4 22 L au rel S t reet C o l umb i a, S o u t h C aro l i n a 2 9 2 0 1 A t t o rn ey s f o r t h e P l ai n t i f f s

ADVISING THE COMMISSION : G ig i L ewi s , E s qu i re

3

S ou t h C aro l i n a D ep artm en t o f L ab o r, L i c ens ing and R egul at i on 1 1 0 C en t erv i ew Dri v e C o l umb ia, S o u t h C aro l i n a 2 9 2 1 1

Also P r e s ent : W and a C o o k e T rac ey M c C arl ey S t el l a H ammo n d f o r S h aro n Wo l f e R o d eri c k A t k i n s o n

W i tne s s e s : Dean P i erc e, E s qu i re M i ch ael B arf i el d , E s q u i re M ayo r Drew L au gh l i n C an t z on F o s t er, E s qu i re


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INDEX

TIMESHARE REGISTRATION HEARING

To go i nto Execu t ive Se s s ion:

Mo t i on by M r . O ' K el l ey S econd by M r . P op l i n

To come out of Execut ive S e s s ion :

Mo t i on by M r . O ' K el l ey S econd by M r . Pop l i n

F i r s t Dec i s ion i n T ime share Regi s t r at ion Hearing:

Mo t i o n by M r . Edwards S ec o n d by M r . Pop l in

Second Dec i s ion in Timeshare Regi s t ra t ion Hea r i ng :

M o t i o n by M r . O ' K el l ey S ec o n d by M r . B i gg er s

C er t i f i c a t e

EXH I B I TS

P e t i t ioner's Exhibit Numbe r One .. ( R et a i n ed b y R ea l E s t a t e C ommi s s i o n )

STIPULAT I ONS

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I t i s i s b ei n g P r o c e6u r es t h e B o a r d .

s t ip u l a t ed a n d a g r eed t h a t t h i s h ea r i ng t a k en pur s u a n t t o t h e A dm i ni s t r a t i v e Ac t , t h e P r a c t i c e A c t a n d R egu la t i on s o f


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SOUTH CAROLINA REAL ESTATE COMMISSION 5

THE CHAIRMAN : The h e a ri ng i s ca lle d t o o rde r. T h i s

i s a m a t t e r o f t h e app l i c a t i o n o f s ev e ra l

e n t i t i e s reque s t i n g app rova l f o r a rea l e s t a t e

t imesha re reg i s t ra t i on . · The ·f i rs t o n e wi ll b e

C o ra l H o l d ings , L L C , H i lt o n Head Dev e lo p m e n t

C ompany LLC , a n d S un ri s e v a c a t i o n P rop e rt i e s ,

LT D, d / b / a C o ra l R e e f H o ri z onta l P ro p e rt y

Regime , C o ra l Ho ld i ng s , LLC , H i lt o n H e a d I s land

Deve lo p m e n t C ompany , LLC and Sun ri s e V a c a t i on

P rop e rt i e s , LT D, d / b / a C o ra l S ands Ho ri z o n t a l

P rope rt y Regime . Rebasha res H i lt o n H ead

Dev e lopmen t , L L C , and S u n ri s e Va c a t i on

P rop e rt i es L T D, , d / b / a P o rt o ' C a ll Ho ri z o n t a l

P ro p e rt y Regimen , C o ra l R e s o rt s , LLC , and

S un ri s e V a c a t i o n s LT D. , d / b / a I s land L i nks

Ho ri z o n t a l P ro p e rt y Regime . E v e ry o n e i s

rem i n d e d t h a t t h e s e p ro c e e d i ngs a re b e ing

re c o rd e d and a ll wi tnes s e s mu s t be s wo rn b e f o re

t h ey t e s t i fy . A ll rema rks s h o u ld b e di re c t e d

t o the C h a i rman . M s . McCa rle y , wa s a comp le t e

app li c a t i on f u rn i s h ed t o e a c h m emb e r?

MS . MCCARLEY :

THE CHAIRMAN :

Y e s , s ir.

What qu e s t i ons d o t h e s t a f f have

c o n c e rn in g t h i s app li c a t i o n ?

MS . MCCARLEY : I wi ll de f e r t h a t ans we r t o Ron


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A t k in s o n who w il l exp l a in in d e t a il .

l1S. DANTZLER : M r . Cha irman , my name is S h a r on

Dant z l e r , and I was I f e e l wrong on t h is

s ide b ec aus e I s a t b e s id e you o r y o u r

p r edec e s s o rs f o r y e ar s , b u t may w e a ddr e s s a

p r e l im inary m a t t e r f ir s t ?

THE CHAIRMAN : Yes , ma ' am . I f y o u w il l wa it a n d l e t

me g e t j u s t a l it t l e f u r t h e r down ?

MS . DANTZLE R : Huh?

THE CHAIRMAN: L e t me g e t j us t a f ur th e r a l ong , and

I w il l a l l ow you a l l to in t r oduce y ou r s e l v e s

an d then w e w il l t a k e a l l r igh t , g o a h ea d

and p r o c e e d , Ms . D a n t z l e r .

MS . DANTZLER : We a r e h e r e f o r a h e a r ing t o day t h a t

inv o l v e s s ome va c a t io n t im e s ha r e p l an s . As y o u

s aw in y o u r p a c ke t , t h e s e ma t t er s s ta r t ed , n o t

w it h t h e k in d o f p ap e r y o u a r e a c c u s tome d t o

s e e ing but f ou r p r iv a t e o r der s . I w o u l d

s u g ge s t t h a t tho s e p r iv a t e o r de r s wer e don e t o

p r o t e c t . the 9 0 0 - p o un d g o r il l a in t h is r o o m ,

wh ic h is the f a c t t h a t t h e r e a r e thousan d s o f

t im e s h a r e own e r s who s e t it l e s and w ho s e

p r o p e r t y r ights a r e b e ing a f f e c t e d by wha t we

do t o day . I n t h e s am e s p ir it tha t t h e s e t h ings

w e r e be gun w ith p r iv a t e o r de r s , I ' m going to

CREEL COURT REPORTING, INC. 1230 Richland Street I Columbia, SC 2920 I

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a s k tha t y o u c l o s e t h is h e a r ing t o day b e c a u s e

if what you hear s a t is f ie s y o u , the r e is n o

need t o a f f e c t the p rop e r ty r ig h t s o f t h e s e

p e op l e . The r e is ·amp l e l eg a l a u t ho r it y t o d o

wha t I ' m a s k ing you t o do . - Y o u a r e a c c us t om e d

t o c o m in g h e r e t o hear app l ic a t io n s under Ti t l e

4 0 . And we ' v e g o t a s c r ip t , · w e ' v e g o t a

everyb o dy under s t ands · how Tit l e 4 0 h e a r in g s

l o o k . B u t t h is is n o t a Tit l e 4 0 ma t t e r . Th is

is a T i t 1 e 2 7 mat t e r . I t is even c o d if ie d

under t h e s e c t io n o f the s t a t u t e t ha t d e a l s

w ith p r op e r ty and t it l e l aws . Th e s t a t u t e

s p e c if ic a l ly author iz e s y o u t o h o l d t h e k in d o f

inv e s t ig a t iv e and qu iz a t o r ia l h e a r ing w e ' r e

t a l k ing a b o u t t o day , e it h e r in p ub l ic o r in

p r iv a t e t o d e t erm in e whe t h e r t h e r e is a p r o b l em

o f c omp l ianc e under the s t a t u t e . The s am e

p ie c e o f t h e s t a t u t e , 1 9 0 (b ) a l l o ws you t o

r e v ie w d o c um e n t s and t o t a k e t es t imony u n d e r

o a th t o a id in t h a t p r iv a t e o r p u b l ic

d e t erm in e d a c t ion . The F r e ed o m o f I n f o rma t ion

A c t r e c o gn iz es that thes e k inds of s t a t u t es

ex is t , c a r v e s o u t an exc ep t io n t o t h e gene r a l

r u l e s , a n d a l l ows f o r c l o s e d m e e t ings . Aga in ,

I canno t s t r e s s eno ugh that t h e r e a r e t hous ands


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o f t i t le s . I m e a n , 5 0 w e ek s , a 1 0 0 u n i t s ,

w e ' ve g o t 5 , 0 0 0 t i t l e s r i gh t ther e ; an d t h e r e

a r e m o r e t han 1 0 0 u n i t s invo lv e d h e r e . An d I ' m

g o ing t o a s k t h a t y o u c o ns i der c l o s i n g t h i s

h e a r ing and t a king t h e t e s t i mo ny i n p r iv a t e .

THE CHAIRI�AN : Ms . D an t z l er , t h i s i s t h e f i r s t

r e q ue s t o f th i s typ e that w e ' ve h a d , a n d I ' l l

a s k the c omm i s s i on m emb e r s i f they have any

qu e s t i on s or c o n c e rn s abo u t t h a t , and t h e n we

w i l l be happy t o br i n g i t t o a v o t e .

MR . O ' KELLEY : Mr . C h a i rman , I ha t e t o d o th i s , b u t

I h a v e s om e qu e s t i on s o f our c ouns e l abo u t wha t

- - no t t h a t I ' m d o u b t ing wha t Ms . Dant z l e r h a s

s a i d , b u t j us t s o w e can b e more c om fo r t a b l e .

I w o u l d l i ke t o ma ke a mo t i on that w e g o i n t o

e x e c u t i v e s e s s i on t o a s k s ome qu e s t i on s o f o u r

c o uns e l .

MR . E DWARDS : I s e c o n d i t .

THE CHA I RMAN : S e c o n d i s n o t e d . W e w i l l b e g o ing

i n t o e x e c u t i v e s es s i on to t a ke l eg a l a dv i c e .

A l l b u t c o mm i s s i on m embers and adv i c e c oun s e l ,

p l e a s e b e excus e d .

( Off t h e Record)

THE CHAIRMAN : The h e a r i n g i s c a l l e d b a c k t o o r de r .

I s t h e r e a mo t i on t h a t we c ome o u t o f execut i v e


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s e s s i on ?

MR . EDWARDS : S o mov e .

MR . CRIGLER : S ec o nded .

THE CHAIRMAN : We h av e a m o t i o n t h a t i s s e c o n de d .

A l l in f av o r , p l eas e s i g n i f y b y s ay i ng a y e .

(Aye) ·

THE CHAIRMAN : We a r e in open s e s s i o n . In e xe c u t i v e

s e ss i o n , w e r e c e i v e d l eg a l a dv i c e f r om o u r

c ouns e l. N o v o t e s were t a k e n , and w e ' r e b a c k

t o the i s s u e o f wh et he r t o g r a n t o r d en y t he

r e qu e s t f o r the app 1 i c a n t t o k e ep the h e a r i n g

p r i va t e .

MS . TAKACS : I have a q u es t i on . Y o u ment i o n e d t h a t

by c l o s i n g t h e h ea r ing y o u w o u l d be p r o t e c t i ng

t h e t ho u s ands o f o wn e r s o f the r e s o r t t h e

r e s o r t owner s . C a n y o u s p e c i f y what kin d o f

ben e f i t t h a t wou. l d be by kee p i ng t h e s e

p r o c e e di ngs c l o s ed ?

MS . DANTZLER : c er t a i n l y . If any s hadow is c a s t

upon t h e i r t i t l e , even i f y o u a l l d e c i d e t h a t

o u r v e r s i o n o f t h e f a c t s s a t i s f y y o u , c a s t i ng

s hadow u p o n t h e i r t i t l e a f f e c t s the v a l u e o f

the i r a b i l i ty t o s el l and r e s e l l . Th e r e w i l l

be t e s t i mo ny l a t e r about t h e v e r y i n t e re s t i ng

b a l an c e b e tw e en k e e p i ng t im e s ha r e pl ans f u l ly


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s o l d and the m a in t enance o f I mean b e c au s e

s ome o f thes e a r e l o ng - t e rm p r o je c t s , 2 5 y e a r s

o l d , · k e ep ing t h e ir m a in t enan c e f u l l y f u n de d .

Any t h in g that a f f e c t s the r e s a l e v a l u e a f f e c t s

t h e r ep u t a t ion o f a p l an wh e r e p eop l e n e e d t o

d o r e g u l a r s a l e s a n d r e s a l e s is no t g o o d f o r

t h e own e r s who depend upon tha t c on s t an t s t r eam

o f . inc ome t o p r o du c e t o f und t h e ir

m a in t enanc e .

MS . TAKACS : S o y o u ' r e c o n c e rned a b o u t t h e PR?

MS . DANTZLER : I ' m c on c e r n e d ab o u t the P R a s it

imp a c t s the owner s o f the s h a r e s , y e s .

THE CHAIRMAN : A r e y o u sp e a k ing o f t h e o wn e r s t h a t

h a v e a l r eady acquir e d t it l e , t he buy er s o r a r e

y o u s p e a k ing about t h e deve l o p er in t e rms - -

MS . DANTZLER : I ' m t h in k ing abo u t t h e own e r s who

h a v e t it l es . S e v e r a l o f the s e two o f t h e s e

p l ans have a l r e ady b e en turned over t o the

H o m e o wn e r s As s o c ia t io n , and I ' m c o n c e rned a b o u t

t h e o wn e r s o f e x is t in g s h a r e s .

THE CHAIRMAN : Any o th e r qu e s t ions ? I s t h e r e a

m o t io n a s it r e l a t e s t o the r equ e s t f o r t h e

app l ic an t ?

M R . P OPLIN : I have ano t h e r qu e s t io n , if I c ou l d? I

gu e s s I ' m s t il l c on f u s e d abo u t how t h a t ' s g o ing


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SOUTH CAROLINA REAL ESTATE COMMISSION

t o n e g a t i ve l y i mp a c t t h e t im e s h a r e own e rs .

j us t I don ' t I d o n ' t s e e i t .

1 1

I

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unde r s t an d what y o u a r e s ay i n g , b u t I d o n ' t s e e

t h a t a s a d e tr imen t t o t h em b e ing a b l e t o

r e s e l l o r en j oy i t o r

MS. DANTZLER: When my p a r en t s w e n t to the n u r s i ng

home , w e f o und our s e l v e s , t h e i r c hi l d r en ,

h o l di n g f o u r t i meshare un i t s i n S ou t h C a r o l i na .

They o f f e r e d them t o each o f u s , b u t none o f u s

a r e i n a p l a c e i n o u r l iv e s wh e r e we c a n g o

anywh e r e f o r a w e e k . S o t h ey w e r e o f n o we

put t h e m o n the r e s a l e m a r ke t . Any th ing t h a t

r e s e l l e r s have i nven t o ry f r o m m u l t i p l e i f

t h e r e s e l l er s ays , you know ; t h e r e ' s s om e

s ha dows , s om e s hade s , s om e p r o b l ems over h e r e ,

why d on ' t y o u l o o k a t t h e un i t h e r e ? Tha t

a f f e c t s t h e v a l u e o f my u n i t . I d o n ' t wan t t o

g o t h e r e i f i t ' s n o t n e c e s s a r y .

n e c e s s a r y under the s t a t u t e .

And i t ' s n o t

The s t a t u t e

c l ea r l y a l l ows f o r p r i v a t e hear i n g s , an d I

wou l d a s k t ha t . And I t h i n k L L R and your s ta f f

r e c o gn i z e t h a t when they b e gan t h i s p ro c e dur e

w i t h a p r i va t e o r de r ; tha t , y o u know , the r e i s

a n o t h e r i n t e r e s t h e r e . I t ' s n o t g o i ng to h u r t

u s t o r e c o gn i z e i t , s o l e t u s r e c o gn i z e i t .

CREEL COURT REPORTING, INC. 1230 Richland Street/ Columbia, SC 29201

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MS . TAKACS : I f t h e r e are two o f them t h a t h a v e b e e n

c l o s e d out and turned bac k t o t h e own e r s , h o w

c o u l d u s ke ep i ng t he s e p r o c e e di n g s o p e n damag e

thos e ?

MS . DANTZLE R : B ecaus e jus t l i ke a ny t h i n g e l s e ,

t h e r e i s a r e s a l e mar ke t , and i t ' s the r e s al e

mar ke t yo u ' r e r e a l ly c o n c e rn e d ab o u t h e r e . I

own a share .· I t ' s n o t I ' v e n e v e r h a d

c o n t a c t bef o r e . I ' m l o o king a t t h i s p r o je c t .

I own a shar e , and I don ' t want I m e an ,

t h i n k about y o ur own t h i n k about y o u r own

home . Any t i m e t h e r e i s p ub l i c i ty a b o u t a

z on i n g i s s u e tha t a f f e c t s y o u r own h ome ,

any t i m e there i s p u b l i c i ty abo u t a a n y t ime

there i s some th i ng negat i v e , i t a f f e c ts l and

v a l u e s . I ' d j us t a s s o o n w e n o t do t h a t t o da y

b e c a u s e i t ' s n o t ne c e s s ary .

M S . TAKACS :

t o m e

We l l , I r e ad t h e s ta t u t e , and i t s a i d

that w e can keep t h e inves t i g a t i o n

p r i va t e , but I d i dn ' t r e a d t h a t t o mean the

p r o c e e d i ngs .

M S . DANTZLE R :

h e a r i ng .

I t h i n k t h i s i s an i n v e s t i g a t i on

I t h i n k you a r e g o ing t o h ear

e v i de n c e to day in t h e f o r m o f inves t i ga t i o n ,

a n d t h a t i s wh e r e w e a r e .


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SOUTH CAROLINA REAL ESTATE COMMISSION 1 3

MR . POPLIN : M r . C h a i rman , do w e have any o n es t h a t

a r e no t b e l onging t o t h e C o mm i s s i o n o r s o m e o n e ,

o u t s i d e r s that a r e h e r e t o day ?

THE· CHAIRMAN : We have I was g e t t ing to t h e

i n t r o du c t i on s o f everyone h e r e , but i t ap pe ar s

w e don ' t have anybo dy h e r e that ' s n o t

a s s o c i a t e d w i th the c a s e ; i s t h a t c o rr e c t ?

MS . DANTZLE R : There w e r e when we s t a r t e d t h i s

deba t e . I don ' t know whe t h e r t h e y ' r e n o t

h e r e n o w ?

MR . HARLEY : N o , no . We d on ' t .

MR . SMITH : I f I m a y , M r . C h a i rman , memb e r s ? My

name i s James Smi th . I a l s o s erve as o n e o f

t h e c o un s e l s f o r the p l a i nt i f f s h e r e to day .

And wo r k ing c l o s e l y w i t h s ta f f as t o wh er e w e

h a v e g o t t en h e r e t o day , t h e d ec i s i on was m a d e

t o i s s u e p r iv a t e o r d e r s i n t h e n a t u r e o f w h i c h

t h e y a r e . And I . th ink wha t Sharon o f f e r e d

e ar l i e r , t h a t t h i s i s n o t t h e typ i c a l natur e o f

a T i t l e 4 0 . And t h e que s t i on that y o u r a i s e d

e a r l i er i s a r e y o u app r ov i ng the p l an ' s

r e g i s t r a t i on ? T h e a s s ump t i on t h a t t h a t i s e v e n

t h e qu e s t i on b e f o r e y o u t o day i s r e a l l y n o t t h e

qu e s t i o n a s y o u wi l l s e e b e c au s e o f t h e way

t h i s has s o r t o f evo l v e d o v e r the h i s t o r y , t he


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SOUTH CAROLINA REAL ESTATE COMMI SSION 1 4

way L L R s o r t o f han d l e d t im e s ha r e s . T h e

c i rcums tances w e fi n d o u r s e l v e s i n i s a h igh l y

unus u a l s i tua t i o n . And s o a s a r e s u l t , p r i v a t e

o rders were i s s ue d . T h e l aw p r o v i de s fo r a

p r i v a t e h e a r i ng t o s e t t l e the s e i ss u e s t o al l ow

u s t o c ommun i c a t e t o y o u . S o I t h ink i t w i l l

r e s o l v e in a v ery s imp l e r e s o l u t i on o f t h e

m a t te r . But wh a t w e a r e t r y i ng t o avo i d i s t o ,

y o u kno w , i nv i t e l i t i ga t i on t o c a l l i n t o

ques t i o n t i t l e fo r a ll t h e s e hom e s . And s o i t

i s jus t out o f an abundance o f c a u t i o n . T h e

a g ency h a s d o n e a g o o d job a t p r o t e c t i ng t he

c o nsum e r s he r e , and s o we t h i n k t h i s i s an

app r op r i a t e way t o p r o c e e d i f w e h a v e p r i v a t e

o r de r s t o have a p r i v a t e h e a r i n g . And t h e r e

w i l l b e an opp o r t un i ty t o make i t a l l p ub l i c a t

s ome p o i n t s h ou l d t h e c ommi s s i o n d e c i de s t o do

t ha t .

THE CHAIR!�AN : Whi l e you ' re up , y o u r name aga i n , and

who you ' r e r ep r e s e n t ing ?

MR . SMITH :

S m i th .

Ye s, M r . C h a i rman , my n ame i s J am e s

I ' m a n a t t o rney h e r e i n C o l umb i a , S ou t h

C a r o l i na , and I s er v e a s c o - c o uns e l a l ong w i th

t h e o th�r a t t o r n e y s h e r e fo r the p l a i n t i ffs .

THE CHAIRMAN : F o r who ?


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MR . SMITH : F o r t h e p l a in t if f s f o r a l l o f C o r a l .

THE CHAIRMAN :· S o you ' r e r ep r e s e n t ing t h em

c o l l e c t iv e l y ?

MR . SMITH : C o l l e c t iv e l y . W e a r e a l l c o - c o u ns e l ;

my s e l f , Nekki S hu t t , and o f c our s e , you ' v e m e t

S h a r on .

THE CHAIRMAN : I wil l a l l ow t h em t o in t r o duc e

thems e l v es , s i r .

MR . SMITH : T hank you .

THE CHAIRMAN : B u t y o u ' r e no t r ep r e s ent in g a n

ind iv id u a l e n t it y a n d a r e a l l c o l l e c t ive , o k ay .

MS . SHUTT : May it p l e a s e t h e commis s ion . M y name

is Nekki Shu t t . I am an a t t o rney w ith C a l l is on

T ighe h e r e in C o l umbia . And t o ge t h e r t h is

is one o f the a t t o rneys at my f irm a s w e l l ,

K a t h l e en McDanie l . And t o ge th e r the f o u r o f u s

a r e r e p r e s e n t ing t h e s e f o ur p l ans . I wil l t e l l

y o u , S h a r o n Dan t z l e r , who was t h e k in d o f

f oundin g g e n e r a l c o uns e l o f LLR in 1 9 9 4 , has

b e e n k in d o f our S ac agawea , our guide t h r o ugh

t h is p r o c es s . And t h a t ' s why s he ' s help in g u s

b e c a u s e s h e knows h o w t h ings h a v e b e en done in

2 3 t h e p a s t . And s o s he has b e e n our guide .

24 THE CHAIRMAN : And is t h is Ms . McDanie l ?

2 5 MS . McDANIEL : Y e s , M r . Chairman , K a t h l e e n McDanie l


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w i t h Ca l l i s on T i gh e and R o b i n s on .

THE CHAIRMAN : Than k you . Al l r i gh t . L e t ' s

p r o c eed . Any o th e r que s t i ons a b o u t t h e m o t i on

f o r a p r iv a t e h e a r i n g ?

MS . SHUTT : And Mr . C h a i rm a n , may I j us t a d d I t h i n k

i t ' s n o t j u s t abo u t the bys tanders t h a t a r e

h e r e t o day , i t ' s a l s o a b o u t ke e p i n g t h i s

inv e s t i g a t i o n o u t o f the m i nu t es and ke e p i n g i t

f rom b e i ng r e c o r d e d , a s w e l l .

t h e r e a s ons we

hear ing , as w e l l .

a r e as ki ng

S o t ha t ' s o n e o f

f o r a p r i va t e

THE CHAI RMAN : S o i f w e w e r e t o g r a n t a p r i va t e

hear ing , you wo u l d e xp e c t i t n o t t o b e r e c o r d e d

a n d a trans c r i p t i s s u e d ?

MS . SHUTT : Y e s , y o u r hono r . S o rry , I ' m u s e t o

c o u r t s .

MS . TAKACS : Y e a h , we g o t y o u . Y e ah , y e a h .

MS . MCCARLEY: Y o u do n ' t want t h e c o u r t r ep o r t e r t o

t a ke the t e s t imony?

MS, SHUTT : W e l l I g u e s s , and maybe w e w o u l d keep

t h a t s e a l ed . B u t I t h i n k i t w ou l d b e

d i f f e rent , and i t wou l d b e h an d l e d in a

d i f f e r e n t way than it w o u l d in a p ub l i c

h e a r ing .

T HE CHAI RMAN : Than k y o u . What ' s t h e p l ea s u r e o f

CREEL COUR T REPORTING, INC. 1230 Richland Street I Columbia, SC 29201

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t h e Comm i s s i on ?

MR . EDWARDS: M r . Cha i rman , I move t h a t we o p en t h e

p r o c e e d i ng s t o t h e p ub l i c j u s t a s we h a v e a t

a l l t h e h e a r i ngs .

THE CHAIRMAN: Th ere i s a mo t i on by M r . Edwar d s t o

k eep t he h e a r i ng publ i c . I s the r e a s e c o n d t o

t ha t ?

MR. CRIGLER:

THE CHAIRMAN:

C r i g l e r .

S econd .

The m o t i on i s s e c onded by M r .

D i s cu s s io n ? H e a r i n g none , a l l i n

fav o r o f keeping t h e h e a r i n g p ub l i c , p l e as e

s i gni fy by s aying aye .

THE CHAIRMAN:

THE CHAIRMAN:

MS, SHUTT:

( Aye s )

Opp o s e d ?

The ayes have i t . O kay .

M r . Chai rman , i f w e can b r ing o u r

w i t ne s s e s i n ?

1 8 MS . TAKACS: M r . Chai rman , p o i n t o f o r d e r ?

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THE CHAIRMAN: Y e s .

MS . TAKACS: May I a s k who the p r i n c i p a l s a r e fo r

C o r a l R e e f, C o r a l S ands , P o r t O ' C a l l , and

I s l a n d L inks ?

MS . SHUTT: Y e s , Comm i s s i oner . We a r e g o i n g t o

b ri n g i n fou r w i tn e s s e s . One o f them i s g o i n g

t o b e r ep r e s en t ing t h a t and w e a l s o have t h e


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two p l an t r us t e e s . S o we a r e b r i n gi n g i n

w i tnes s e s . O ut o f t h e a b undan c e o f c a ut i o n , we

h a v e b r o ught e v e ryb o dy yo u m i gh t want t o h e a r

f r o m t he s e i s s ue s .

MS . TAKACS : I don ' t wan t t o h e a r t ha t . I j us t want

t o know who the own e r s are b e c a us e i t m ig h t be

a p o i n t o f o r d e r f o r me to r e c us e my s e l f .

MS. SHUTT : Okay . Thank y o u, C ommi s s i o n e r . We l l ,

a s Ms . Dant z l e r s a i d , two o f the r e s o r t s , P o r t

0' C a l l and C o r a l R e e f , have l ong b e en t ur n e d

o v e r t o t h e homeowners a s s o c i a t i on . S o the

own e r s a r e the p r o p e r t y own e r s thems e l v e s , the

t im e s h a r e o wn e r s . F o r P o r t O ' Ca l l , f o r

examp l e , t h e r e a r e 4 , 4 0 0 o f t h em ; a n d they a r e

r ep r e s e n t e d b y a homeown e r s b o a r d . We have

b r o ught t o da y one m ember of that home own e r s

b o a r d t o t a l k t o y o u today . C o r a l R e e f , the

s am e way . I t i s owned by t h e homeown e r s . The

o th e r two r e s o r t s , t h e s e a r e p l ans . S o they

a r e no t p r i v a t e l y owned . S o when the

d e v e l op e r , and j us t to be k i n d o f f undament a l ,

t h e s e the d ev e l op e r b ui l ds s om e t h ings and

t h e n r e g i s t e r s i t w i th t h e C omm i s s i on a s a

t i m e s ha r e and t h en o f f e r s i t f o r s a l e . A t the

s am e t i me , a h o m e o wn e r s as s o c i a t i o n i s s t a r t ed .


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SOUTH CAROLINA REAL ESTATE COMMIS SION 19

S o the d ev e l op e r d o e s n ' t r e a l l y d o e s n ' t own i t .

The homeowners as s o c i a t i on runs i t . T h e r e i s

a p l an t h a t i s managed - - tha t i s admi ni s t e r ed

by t h e deve loper and t h en t h e h o m e o wn e r s

as s o c i a t i on .

MS . TAKACS : S o the d ev e l o p e r i s n o l o ng e r inv o lv e d

i n any f our o f thes e ?

MS . SHUTT : T h e r e i s a d e v e l oper i nv o l v e d i n Is l a nd

L i nk s and i n C o r a l S ands . And t h e d e v e lo p e r

i nv o lv e d i n both o f tho s e i s H i l t o n H e a d I s la n d

D ev e l opment C omp any .

MS . TAKACS : Whi ch i s whom ?

�!S . SHUTT: I c an ' t t e l l you , f r an kly , who t h e

i n d i v i du a l s ha r e h o l d e r s a r e .

MS . TAKACS : I s there a C E O o r --

MS . SHUTT : D e an P i er c e i s h e r e t o d ay . H e i s you

know , h e can t e l l you . He h a s b e e n w i t h t h e

c ompany f o r about 1 3 years , m a y b e 18 y e a r s

t h r o u gh t h e h i s t o ry o f t h e c omp any a s a p r i v a t e

a t t orney . H e i s an a t t o rney who c am e in -h o u s e

a s g en e r a l c o un s e l i n 2 0 0 3 , and h e i s now t h e

m a n a g i n g memb e r o f t h e c omp any . S o h e ' s h e r e

t o d ay o f t ho s e two d ev e l op er s .

M S . TAKACS : Wel l, I ' m an i s l and r e s i dent f o r 31

y e a r s o n H i l ton H e a d I s l and ,


(803) 252-3445 1(800) 822-0896

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t ry i ng t o d e c i de wha t wo ul d b e b e s t f o r m e an .d

mayb e , C o un s el o r , I ' m o u t o f l i ne h e r e s ay in g

t h i s . B ut i t wou l d b e f a i r e r f o r m e and

f a i r e s t f o r yo u i f I c an know who t h e p l a y e r s

a r e s o I c a n d e c i de wh e th e r I s ho ul d

app r op r i a t e ly recus e my s e l f o r s t ay .

MS . SHUTT : S ur e , I ' d b e happy t o t e l l you w h o e l s e

I have b r o ug h t a s wi tnes s es . S o b e s id e s D ea n

P i e r c e , D e a n was an a t t o rney h e r e i n C o l umb i a

un t i l h e m o v e d to H i l ton H e a d . I t h i n k h e

moved t o H i l t o n H ea d a b o u t 2 0 0 3 a n d s t a r t e d

r unning t h e b us ines s e s . Al s o w i t h m e i s May o r

Drew L a ugh l i n o f H i l t o n Head h e r e t o t e s t i fy o n

b e h a l f o f t h e s e res o r t s . A l s o h e r e a r e t h e two

t r us t e e s o f the p r op e r ty , t h e two t r us t e e s o f

t h e p l a n . O n e i s o f t h e new p r o p e r t y t h a t i s

b e ing s o l d . T h a t i s M i chae l B a r f i e l d . He i s

an a t t o r n ey in Cha r l e s t on a t B a rnwe l l W h a l ey

Law F i rm . The o th e r one i s a t r us t e e named

C a n t z on F o s t e r . H e ' s the t r us t e e o f the non -

j ud i c i a l f o r e c l o s u r e p r oper t y . S o b as i c a l l y

t h e p r op e r t y t h a t comes back t o t h e p l an i f the

owner d o e s n ' t p a y the maint enance f e e . H i s

name i s C a n t z on F o s t e r . H e i s an a t t o rney h e r e

i n C o l umbi a . S o tho s e are my f o ur w i tn e s s e s


(803) 252-3445 I (800) 822-0896

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1 that we a r e o f f e r i ng t o day t o you .

2 MS . TAKAC S : Excus e u s .

3 MS . S HUTT : C er t a i nly .

4 MR. O'KELLEY : M r . C h a i rma n, a nd m a i nl y b e c aus e the

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a t to r neys that a r e i nv o l v e d , I am a n a c t iv e

p r ac t i c i ng l awye r . I hav e h a d c a s e s w i t h May o r

Laugh l i n. H e ' s a c tu a l l y s e r v ed as a guardian

ad litem a nd a t r u s t e e i n c a s es t h a t I ' ve b e e n

i nvo 1 v e d wi t h . A nd I s aw Mr . B ar f i e l d in the

h a l l way . H e a nd I have h a d c a s e s t o g e th e r , but

I do n' t t h i nk t h a t t h a t in a ny way w o u l d

i nf l u e nc e my abi l i ty t o b e f a i r a nd imp ar t ia l .

B u t f o r t h e r e c o r d , I want s i nc e Ms . T a ka c s

a s ke d , I wa nt p eo p l e t o know t h a t I know s ome

o f t h e w i t ne s s e s . I f t ha t ' s a p r ob l em f o r a ny

o f you a l l , I am happy t o rec u s e my s e l f ; b u t I

ju s t wa nt , y o u k no w , f u l l d i s c l o s ur e .

M S . COLEMAN : I t h i nk t h e p r o p e r way t o d e a l w i th

t h a t i s j us t es s ent i a l ly wha t was a c c ompl i s he d

w i t h t h e no d o f h e ads . D o a ny o f t h e a t t o r n eys

f o r the p a r t i e s have any o b j e c t i o n to M r .

O ' Ke l l ey ' s p a r t i c i p a t i o n h a v i ng h e a r d f rom h im

t h a t h e b e l i eves ·he c a n b e f a i r and i mpar t i a l ?

THE CHAIRMAN : As . w e l l a s M s . T ak a c s .

M S . TAKAC S : I ' m S ar ah T a k a c s a nd D r ew i s my


(803) 252-3445 I (800) 822-0896

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ne i ghb o r , a nd I ' m k now n h i m f o r 3 0 yea r s . S o

i f yo u have a ny p r ob l ems

MS . S HUTT : N o t a t a l l . I m e a n, Mayor L a u gh l i n i s a

p ub l i c o f f i c i a l . S o I t h i nk h e k nows l o t s o f

p e op l e a nd h a s no ob je c t i o n wha t s o ev e r .

jus t i nf o rma l l y , i f I c o ul d i nt ro d uc e

A nd

t h e

w i t ne s s e s , t h i s i s Dea n Pi erc e , who I m e nt io ne d

t o yo u b e f or e , Ms . Takacs .

9 MR . PIERC E : G o o d mor ni ng .

10 !<IS . S HUTT : A nd t h i s is Ca nt z o n F o s t e r .

11

12

13

14

15

MR. FOSTER : G o o d a f t e r noo n, how a r e yo u a l l ?

MR . S HUTT : O ne o f the t r us t e es f o r j ud ic i a l

f o r e c l o s ur e s . Thi s i s M i c h a e l B ar f i e l d , w h o i s

t he t r us t e e f o r the new p r op e r ty , a nd t h i s i s

Mayor D r e w L a ugh l i n a t H i l t o n Head .

1 6 MR . BARFIELD : Go o d a f t e r no o n.

17 MR. LAUGHLIN : . G o o d a f t e r no o n.

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MS . C OLEMAN : Ms . Sh ut t , I jus t h a v e a q ue s t i o n t o

b r i ng t o yo ur a t t e nt i o n. I n t h e p r o je c t o f new

p ro p e r t y , a r e yo u r e f e rr i ng to o ne o f t h e na me d

e nt i t i e s o r a r e yo u r e f e r r i ng - - wha t e x a c t l y

a r e yo u r e f e r r i ng t o ?

MS . S HUTT : A nd I ' m happy t o expl a i n t ha t . A nd i f

y o u wa nt me t o b e g i n my remarks now , wh e never

y o u' r e r e a dy t h a t might - -


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SOUTH CAROLINA REAL ESTATE COMMISSION

MS. COLEMAN : I f you c o ul d j us t maybe

y o u wi l l a ddr e s s t h a t i n y o uc re ma rks .

2 3

w e l l , i f

I d on ' t

want t o g e t ahead o f you , b uc I think t h e r e may

b e a q ue s t i on .

MS. S HUTT : W e l l , and I t h i nk , t th a t ' s a p er f e c t way

t o t e e thi s up .

THE C H A I RMAN : Wa i t a m i n ut e . w� a re no t t e e i ng up

y e t . M r . Atkinson i s g o i n g t o exp l a in t o us

why we a r e her e .

MS . C OLEMAN : Okay .

b ut c an we

V e r y g o o d , B-ut wa it a s e c on d ,

j us t c l ar i fy bec a us e w e w e r e

i de n t i fying the w i t ne s s e s Ln the i r c a p a c i ty .

I ' m trying t o unde r s t and, f o rr my o wn know l e d g e ,

Mr . B a r f i e ld i s the t r us t e e , I t hi nk y o u s a i d

o f t he n ew

1 6 MS . S HUTT : F o r a l l f ou r r e s or t s .

1 7 M S . COLEMAN : Okay .

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M S . S HUTT: B u t t h e r e i s a di s t i.nc t i on b e tw e en t h e

n e w p r o p e r t y and t h e us e d p rrope r ty . S o t h e s e

f o ur r e s o r ts a r e s i n g l e s nte de ve l o p e r s on

H i l ton H e a d I s l and . And when th ey b egan , t h e y

h a d a f in i t e l e t ' s jus ·t say i t 's a 1 0 0

un i t s . They had a f i n i t e r:nnmbe r of uni t s t o

s e l l . And s o onc e t h ey s o lid! t ho s e , that was

a l -l they h a d . Any p r o pe r t y eba t c o me s b a c k f o r

CREEL COURT REPORTING,.LVC. 1230 Richland Street I Columbia, SC E9201

(803) 252-34451 (800) 822-0890.

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f o r e c l o s ur e , f o r ins t anc e , s om e o n e not 'pay i ng

th e i r m a i n t enance f e e s o r s om e one t h e

p r o p e r ty b e i ng canc e l l ed , tha t c om e s b a c k t o

t h e p l an t h r o ugh ano the r v eh i c l e . And s o t h a t

i s t e chn i c a l ly us ed p r o p e r t y l i k e yo u t h i nk o f

c a r s us e d and ne w.. And s o tha t r e q ui r e s a

d i f f e r e n t t r us t e e and that ' s M r . F o s ter h e r e .

THE CHAIRMAN : B ut a s I und e r s t o a d i t as yo u w e r e

go ing t h r o ugh t h i s e ar l i e r , t h e HOA p r op e r t i e s

were C o r a l R e e f and P o r t O ' C a l l and t h e new

p r o p e r t i e s are C o r a l S ands a n d I s l and L i nk s ; i s

that c o r r e c t ?

HS. SHUTT : We l l , M r . Chai rman , and j us t t o be

c l e a r , t h e s e p r op e r t i e s h a v e a l l b e e n a r o und

f o r . awhi l e . They a r e . n o t t h e r e a r e s t i l l

dev e l o p e r s on s i t e that a r e s t i l l s e l l i ng t h em .

Wha t h a p p en s i s when t h e s e p r op e r t i e s a r e

b ui l t , w h en th e s e r e s o r t s a r e b ui l t , a m a s t e r

d e e d i s p ut i n p l a c e t o g o v e rn t h e p r o p e r t i e s ,

the p l an . And s o t h e r e i s a t r i gg e r ing p o int

i n t h e m a s t e r deed a t wh i ch t i me when the

dev e l o p e r goes away and t ur n s over t h e prop e r ty

t o t h e h omeown e r s a s s o c i a t i on , t urns o v e r t h e

p l an t o t h e homeown e r s a s s o c i a t i o n . S o f o r two

o f t h e p r o p er t i e s , C o r a l S a n d s and I s l and

CPJ£EL COURT REPORTING, INC. . 1230 Richland Street I Columbia, SC 29201

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L i nk s , t h e r e i s s t i l l a d e v e l oper i nv o l v e d .

T h e r e i s a l s o a homeown er s a s s o c i a t i o n

i nvo l v e d . And s o t h e r e i s s t i l l s e l l i n g g o i n g

on . B u t t he s e p r o p e r t i es h av e a l l b e e n a r o un d

f o r a s i gn i f i c an t amount o f t i me .

THE CHAI RMAN : Wha t a r e you r e f e r r ing t o a s t h e n e w

p r op er t y ?

MS . S HUTT : W e l l , I don ' t mean new p r ope r t i es . I

mean t h a t t h e r e a r e p rope r t i e s t �a t a r e un s o l d .

L i ke a t C o r a l S a nds and I s l an d Li nks . t h e r e a r e

p i ec e s o f p r op e r t y t h a t h a v e never b e e n s o l d

b e f o r e .

THE CHAIRI1AN : Un s o l d uni t s . Okay .

M S, S HUTT : Y e s , s i r .

THE CHAI RMAN : O k a y . Al l r i ght . T h ank y o u .

M S . S HUTT : Thank .you .

THE CHAIRMAN : M r . A t k in s o n , wha t q ue s t ions d o e s t h e

s t a f f have c onc e rn i ng thi s app l i c a t i o n ?

M R. ATK I NSON : Y e s , M r . Cha i rman , and memb e r s o f t h e

C o mm i s s i o n . I n r ev i ew o f t h e D e p a r tmen t o f

R e c o r ds , i t app e a r s t h a t t h e s e l l i ng en t i t i es

i n t h e s e p a r t i c u l a r p l ans h a v e f a i l e d t o r enew ,

a m e n d , and up d a t e the d e p a r tmen t o r t h e

C o mmi s s i on o f t he changes t o t h e s e

r e g i s t r a t i on s o v e r t h e cour s e o f s ev e r a l y e a r s .


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I t a l s o app e a r s that t h e s e l l er c o n t r a c t

i n t e r e s t s have c o n t i nued du r i ng t h e s e p e r i od s

o f non - r enewa l . And we n o t i f i ed c o un s e l f o r

t h e s e l l e r s . Couns e l f o r t h e s e l l er s r e s p o n d e d

t o t h e dep a r tment by s ub m i t t-i n g u p d a t e d

r e g is t r a t i o n p a c k e t s and a d d i t i o n a l do c u m e n t s

t h a t we r e qu e s t e d , you know , t h e t h i ngs t h a t w e

wo u l d r e que s t f o r i n new r e g i s t r a t i on . A n d w e

r ev i ewe d , a n d I a c tu a l l y p a r t i c ip a t ed i n the

r e v i e w o f t i m e s ha r e l an d s a l e s . And s o I

r ev i ewed t h e s e documents . And i t d o e s a p p e a r

t h a t t h e d o c umen t s we h a v e r e c e i v e d a t t h i s

p o i n t w o u l d b e s ub s t a nt i a l l eg a l l y comp l e t e t o

u p d a t e r e g i s t r a t i ons . S om e o f t h em a l s o h a v e

t ende r e d a c h e c k i n t h e amount f o r a

r e g i s t r a t i o n f e e t h a t wo u l d exc e e d the 2 0 1 2-

20 1 3 r e n ewal amoun t . I t a c t u a l l y wou l d h av e

c o v e r e d t h e p r ev i ous y e a r s . A n d f o r t h a t

r e a s o n , we r e t u rn e d t h e c h e c k d u e t o

o v e r p ayment o f r enewal f e e s a n d b e g a n revi ewing

t he s ubmi t t e d documents . U p o n r ev i ew , i t was

d i s c o v e r e d that t h e r e had b e e n ma t e r i a l changes

t o each p l an , i n c l ud i ng c h a n g e s t o t h e s e l l ing

e nt i t i e s o f r e c o r d , p ubl i c o f f er i n g s t a t e m e n t s

a n d p u r c h a s e c o n t r a c t s . An d t h e y were n o t


(803) 252-34451 (800) 822-0896

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SOUTH CAROLINA REAL ESTATE COMMISS ION 2 7

1 r e f l e c t e d i n p r e v i o u s r e c o rds on f i l e w i t h t h e

2 Department o f R e c o rds f o r R eg i s t r a t i on s and

3 P l ans . The dep a r tment was unab l e t o app r ov e

4 the s e r e g i s t r a t i ons f o r t h es e r e a s ons a n d t h e

5 reas ons that a r e o u t l i ne d i n t h o s e i n d iv i d u a l

6 o r d e r s f o r e a c h p l an . And t h a t i s b a s i c a l l y

7 the s ummary o f why we a r e h e r e t oday .

8 THE CHAIRMAN : B u t d i d your s t a f f s ubp o ena any o t h e r

9 p e r s ons to b e h e r e t oday?

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MR . ATKINSON : I d o n ' t know , s i r ..

THE CHAIRMAN : S o we • v e a l r eady gone through t h e

i n t r o duc t i on s . A l l the en t i t i e s a r e

r e p r e s e n t e d b y l eg a l c ouns e l . And , I gu e s s a t

t h i s p o int w e w i l l turn i t over t o the

app l i c an t .

MS. S HUTT : Thank y o u , M r . Chai rman . Wou l d y o u

p r e f e r that I s t a n d , wha t e v e r i s e as i er f o r

y o u ?

T H E CHAIRMAN :

MS, S HUTT :

s o r ry ,

Y o u ' r e f i ne t o s t ay s ea t e d .

Okay . Thank y o u , y o u r hono r . I • m

but I k e ep s ay i n g t ha t . A g a i n

C o mm i s s i on e r s , i t • s n i c e t o m e e t y o u a l l . My

name i s Nekki S hu t t . And I r ep r e s en t t he s e

f o u r p l ans . W e have a l r e a dy t a l ked a 1 i t t l e

a b o u t t hem . I t h i nk f r om t h e o ns e t , i t i s


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i mp o r t a n t to d i s t ingu i s h t h i s s i tu a t i o n f r om a

T i t l e 4 0 ma t t e r . I think t h i s b o a r d i s u s e d t o

s e e i ng T i t l e 4 0 ma t t e r s whe r e you have

p r o f e s s i o n a l s c oming i n f r o m l i c e n s i n g , and ·

y o u ' r e t a l k i ng about d i s c i p l in e o r n o t

r e g i s t e r ing o r n o t r enewi n g r e g i s t r a t i o n . T h i s

i s a v e r y d i f f e r ent s i 't u a t i on . Thi s i s wha t

Ms . Dant zl er h a s c a l l ed a n o u t l i e r a c t . T i t l e

2 7 i s t h e S o u th C a r o l in a T im e s h a r e Ac t . I t

governs j us t ·t i m e s ha r e s . I t r e c o gn i z e s t h a t

t h i s i s v e ry d i f f e r en t . The s e -- wha t we a r e

t a l k i ng about t o day a r e r ea l e s t a t e p r op e r ty .

Th e s e a r e p ro p e r ty in t er e s t s i ns t e ad o f

p r o f e s s i o n a l l i c ens i ng . The se a r e ent i t i e s .

The se a r e p l ans i ns t ead o f a r ea l t o r o r a

b r o k e r i n cha r g e o r a dent i s t o r som e thing l i ke

t h i s . Under T it l e 2 7 ' o n c e a p l an i s

r e gi s t e r e d , i t ' s b a s i c a l l y a l ways r eg i s t e r ed .

I t ' s l i k e whe n you buy a h o u s e and a dee d i s

r e g i s t e r e d wi t h the Re g i s t er o f Deeds o f f ice ,

i t ' s a l ways o n f i l e t h e r e . A n d s o i t i s r e a l l y

e x t r em e t o s ay t h a t t h a t i s n o t r eg i s t e red . S o

f ro m o u r p er s p e c t i v e , t h i s i s n o t a

r e g i s t ra t i on h e a r i n g a t a l l . T h e s e p l ans have

b e e n r e g i s t e r e d f or a l on g t ime .


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m en t i oned be f or e , w e have b r o ug h t t h e t w o

t ru s t ees here to t a l k t o you t o day . Mr .

Ba rfi e ld i s g o i n g t o t a lk t o you abo u t the

h i s t o ry o f the s e f o u r p l ans , b ut they h a ve long

b e en r eg i s t er e d . And they ha ve b e e n i n r e gu la r

c o mmuni c a t ion w i th LLR abo ut any chan g e s t o t h e

p l an . T o day , wha t we a r e h e r e t o t a lk a bo u t

a n d wha t s t a r t e d t h i s who le t h i n g , i s a n a n n u a l

f e e . Under T i t l e 2 7 , t h e r e i s a $ 2 5 0 p er

r e s o r t annual f e e . We ' r e t a l k i n g abou t f o ur

r e s or t s , and s o we a r e t a l k in g a bo u t $ 1 0 00 a

y e a r . A t s o m e p o i nt , the s e f o u r p l an s d i d n o t

p a y tho s e f e e s . And I wi l l t e l l y o u tha t

s tr a i gh t up . That was inadv e rt e n t , t h o u gh .

That was n o t a ny t y p e o f i n t en t i on a l a c t . Wha t

t h e t e s t imony w i l l s ho w y o u i s un t i l a b o u t

20 0 6 , LLR i s s ue d s ta t em e n t s f o r inv o i c es t h a t

s a i d , yo ur money i s due . Thi s i s n o t l i k e , a s

a n a t t or n e y , I k now m y annual b a r f e es a r e due

M a r ch 1 5 t h e ve r y y e ar . And I know i f I d on ' t

p a y my an nua l ba r f e e s , then t h e S o ut h C a r o l i n a

S up reme C o ur t i s g o ing t o t a k e away m y l i ce ns e .

Th i s i s no t t h a t t yp e o f s it ua t i o n . Each o f

t h e s e p l ans h a d a di f f er en t d a t e tha t L LR i s

s ay i n g t h a t t h e y d id n o t p ay t h e ir f ee s .


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SOUTH CAROLINA REAL ESTATE COMMIS SION 3 0

P o r t 0' C a l l , f o r i ns t a nc e , t hey s a i d d i d no t

p ay t h e i r f e e s as o f M a r c h o f 20 0 6 . O t her

r e s o r t s 20 0 7 , 20 0 8 . S o i t ' s a d i f f e r e nt d a t e

f o r e a c h o f them . The · p l a ns the w it ne s s e s

h e r e wi l l t e s t i fy they d i d no t k now t ho s e w e r e

u np a i d . At s ome p o i nt , wh e n L L R cha ng e d i t s

p r o c e s s , a nd I t h i nk that w a s p robab l y a b o u t

the t i m e t h a t K e n K i t t s w a s no l o nger w i t h L L R ;

whe n h e was no l o ng e r t h e t i m e s ha r e

admi ni s t r a t o r , the i r i nv o i c e s s t opp ed b e i ng

p a i d - - s t o p p e d b e i ng s e nt . Y o u k now - - i f i t ,

a nd yo u ' l l h e a r t e s t imo ny , t h e s ame way my l aw

f i rm wo r k s u nl e s s I g e t a n i nv o i c e o r I get

a b i l l o r I g e t a s t a t em e nt , my a c c o u nt i ng

o f f i c e d o e s n' t k now t o pay t h o s e . It ' s t h e

s am e t h i ng t h a t happe ned he r e . As s o o n a s

t h e t e s t imo ny w i l l s how t h a t a s s o o n a s t h e

p l a ns r e a l i z ed t ha t , t hey s e nt s omeo ne o v �r t o

t e nd e r c h e c k s . The checks h a v e b e e n t e nd e r e d

t w i c e now a nd have no t b e e n a c c e p t e d . T h e LLR

d i d n' t k now wha t t o do b e c au s e t h e r e was a t i me

d e l ay . T h e r e i s 20 0 6 t o p r es e nt . A nd s o

t h a t ' s r e a l l y wha t t r i ggered u s b e i ng her e . S o

t h a t i s t h e p r i mary i s s u e t h a t w e a r e h e r e t o

t a l k abo u t t o da y . In the c o u r s e o f that c omi ng


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t o li ght , L L R a s ke d f o r a dd i t i on a l

do cumen t a t i on , and they i d en t i f i e d abou t fiv e

d i s c r e e t p i e c e s o f in f o rma t i o n t h a t t h e y s ay

t h ey do no t have i n the i r f i l e s . T h e w i t n e s s e s

I brought here t o day and t h e docume n t s w e a r e

g o ing t o show t o day , I t h i nk prove t h a t t h e r e

i s a d i s c r �pancy be t w e en L LR ' s r e c o r ds a n d t h e

p l an ' s r ec o r ds . And we ' v e go t s o rne F ed Ex

r e c e ip t s t o s how you t h a t thi ngs w e r e

t r ansm i t t e d and r e c e i v e d . And s o t h e r e i s a

d i s c r ep ancy i n t h e rec o r d s . S o t h a t ' s w h a t we

a r e going t o t ak e you through t o day . I t h ink

t hough p l ea s e k e ep i n m i n d t h e i mp o r t an t

d i s t i nc t i on t h a t w e a r e l o oking a t T i t l e 27 .

And wha t y o u do t o da y , I ' m g o ing t o a s k y o u a t

t h e end o f t h e h e a r i n g o r a c t u a l l y M r . S m i t h i s

g o ing t o a s k You a t the end o f t h e h e a r i n g , t o

f i nd t h a t th i s w a s i na dv e r t en t , t h a t my

c l i en t ' s nonpayment was i n a dv e r t e n t a n d t o

p l ea s e a cc ep t t h e money t h a t we have o f f e r e d

y o u guys . And p l ea s e t ake t h a t and d e t e r m i n e

t h a t t h e r e h a s b e e n n o v i o l a t i o n under t h e

s t a t u t e . Y o u kno w , T i t l e 2 7 l i s t s v i o l a t i ons .

N onp aymen t o f t h i s renewal f ee i s n o t a

v i o l a t i o n . We wo u l d a l s o a s k you t o f i nd t h a t

CREEL COURT REPORTING, INC. 1230 Richland Street I Colunibia, SC 29201

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ther e h a s b ee n n o l aps e . Th e c o n s e qu e n c e s o f

f i n d i ng e i t h e r o f tho s e two t h i n g s c o u l d b e

g r av e . And s o we a r e a s king y o u t o l e t u s p a y

o u r m o n ey a n d f i nd t ha t w e h a v e s ubs t a n t i a l l y

c omp l i e d w i t h the Timeshare A c t and t h a t w e

have done o u r u t mo s t t o

Ti me s ha r e Ac t over t h e years .

c omp l y w i t h t h e

THE CHAIRMAN : When · y o u s ay t h a t t h e c o n s e qu en c e s

c o u l d b e g r av e , what d o y o u m e a n ?

10 MS . S HUTT : W e l l , y o u r h o no r , s i n c e w e a r e i n a

1 1

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p ub l i c h e ar i ng , I h e s i t a t e t o s p e n d t o o much

t i me t a l king abo u t what the p o t e n t i a l o u t c o m e s

c o u l d b e . B u t under Ti t l e 2 7 i f , y o u know ,

h o m e o wn e r s dur i ng a c e r t a i n t i me p e r i o d , my

c l a i m tha t t h e i r i n t e r es t c o u l d and , I ' m

s o r r y , I ' m h e s i t a t i n g b e c a u s e a g a i n , we a r e o n

p ub l i c r e co r d , and s o i t do e s c o n f i n e wha t I

want t o s ay . B u t i t c o u l d a f f e c t Ti m e s h a r e .

I t c o u l d a f f e c t a c l a s s o f o wne r s tha t t h e

t e s t i mony i s g o ing t o t e l l y o u . I f y o u have

5 , 0 0 0 owner s , the b a l an c e o f i t i s everyb o dy

h a s t o p ay th e i r m a in t enance f e e s . Tha t i s how

t h e p o o l chem i c a l s get p u t i n , t h a t ' s how the

s hr u b s

c l e a n e d .

g e t c u t ,

I f

tha t ' s how t h e r o o f s

a quar t er o f t ho s e


(803) 252-34451 (800) 822-0896

g e t

f o lks

c


1 d i s app ea r ed , t h en t h a t wou l d ups et t h e b a l a n c e

2 a s f a r a s who i s p a y i ng a s har e o f t h e t ax es

3 and t h e p o o l f ee and ev ery thing el s e a n d Co u l d

4 s end t h es e r es o r t s i n t o turmo i l . And t h a t ' s

5 why w e had a s k ed t h e h ea r i ng t o b e c l o s e d in

6 t h e f i r s t p l ac e b ec aus e i t do es s t i l t t h e

7 c o nv er s a t i on s o m ewha t , M r . C h a i rman .

8 THE CHAIRMAN : Okay .

9 MS . S HUTT : . A t t h i s p o in t , I w o u l d l i k e t o o f f er our

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w i tn es s es . F i rs t , I woul d l i k e t o o f f er M r .

D ean P i er c e.

THE CHAIRMAN : Mr . P i er c e. H e' s g o i n g t o s t and .

P l eas e s ta t e your f u l l nam e and addr ess a n d b e

s w o rn i n by th e c o u r t r ep o r t er .

MR . P I ERCE : S u r e, Bobby D ean P i er c e. My a ddr es s i s

8 Turnb erry L an e, H i l ton H ea d I s l an d , S o u th

ca r o l i na 29 9 28 .

MS . S HUTT : And M r . Cha i rman , i f i t ' s a l l r i gh t w i t h

y o u , wha t I wou l d l i k e t o d o i s g et a l l t h e

w i t n es s es s w o rn r a t h er than

t es t i mony on e a t a t i m e.

THE C H A I RMAN : That w i l l b e f i n e.

t a k i n g t h ei r

I f a l l t h e

w i t n es s es w o u l d s t and and j us t as M r . P i er c e

h a s don e, s t a t e y o u r nam e and addr es s o n th e

r ec o r d .


(803) 252-34451 (800) 822-0896

c


1 MR . LAUGHL I N : I ' m D r e w Al l en Laugh l in . I 1 i v e a t 5

2 M c i n t o s h Road on H i l t o n H e a d I s land .

3 MR . BARF I E LD : I ' m Kenne th M i ch a e l B a r f i e l d . I l i v e

4 a t 3 9 F e n wi c k D r i ve in Cha r l es t o n .

5 MR . FO STER : And I ' m Cant zo n F o s t e r . I i iv e a t 1 6 5

6 R i v e r C l ub R o a d in Lexi n g t on , S ou t h C a r o l i n a .

7 THE CHAIRMAN 1 I f you wou l d a l l r a i s e y o u r r i ght

8 hand and b e s wo r n i n b y the c o u r t r e p o r t e r .

9 BOBBY DEAN P I E RC E , DREW ALLEN LAUGHL I N , KENNETH

1 0 MICHAEL BARF I ELD, and CANT Z ON FOS T E R , hav i n g b e en

1 1 duly s wo r n , d ep o s ed and t es t i f i ed a s f o l l o ws :

12 MR . P I E RCE - E XAMINATION BY MS . SHUTT :

1 3 Q :

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M r . P i er c e , p l eas e i n t ro d u c e y o ur s e l f t o the

memb e r s o f the C ommi s s i on who a r e h e r e t o da y .

W e l l , I have indi c a t e d that I ' m Dean P i e r c e .

I ' m h e r e t o day as p r e s i de n t o f a n d the man a g e r

f o r t h e f our p l ans that a r e a t i s s ue h e r e

t o day . I have b e en f o r the p a s t 1 8 y e a rs

c onne c t e d in s ome r eg a r d t o thes e p l a n s .

I n i t i a l l y I wa s a l a w p a r t n e r wi th Tom V e r n o n ,

who wa s o n e o f the p l an a t t o r n e y s i n the p a s t .

And t h e n i n 2 0 0 3 I b e c ame i n- h o u s e couns e l .

And s i n c e that t ime I have b e e n a t H i l ton H e a d .

My p r a c t i c e b e f o r e tha t wa s i n C o l umb i a .

And M r . P i er c e , wi l l y o u t e l l u s a l i t t l e b i t

CREEL COURT KEPORTING, INC. 1230 Richland Street I Columbia, SC 29201

(803) 252-34451 (800) 822-0896

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a b o u t t h e f o u r r e s o r t s that we a r e h e r e t o t a l k

a b o u t t o day .

T h e f o u r r e s o r t s a r e P o r t O ' C al l , C o r a l R e e f ,

I s l and L i nks a n d C o r a l S ands . P o r t O ' C a l l i s

t h e o l de s t o f the r e s o r t s . I t i s m o r e t h a n 25

y e a r s o l d , and i t has been s o l d o u t f o r many

y e a r s . I t was t u rn e d over t o the HOA b o a r d i n

t h e n i ne t i es . And C o r a l Reef i s ano t h e r o f t h e

o l de r r e s o r t s that was turned o v e r i n t h e e a r l y

t wo thous ands . C o r a l S ands and I s l an d L i n k s

a r e the t wo n e wer r e s o r t s . They a r e s t i l l i n

s a l e s . They hav e n o t r e a ch e d a p o i n t wh e r e

t h e y have b e e n s o l d o u t and turned o v e r t o t h e

H O A s .

W h e n we r e C o ra l S an d s and I s l an d Links b e g u n ?

C o r a l S ands wa s b e gun i n the e a r l y t wo

t h o u s ands . I s l an d L i nks a c t u a l l y h a s s o r t o f

a l on g e r h i s t o ry . I t was o r i g i n a l l y b e g u n by

s ome f o l ks who a r e u n r e l a t e d to our c omp a n i e s .

B a c k i n t h e e i g ht i es , they wer e no t v er y

s u c c e s s f u l i n thei r d ev e l opment though , a n d i t

e n d e d up chang ing hands a c o up l e o f t i m e s . A t

o n e p o i n t , i t e n de d up b e i ng o wn e d by Ep i c

R e s o r t s , whi c h wa s a s o r t o f mo r e g l o b a l

t i me s h a r e d ev e l op e r than we a r e .


(803) 252-3445 I (800) 822-0896

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s i n g l e s i t e dev e l op e r . A l l o f o u r dev e l opment

o c curs i n S outh C a r o l i n a in H i l to n Head . Ep i c;

R e s o r t s u l tima t e ly went i n t o bankrup t cy and

another t i meshare c ompany , a s o r t o f

i n t erna t i o n a l c ompany , whi c h i s no l o ng e r i n

ex i s t e n c e , but a t tha t t i m e w a s c a l l ed S un t er r a

and was t h e s u c c e s s f u l b i d d e r a n d purcha s e d the

p r op e r t y a l ong wi th a l o t o f Ep i c ' s o th e r

p r o p e r t i e s o u t o f bankrup t cy . And then

a c tual l y I s lan d L i nks w a s p u r c h a s e d by f o u r

r e s o r t s f r om S u n t e r r a an d r e g i s t er e d w i t h t h e

Commi s s i o n i n 2 0 0 4 .

Q : And h o w many current own e r s o f t im e s ha r e

i n t er e s t s a r e t h e r e f o r t h e f ou r r es o r t s ?

A : W e ' ve g o t o v e r 2 8 , 0 0 0 I t h i nk r i gh t now .

Q : And Mr . Chai rman , f o r t h e p u r p o s e s o f t h i s

t e s t i m o ny , w e w o u l d l i ke t o hand up e i gh t

e xh i b i t s .

THE CHAIRMAN : Can I take a l o o k a t tho s e ?

MS . C OLEMAN : M r . C h a i rman , I wou l d l i k e t o l o o k a t

t h o s e f i r s t , i f y o u d on ' t m i n d ? And a r e they

a l l r e l a t ed and i nc l u d e d i n the p a c ke t ?

MS . S HUTT :

MS . C OLEMAN :

Y e s , they a r e .

M r . A t k i ns o n , h a v e y o u r ev i ewe d t h e

exhibi t s that a r e p r op o s e d ?


(803) 252-3445 I (800) 822-0896

c

SOUTH CAROLINA REAL E STATE COMMISSION 3 7

1 MR . ATKINS ON : No , I have n o o b j e c t i ons .

2 MS . COLEMAN : Ms . S hut t , w o u l d you m i n d o p en i n g t h e

3 p a cke t ?

4 MS . S HUTT : Y e s .

5 MS . COLEMAN : You have no o b j e c t i o n i f we w i l l m a rk

6 t h e c u r r e n t p r o j e c t a s one exh ib i t ?

7 MS . S HUTT : N o o b j e c t i o n .

8

9

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1 1

1 2

1 3

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( P l a i n t i f f ' s Exhibit Number 1 was marked f o r

i dent i f i c at i o n purpo s e s . )

MS . TAKAC S : J u s t f o r the r e c o r d , I wo u l d n o t e t h a t

t h o s e t h a t a r e B a t e s S t amp ed a t t h e b o t t o m , and

they go t h r ough r l an 0 0 1 through P l an 0 5 2 .

M S . S HUTT : And Mr . Chai rman , a l s o we ' v e g o t t h i s

p i e c e o f d emons t r a t i v e ev i d en c e . I h o p e

everyone can s e e i t , j us t kind o f g e t t h e d a t e s

i n r ev i ew . Can you s e e i t a l l r i gh t ? H e

s ha k e s h i s h ead n o . W e c an c e r t a i n l y m o v e i�t

c l o s e r .

THE CHAIRMAN r I t wou l d mo r e meani ng f u l .

2 0 M S . S HUTT : Okay , very go o d .

2 1 T H E CHAI RMAN : I m i g h t c o u l d have done i t a t 8 : 0 0

2 2

23

2 4

t h i s mo r ni n g .

M S . S HUTT :

p r o c e e d ?

Hr . Cha i rm an , a r e you r e ady f o r m e t o

25 T HE CHAI RMAN : Y e s , m a ' am , p l eas e .


(803) 252�34451 (800) 822�0896

F� l;c .

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A :

Q :


( O f f the Rec ord )

Thank y o u . S o M r . P i e r c e , l e t ' s g e t t o the

p r imary i s s u e t o day . Y o u c ame i n - ho u s e t o

manage t h i s p l an i n 2 0 0 4 . S in c e tha t t i me ,

have t h e p l ans autho r i z e d p aymen t o f e v ery

i nvo i c e r e c e i ved by L L R ?

Y e s , we have .

When d i d you b e c ome a wa r e tha t t h e r e wa s a non-

p ayment i s s u e ?

W e l l , i t ' s r e a l l y a l i t t l e d i f f i cu l t t o s a y f o r

t h i s r e a s o n . I n S e p t ember o f t h i s pas t y e a r ,

I r e c e i v e d s om e c o r r e s p onden c e i n t h e m a i l f rom

S t e l l a Hammond , who i s a p e r s on a t L L R , t h a t

works a t L L R . And i n i t s h e r a i s ed c on c e rns

a b o u t c omp l i an c e o f t h e p l an s but d i d n o t

i nd i c a t e i n t h e l e t t e r tha t , y o u kno w, t h a t

t h e r e wa s a p ro b l em wi t h t h e non-payme n t o f

f e e s . And s o f o r t h a t r e a s o n , we we r e a l i t t l e

b i t a t a l o s s a s t o exa c t l y wha t t h e i s s ue was .

And s o b o t h mys e l f and M i cha e l B a r f i e l d , the

o u t s i d e a t t o rn ey f o r t h e p l an s , t r i ed to r e a c h

o u t t o M s . Hammond t o g e t s ome c l a r i f i c a t i o n

a n d d i d n o t i mmed i a t e l y h e a r b a c k f r om her .

A l l r i g h t . And s o wa s t h e r e a d e a d l i n e i n t h a t

l e t t e r ?


(803) 252-3445 I (800) 822-0896

(


1 A : The r e was a d e adl i ne t o r e s p o n d e a r l y O c t ob e r

2 o r mayb e O c t o b e r 4 .

3 Q : S o d i d y o u d o b eh i nd - th e - s c en e s i nv e s t i g a t i on

4 o f what was g o ing o n ?

5 A : W e l l , you kno w , we c e r t a i n l y w e r e t r y i n g t o

6 figure o u t obv i ous ly b e c a u s e we c ou l d n o t be in

7 t ouch w i t h Ms . Hammond exac t l y wha t w a s g o ing

8 o n and what s he was r e f er r i n g t o . A n d s o

9 bas i c a l l y we · w e r e j u s t trying t o thi n k , you

1 0 know, wha t i n the wo r l d c o u l d t h i s be , w h a t in

1 1 t h e wor l d cou l d t h i s b e ? And s o , you k no w , one

12 of the p o s s i b i l i t i e s tha t o c c u r r e d to u s was

13 maybe t h e r e w a s s ome f e e i s s u e . And , y o u k n o w ,

1 4 b e caus e we c o u l d n o t h e a r f r om M s . Hamm o n d and

1 5 b e caus e C an t z o n Fo s t e r , w h o i s a l o c a l C o l u mb i a

1 6 a t t o rney , i s h e r e c l o s e by t o LLR , you k n ow , we

1 7 c a l l e d a n d a s k e d h i m t o c ome o v e r t o L L R a n d ,

1 8 y o u know , s e e i f t h e r e w e r e a c t u a l l y f e e s t h a t

1 9 w e r e due . F i nd o u t wha t tho s e w e r e and then

2 0 p a y tho s e f e e s i f t h e r e wer e f e e s t h a t w e r e

2 1 due .

2 2 MS . S HUTT : L e t m e s w i t c h o v e r t o M r . F o s t e r a b i t .

2 3 MR . FOSTER - EXAMINAT I ON BY MS . SHUTT :

2 4 Q :

2 5

M r . F o s t e r , i f y o u wi l l j u s t i d e n t i fy yo u r s el f

t o the b o ar d .


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My name i s C a n t z o n F o s t e r . I am a l o c al

a t t o rney in C o l umb i a . My p r a c t i c e f o c u s e s on

l i t i ga t i on i n real e s t a t e . And I a l s o s e r v e as

a b o a r d I am a prop e r t y owne r o f P o r t

O ' C a l l , l o c a l P o r t O ' Ca l l R e s o r t . I am a l s o on

t h e b o a r d o f d i r e c t o r s f o r P o r t 0' C a l l , a n d I

s e r v e a s t h e n on - j u d i c i a l f o r e c l o s u r e t ru s t ee

f o r t h r e e o f the p l ans a t i s s u e t o d a y .

B a s i c a l l y , under t h e S o u t h C ar o l i na T i m e s h a r e

A c t , a s ep a r a t e f o r e c l o s u r e p r o c ee d i ng i s s e t

up f o r v a c a t i o n t i m e s h a r e p r o p e r t i e s . And t h a t

s t a tu t e r e qu i r e s tha t a t r u s t ee b e app o i n t e d .

S o I a c t a s t h a t t r u s t e e , and i t i s a p r o c e s s

t h a t I

p r o p er t i e s

e n s u r e i s f o l l ow e d s o t h a t

a r e p r o p e r l y f o r e c l o s e d i n

t h e

t h e

i n c i den c e when a homeown e r s a s s o c i a t i o n i s

u n a b l e t o c o l l ec t the m ai n t enanc e f e e s f r o m t h e

p ro p e r ty owners . And we g o through the n o n -

j ud i c i a l f o r e c l o s u r e p r o c e s s t o handle t h e

f o r e c l o s u r e a n d then make s u r e the t r ans f e r i s

p r o p e r l y d o n e .

M r . F o s t e r , a t s ome p o i n t , d i d y ou come o v e r t o

L L R t o i nqu i r e abou t any f e e s d u e ?

I d i d . O n O c t ober 2 n d , Mr . P i e r c e a s ked m e t o

g o b y LLR t o p a y any f ee s t h a t m i gh t b e d u e f o r


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t h e f our p l an s . I c ame t o t h i s bu i l d i ng . I

was di r e c t ed t o the s e c ond f l o o r . I m e t w i th

a very n i c e l a dy n a m e d P a t a t t h e d e s k and

i n f ormed h e r t h a t I h a d brought thr e e c h e c k s o r

f our checks and t h a t I wan t e d t o p ay a n y f e e s

a s s o c i a t e d w i t h the . f o u r p l an s a t i s s u e . S he

p u l l ed h e r. r e c o rds and t o l d m e t h e r e w e r e no

f e e s due . And I t o l d h e r that I r e a l l y d i dn ' t

want to l eave h e r e w i tho u t p a y i ng any f e e s t h a t

m i ght b e d u e . And I thought t h e r e m i g h t b e

s omething du e and a s ke d i f s h e wou l d c he c k w i th

s omebody e l s e j u s t t o c o n f i rm tha t . She t o o k

my chec k s t o the b a c k and t o l d m e t ha t

s u b s equ en t l y t o l d m e t h e r e w e r e s ome f o l k s t h a t

w e r e w o r k i ng o n tha t . I wa i t e d f o r ab o u t 4 5

m i n u t es a n d then t h r e e o f the L L R emp l oy e e s , I

b e l i eve t w o o f them a r e h e r e t o da y , c am e b a c k

and gave m e my c h e c k s b a c k and s a i d t hey c o u l d

n o t a c c e p t t h e c h e c k s . 1 a s k e d t hem aga i n t o ,

y o u know , r e ga r d l e s s o f any i s s u e s that m i g h t

b e ra i s e d , y o u kno w , I a s k e d wou l d t hey p l e a s e

a t l e a s t j u s t t a k e the c h e c k s a n d c r e di t them

t o the f o u r p l an s a c c ou n t s a n d w e w o u l d w o r k

o u t any i s s u e s . B u t they j u s t s a id they

c o u l dn ' t a c c ep t my checks . And s o I br ought

CREEL COURT REPORTING, INC. I 230 Richland Street I Columbia, SC 29201

(803) 252-3445 I (800) 822-0896

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1 them b a c k .

2 Q : Thank y o u , Mr . F o s t e r .

3 MR . P I ERCE - EXAM I NAT ION B Y MS . SHUTT :

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Q : S o Mr . P i e r c e , when y o u a s k e d Mr . F o s t e r t o g o

t o L L R t o c h e ck on any b a c k - e n d f e e s , h a d y o u

r e c e i v e d a n i nv o i c e f r o m LLR s t a t i ng t h a t a ny

f e e s w e r e a c t u a l l y d ue ?

A : No .

Q : T o da t e have you r e c e i v e d a n i nvo i c e o r

s t a t emen t about the exa c t amount o f any f e e s

d ue ?

A : N o .

Q : Was t he r e ano the r o c c a s i on when y o u t r i e d t o

p ay f e e s ?

A : Y e s , a f t e r w e l earned f r om L L R t ha t , y o u k n o w ,

t he i r p o s i t i on was t h a t t h e s e f e e s w e r e

o u t s t an d i n g , a l tho ugh d i d n o t indi c a t e h o w m u c h

t h e y wer e , b u t they indi c a t e d , y o u know , t h e

ma j o r i s s u e t h a t they w e r e r a i s ing , y o u know,

to us l a t e r o n was t h e s e f e e s . As Mr . A t k i ns on

i n di c a t e d , they h a d a s k e d us f o r s om e

s ubmi s s i ons . And a s p a r t o f us s ending t h e m

t h e .t h i n g s t h a t t h e y had a s k ed f o r o f u s , w e

a l s o a g a i n , y o u kno w , tende r e d a che c k t o t r y

t o t a k e c a r e o f the f e es . A ga i n , j u s t t ry i n g


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SOUTfi CAROLINA REAL ESTATE COMMISSION 43

t o at t h a t p o i n t c a l c u l a t e them as b e s t we

c o u l d wi t h o u t hav i ng an invo i c e and w i t h o u t L L R

t e l l ing u s wh a t they though t t h e amo u n t o f

t h o s e f e e s m i gh t b e .

Q : And how much was t h a t check?

A : F o r $ 7 , 0 0 0 , I b e l i eve i t was .

Q : And wha t b e c am e o f tha t che c k ?

A : LLR had i t f o r a c o up l e o f d ays and t h e n t hey

Q :

A :

s en t i t b a c k indi c a t i n g that b e caus e i t w a s f o r

l a t e f e e s o r wha t ever and t h e f e e s were l a t e ,

t h a t they c o u l dn ' t a c c ep t i t .

D i d the p l an s that you repres e n t i n t en t i o n a l ly

f a i l t o p a y any o f t h e s e renewal f e e s ?

Ab s o l u t e l y n o t . And we ' ve w o r ked r ea l l y h a r d

t o a l ways c o op e r a t e wi th L L R a n d the R eal

E s t a t e C o mm i s s i o n . B u t frankl y , t h e l a s t t h i ng

i n t h e w o r l d that we wou l d d o wou l d b e t o , you

k n o w , on p u r p o s e , not pay s om e f e e . I m e an ,

w e ' r e t a l k i n g ab o u t $ 2 5 0 her e , - you kno w , t i mes

f ou r res o r t s . And·, you know , we wo u l dn ' t n o t

h a v e pai d i t i f we had , you know , under s t oo d

t h a t i t w a s due . Unf o rtuna t e l y , what i t t urns

o u t happ e n e d a f t er l o o ki ng at t h e ma t t er i s f o r

a n umbe r o f year s , K e n K i t t s a t LLR , who was

t h e R e a l E s t a t e P r o gram C o o r d i n a t o r at LLR f o r


(803) 252-3445 1(800) 822-0896

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a l ong t ime , h i s t o r i c a l ly s en t o u t i nv o i c es

every year a t , you kno w , v a r i ous t i mes

through o u t t h e year . An d h e would i n d i c a t e ,

you know , t h a t thi s f e e was coming · du e and

n e ed e d t o be p a i d . The a c c o u n t i ng dep a r t m ent

wou l d r e c e iv e that . They w o u l d p r o c e s s the

c h e c k f o r the four p l ans a n d then s en d t h a t

o u t . A t s ome p o i n t tho s e i nvo i c e s s t o p p ed

c o m i ng . And u n f o r t una t e l y , the way our

a c c o un t i ng i s s e t up , they w a i t on an i n v o i c e

t o come i n and then p r o c e s s i t and p a y i t .

A n d , you kno w , becaus e we d i d n o t r e c o gn i z e

t h a t Ken had s t opp e d s en d i n g inv o i c e s , the

a c c o u n t i n g depar tment w a s n ' t t ri ggered t o s end

t ho s e c h e cks and s o they s topp e d .

Q : D o . y o u a l l s tand ready and w i l l i ng t o p a y any

b a c k - due r enewal f e es ?

A : Comp l e t e l y .

MS . S HUTT : Mr . Cha i rman , a t t h i s p o in t , t hat

c onc l ud e s our t e s t imony o n the f i rs t i s s u e

abou t t h e nonp ayment o f t h e renewal f e e s and

wo u l d l i ke to p a s s o f f f o r t h e C ommi s s i on e r s an

o pp o r t un i ty t o t a l k t o a ri d a s k the two

w i tnes s e s any ques t i on s they have ab out t hat

b e f o r e w e move onto o ther i s s u e s .


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SOUTH CAROLINA REAL ESTATE COMMISSION'

THE C H A I RMAN :

A t k i n s on ,

p r e s e n t e d

MR . ATKINSON :

Y e s ,

do you

a t t h i s

I don ' t

rna ' am . T hank you .

have any ques t i ons o f wh a t

p a r t and t h e l a s t p o r t i on ?

have any qu e s t i ons .

4 5

Mr .

was

THE CHAIRMAN : Comm i s s i oner memb e r s , any ques t i on s ?

MR . E DWARDS : What year was i t w h e n y o u c ame t o the

L L R ? Wh a t year was tha t ?

i<�:R . F O S TE R : S i r , I c ame t o LLR o n O c t ober 2 n d o f

l a s t y e a r .

1 0 MR . EDWARDS : o c tober 2 n d o f las t y e a r .

1 1 t-lR . F O STER : Y e s , s i r .

1 2

1 3

1 4

1 5

1 6

1 7

1 8

1 9

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2 5

MR . EDWARDS : But the f e e s hadn ' t been pai d s i nc e

2 0 0 4 ?

MR . ATKINS O N : I t var i e s by r e g i s tr a t i on . And i n

t h e o r d er s , t h a t s h o u l d b e a p a r t o f t h e

p a c ka g e f o r e a ch s p e c i f i c r e g i s t r a t i o n . T h e r e

w a s one , I t h i nk i n 2 0 0 6 , a n d there was 2 0 0 7 .

O k ay , y e a h , o kay t h e date s h o u l d been on t h i s .

B u t , y e a h , i t var i e s becau s e renewal s a r e d u e

o n di f f e r e n t d a t e s . I t depends on the o r i g i n a l

r e g i s t ra t i on d a t e . S o the d a t es f r om whi c h

o r a t l e a s t our l a s t r e c o r d s o f up dat e s o f

r en ewa l s v a ry .

MR . 0 ' KELLEY : Mr . F o s t e r , has a ny on e s a i d f o r the

d u e s now you owe X o r the day y o u were here di d


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anybody t e l l you , y o u owe X f r om ' 0 6 f orwar d ?

MR . FOSTE R : No . The · day I came here wha t I was

t o l d w a s we d i dn ' t owe any t h i ng . Our r e c o rds

d i dn ' t s h ow that w e owed any t h i ng . T h e y w ent

and I i ns i s t e d , p l eas e go b a c k and c h e ck .

I ' m p r e t ty sure we do , but I don ' t know . wh a t we

owe , b u t I ' m h e r e t o p ay i t .

p r ep a r e d t o pay $ 7 , 5 0 0 on t h a t day .

And I was

As o f that

day and as of t o da y , I ' m n o t awa r e o f an a c tual

amount t h a t is owe d . I don ' t think P o r t O ' C a ll

o r any o f the o th e r p l ans had r ec e i v e d an

i nv o i c e f o r the amount t h a t ' s owed . And a s I

unders t and i t , s t a n d r eady and wi l l ing an d a b l e

t o p ay wha t ever i s owed t o day i f i t c a m e down

t o t h a t .

M R . O ' KELLE Y : And the f i gu r e was j u s t bas e d o n your

c a l cu l a t i ons of 2 5 0 t i mes f o u r t imes the n umber

o f y e a r s 7

M R . FOSTER : M r . P i e r c e c a l l ed me and asked me t o go

M R .

pay t h e f e e s , a n d I t h i n k s o mebody in t h e i r

a c c ount i ng dep a r t m e n t made t h e i r b e s t gue s s o f

wha t m i g h t b e owe d . B u t I c an ' t t e l l you w i th

ab s o l u t e c e r t a i n t y t h a t t h e y · d i dn ' t hav e an

invo i c e a n d ne i th e r d i d I .

EDWARDS : Who t o l d you t h a t t h e r e w a s n ' t


(803) 252-3445 I (800) 822-0896

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Sbtl'TH CAROt.INA REAL ESTATE COMMISSION 4 7

any thing d u e ?

MR . FOSTE R : T h e f i r s t l a dy t h a t I s p o k e t o w a s a t

t h e f r o n t d e s k o n t h e s e c ond f l o o r . H e r n a m e

w a s P a t . She l o o k e d i n t h e c o mp u t e r s y s t em a n d

c o u l dn ' t f i nd any t h i ng d u e . S a i d , I d o n ' . t

t h i nk you k n o w , p e op l e d o n ' t n o r m a l l y c om e

b r i n g c h e c k s t o u s , but I ' m l o o k i n g i n t h e

s y s t em a n d I do n ' t s e e any t h i n g d u e . And I

a s k e d h e r i f s h e w o u l d a t l e a s t go c h e c k wi t h

s o m ebody e l s e b e c a u s e I ' m p r e t t y s u r e s om e t h i n g

was due . S h e c am e b a c k a n d t o l d m e , y eah ,

t h e r e ' s s o m e f o l ks w o r k i ng o n t h i s . P l e a s e b e

p a t i e n t . T h ey w i l l b e w i t h you i n a m o m en t .

And app r o x i ma t e l y 4 5 m i nu t e s l a t e r , s om e f o l k s

came and t o l d m e t h a t they c o u l d no t a c c ep t my

c h e ck s . And t h a t I a s k e d t h em t o p l e a s e

j u s t t a k e t h e c h e c k s · and c r e d i t t h em t o t h e

a c c o un t s w i t h t h e f o u r plan s . And t h ey s a i d

t h ey wo u l d no t a c c ep t t h e c h e c k .

MR . EDWARD S : W a s t h a t t h e f ir s t and t h e o n l y t i m e

y o u w e r e h e r e ?

M R . F O S TER : Y e s , s i r . O n O c t o b e r 2 , f i r s t a'n d o n l y

t i m e I w a s he r e . I bel i e v e t h a t t h e c h e c k s

m i g h t h ave been t en d e r e d b e f o r e t h a t da t e a s

w e l l , b u t t h a t ' s my i n t er a c t i o n .


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SOUTH CAROLINA REAL ESTATE COMMISSION 4 $

MR . ATKINSON : Mr . C h a i rman , may I make j u s t a

s t a t em e n t a s t o why there was no o u t s tand i ng or

i nvo i c e that wou l d have b e en r e f l e c t e d f o r as

o f a renewal dat e ?

THE CHAIRMAN : P l eas e , s i r .

6 MR . ATKINSON : The r e a s o n i s becaus e ��hen t i m e s hare

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r e g i s t r a n t s do n o t r enew , w e do n o t g o and

c h e c k b a c k on them , and we do no t - - y o u know,

i t s ays l a t e f e e s , or the r e g i s t ra t i on y e a r has

p a s s e d , and we do n o t go b a c k ret r o a c t i ve l y and

a c c e p t f ees f o r t h o s e years that have a l r e ady

p a s s e d a n d app r o v e tho s e . The r e a s on w e are

h e r e t o da y o n e o f the r e a s ons w e a r e here

t o day i s b e c au s e w e , as s t a f f p e op l e , di d not

know exa c t l y wha t f e e s we n e e ded to ask f o r at

t h i s p o i n t w i t h t h e t ime that has l ap s ed . we

d i dn ' t know whe t h e r t o ask f o r $ 2 5 0 renew a l f ee

f o r t h e y e a r go i ng f orwa rd o r i f we a r e to

t r e a t t h i s as a new regi s t er o r a re-

r e g i s t ra t i o n and a s k f o r the f u l l r e gi s t r a t i on

f e e . B u t w e were n o t abl e t o at s t a f f lev e l go

b a c k and app r o v e a n d a c c.ep t p ayme n t f o r y e ars

when renewal was n o t p a i d .

THE CHAI RMAN :

M R . ATKINSON :

How much i s a f u l l r e g i s t r a t ion f e e ?

I t i s $ 5 0 0 . And there i s a f o rm u l a


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( ··.


that i s i n t h e · T i m e s h a r e A c t f o r i t .

Deve l op m en t s w i t h i n t e r e s t are - - i t ' s l i k e $ 1 0

p e r o n e week . us e avai l ab i l i t y p e r i o d i n the

p l an b u t mo s t o f the re g i s t r a t i o n is g o i n g t o

b e $ 5 0 0 . That ' s t h e cap f o r the i n i t i al

reg i s t r a t i o n .

!([R . 0 1 KELLEY : Mr . Cha i r m a n , i t w o u l d s e em t o m e

that t h i s wo u l d s omehow c o u n t a s r e n e w a l and

no t - - j u s t t h inking out l o u d b a s ed on wh a t we

heard . I f M r . K i t t s w a s s en d i ng r e n ewal

n o t i c e s and t ho s e s t opped in ' 0 7 , and t h e y ' v e

b e e n p a i d , I do n ' t know why t h i s wou l dn ' t b e

s e en a s a r e n ewa l , a n d I g u e s s t ha t ' s w h y we

are h e r e , f o r us to make t h a t c a l l s i n c e at

s t a f f l ev e l , y o u a l l don ' t f e e l comf o r t ab l e and

l i t er a l l y c an ' t make t h a t c a l l .

T H E CHAIR!>IAN : I · a g r e e . I was j u s t s i mp l y t ry i ng t o

M R .

MR .

M R .

M R .

M R .

M R .

M R ;

f i nd o u t .

EDWARD S :

ATKINS O N :

EDWARDS :

ATKINS O N :

EDWARDS :

ATKINSON :

EDWARDS :

You s a i d t h e $ 5 0 0 i s t h e i n i t i a l ?

T h a t i s t h e o r i g i n a l - - t h e i n i t i a l .

Wh a t i s t h e r e newab l e ?

R e n e w a l i s $ 2 5 0 .

$ 2 5 0 .

Y e s .

S o i f i t ' s b e en r en e w e d e v e r y y e a r - -


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i t i s f o ur o f them ?

MR . F O S TE R : Y e s , s i r .

MR . EDWARDS : And s o they hadn ' t p a i d s i nc e 2 0 0 7 .

T h a t wou l d b e s i x years s i n c e they hadn ' t p a i d

t i me s f o ur t i mes $ 2 5 0 .

MR . ATKINS ON : I n my o p i n i on , i t ' s no t n e c es s a r i l y a

m a t t e r o f j us t the f e es , i t i s a ma t t e r o f the

r e g i s t r a t i on b e ing · r enewed . Y o u know, a s we

t r ea t o ther l i cens e es i f t hey do n o t r ertew

t h e i r r e g i s t r a t i on f o r a p ar t i cu l a r y e a r , t hen

t h ey · a r e n o l onger regi s t e r e d o r no l o n g e r

l i c en s e d a t that p o i n t . S o a c c ep t i n g p as t

f e e s , I don ' t think wo u l d have been p r op e r in

t h i s p r o c es s .

MR . E DWARDS : I f I don ' t pay my t axes , they d o n ' t

c om e b e g g i n g f o r t hem .

M R . ATK I N S O N : Y e s ·, s i r .

T H E ·c H A I RMAN : P l ea s e c o n t i nu e , M s . Shu t t .

M S . S HUTT : T hank y o u , Mr . Chai rman . J u s t bri e f ly

o n that p o i n t , I wou l d l i ke t o a s k Mr . Bar f i e l d

t o r e s p ond . Mr . B ar f i e l d has b een a l r e a dy

i d en t i f i ed a s an a t t o rney f o r the p l ans . H e i s

a l s o t h e t r u s t e e f o r the p l ans . And s o I w o u l d

l i k e f o r h i m t o speak d i r e c t ly t o t h i s i s s u e o f

r e g i s t r at i o n a n d the f a c t t h a t t h e s e f our p l ans


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. have l o n g s i n c e been r e g i s t e r e d .

MR . BARF IELD : Good a f t ernoon , f o l k s . L e t m e c ome

o u t i n f r o n t a l i t t l e b i t . I t ' s a l i t t l e b i t

con fus i n g t o t a l k i n t e rms o f l i c ensure i n this

c o n t ext . I t ' s m i s l e a di ng , and i t ' s p o t e n t i a l ly

danger o u s . T imeshare p l ans i n the a b s t r a c t ,

t h a t ' s r e a l ly j us t a t erm c r e a t e d f o r p ur p o s es

o f the T i m e s h a r e Ac t t h a t i s a way t o d e s c r ibe

a sys t em o f owners h i p o f r e a l p r oper t y . And

what i s n o t spec i f i c a l l y g o v e rned b y t he

T imeshar e A c t i s governed by t h e Hor i z o n t al

P r o p e r t y A c t o f wh i ch I am s u r e you a r e a l l

f am i l i a r t o o n e d e g r e e o r a n o t her b e i n g r e al

e s t a t e p r o f es s i ona l s . The p l an , as w e a l l

i n t erp r e t t h e a c t t o mean , i s t h e sys t em o f

owners h i p a n d the s y s tern o f governanc e o f a

p a r t i c u l a r t im e s h a r e d ev e l opmen t . I t i s n o t

l i c ensur e . A p l an w o u l d c o n s i s t o f a m a s t er

d e e d , b y - l aws , and wha t ev e r o ther gov e r n i ng

do c umen t s may i mp a c t owne r s h i p o f a p ar t i cular

t i mesha r e dev e l opmen t . And s o when we g o d o wn

t h e p a t h o f t a l k i n g about a l ap s e i n t h e p l an

o r a l ap s e o f r e g i s t r a t i o n i t b e comes dan g e rous

b e caus e wha t y ou ' r e r eal l y s ay i n g i s y o u ' re

c a l l ing i n t o ques t i o n the s t a t u s o f owne r s h i p


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and gov ernan c e o f t h e own e r s o f i n d i v i d u a l

weeks o f t i meshare wi thin t h a t dev e l o p m en t .

And I d o n ' t think we want to g o there b e c au s e ,

aga i n , w e ' r e t a l king ab out 4 8 , 0 0 0 i nd i v i d u a l

owners t h a t a r e par t i c i pa t i ng i n t h e s e p l an s .

Now, i n t e rms o f r e g i s t r a t i on , the i n i t i al

r e gi s t r a t i on p a ckets tha t a r e s en t t o LLR a r e

�e ant t o .inc lude and d o i n c l u d e o ther d o c um e n t s

beyond t he do cumen t s tha t c o mp r i s e t h e p l an .

Wel l , why i s that ? B e c aus e a t the t im e o f

i n i t i a l r e g i s t r a t i on , you ' v e g o t a dev e l op er

who ' s g e t t i ng i n to the t i m e s h a r e bus i n e s s a n d

who ' s d o i n g a new deve l opmen t . And s o LLR d o e s

have a v e s t e d i n teres t i n f i gu r i ng , w e l l h o w - -

n o t o n l y h o w i s t h e p l an s e t u p b u t h o w a r e

t im e s ha r e s g o i n g t o b e ma r k e t e d and s o l d i n

t h i s n e w devel opment . But t h e r e i s , v e ry e a r ly

o n i n t h e p r o c es s , a diver g e n c e o f the p l an ,

wh i c h i n o u r po s i t i on i s c o n s t a n t , d o e s n o t

l ap s e , d o e s n o t fai l , and tho s e o ther docum e n t s

t h a t s p e a k t o how the s e things a r e mark e t e d a n d

s o l d . And s o I wan t to b e p e r f e c t ly c l ear

about t h a t . We ' re g e t t i n g i n t o dang e rous

t er r i t o r y i f we s t a r t t a l k i ng a bo u t t he s e

t h i ng s i n the s t andard nomenc l a t u r e


(803) 252-34451 (800) 822-0896

o f


1 l i cens i n g tha t p e r hap s this board i s us e d to

2 u s ing .

3 MS . S H UTT : Thank y o u v e ry mu ch , Mr . B a r f i e l d . Mr .

4 Chai rman , w i t h y o u r p e rm i s s i on , I w o u l d l i k e to

5 move on t o t h e o th e r is sues i n the p r i v a te

6 o r ders . S o we ' v e t a l k e d abo u t tha f i r s t i s s u e ,

7 whi ch i s nonpaym e n t o f c e r t a i n renewa l f e e s .

8 The s e c on d i s s u e i nv o lves c e r t a i n p i e c e s o f

9 p ap er wh i ch L L R c o n t ends that i t d o e s n o t h ave

1 0 i n i t s f i l e . L e t m e a s k Mr . P i er c e .

1 1 MR . P I E RCE - EXAMINAT I O N B Y MS . SHUTT :

1 2 Q :

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M r . P i erc e , a s a g e n e r a l ma t t e r , have the p l ans

m a i n t ained r e gu l a r c o n t a c t wi th LLR f rom t he

t i me o f r e gi s t ra t i on , whi ch i s on t h i s b o a r d in

t h e mi ddl e , f r o m t h e t ime o f r e g i s tr a t i on

o nwards ?

Y e s , they have . Over the years , a s I

m e n t i o n e d , t h e r e a r e a number o f f o l ks who h ave

b e en i nv o lved w i t h t h e p l an . Dwi gh t Trew, the

f o under o f our c ompany , you know, has c e r t a i n ly

h a d c o n t a c t w i t h L L R over the y e a r s abo u t the

p l an s , as we l l h a s W i l l i am F o i l e s who i s an

a t t o rney o n H i l t o n Head I s l and who wa s the

i n i t i a l p l an ' s a t t o rney and trus t e e ;_ and Tom

V e rn o n , my f o r m e r l aw partner , who is now


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S'OUTH CAROt:!:NA REAL ESTATE CbMM!SSION 54

deceas e d . H e d i e d i n 2 0 0 9 , b u t h e w a s a l s o

trus tee f o r the p l ans f o r awhi l e and a t t o rn e y

f o r t h e p l ans . Then obv i o us l y , M i c ha e l

B a r f i e l d , who i s h e r e t o day , h a s h a d c on t a c t as

t rus tee o f the p l ans and a l s o is a t t o r n e y f o r

the p l a n s .' I a l s o , o v e r the years , h a v e had

c o n t a c t wi th var i o u s f o l k s at L L R and t h e R e a l

E s tate C ommi s s i o·n . T o name j us t a f e w o f the

f o lks t h a t we have had c o n ta c t w i t h , tha t w o u l d

i nc l ude : Robe r t S e l lman , who f or many y e a r s was

the R e a l Es t a t e Commi s s i on Adm i n i s t r a t o r ; a l s o

Ken K i t t s , who was the T i me s hare P r o g ram

C o o rdina t o r ; Ed F a rne l l , who was a t L L R f o r a

number o f year s ; and J . P i t t s , who f o l l ow e d Mr .

S e l lman as Admi n i s t r a t o r a t L L R ; and a l s o

Sharon W o l f e . And I ' v e men t i oned t h a t I ' v e

b e en i n t o u c h wi th S t e l l a H amm o n d , as we l l .

The p a r t i e s subm i t t e d t o t h e Commi s s i o n a

p a cket o f do cumen t s . C a n y o u t e l l u s what

E xh ib i t 1 i s ? And j u s t f o r t h e r e c o r d , t h a t ' s

B a t es S t amp ed as P l an Exh i b i t 0 0 3 .

T h i s i s a l e t t e r f rom J anuary 9 , 2 0 0 1 f r o m Ken

K i t t s a t the Rea l E s t a t e C o mm i s s i o n t o a

p urchas e r a t C o r a l R e e f i n di c a t i ng tha t h e

apparent l y thi s owner h a d h a d s ome i s s ue .


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h a d f o r w a r d e d that l e t t e r to Dw i gh t T r e w . And

that at t h e end o f the day , you know, K e n f e l t

c on f i den t t h a t Dwight was g o i ng t o s o l v e i t .

H e had t h e utmo s t c on f i denc e , a s i ndi c a t e s in

Dwight , and B i l l F o i l e s , who I have men t i oned

b e f o r e as one of the p l an a t t orneys , a n d t ha t ,

y o u kno w , t h i s own e r sho"u l d b e i n t o u c h wi th

h i m i f t h e y have any i s s u e s . T h i s i s

i n di c a t i v e o f t h e r e l a t i onsh i p that the p l ans

have had w i th LLR a t the Rea l E s t a t e C omm i s s i on

a n d i n p a r t i cu l ar w i th Ken K i t ts over t h e y e ars ·

and i s i nd i c a t i v e o f the r e l a t i o nship w e h ave

m a i n t a i n e d w i th LLR and the · Re a l E s t a te

C omm i s s i o n and members o f the b o a r d g o i ng

f o rwar d .

M S . S HUTT : A n d Mr . C h a i rman , I don ' t know i f you

w a n t me t o move the s e i ndivi dual exh i b i t s i n or

1 9 M S . COLEMAN : T h e y a r e a l r eady a p a r t o f t h e r e c o rd .

2 0 M S . LEWI S : T h e y a r e a l r e ady in a s Exh i b i t 1 .

2 1 M S . S HUTT : V e r y g o o d , tha_nk you v e ry mu c h .

2 2 T HE C H A I RMAN : C o l l ec t i v e l y as Exh i b i t 1 .

2 3 M S . SHUTT : T h a n k you , Mr . Chai rman .

2 4 M R . B A R F I E L D - EXAMI NATI ON BY MS . S HUTT :

2 5 Q : M r . Bar f i e l d , I t h i nk you hav e a l r e ady to l d the


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SOUTH CAROLINA REAii ESTATE COMMISSION 5 6

C ommi s s i on a l i t t l e b i t a b o u t thes e p l an s , a n d

we ' ve t a l ke d a l i t t l e b i t about the h i s t o r y o f

the p l an s . Can y o u t a l k t o u s ab o u t t u r n o v e r ?

W e ' ve a l r eady t a l ke d a b o u t P o r t O ' C a l l a n d f o r

t h e r e a s o n i t was b e i ng t u r n e d o v e r . C an y o u

t a l k t o u s abo u t wha t t h a t means und e r t h e

mas ter d e e d and under t h e p l a n ?

C er t a i nl y . As I men t i o n e d , t imeshare r e g i me s ,

i t ' s a s ub s e t o f h o r i z on t a l p r.op e r ty r e g i m e s .

And the H o r i z on t a l P r op e r t y A c t has a p r o v i s i on

i n i t t h a t addr e s s e s t u r n o v e r o f c o n t r o l o f a

homeown e r s as s o c i a t i on t o t h e memb e r s o f t h e

a s s o c i a t i on upon t h e o c c u r r e n c e o f s om e

t r i gg e r i n g even t . And u s u a l l y what t h a t m e an s

i s t h e dev e l op e r o f a devel opmen t , b e i t

c ondom i n i urns o r t i m e s h a r e s o r what have y o u ,

h a s s o l d a par t i cu l a r p e r c en t age o f the u n i t s

i n tha t devel opmen t . I t i s u s ua l l y a h i gh

t h r e s h o l d l i ke 9 0 o r 9 5 p e r c en t . Once t h a t

t hr e s h o l d i s me t , t h e t r i gg e r i s p u l l e d , and

t h a t d e v e l op e r r e l i n q u i s he s c o n t r o l o f t h e

b o ard o r wha t ever o th e r managemen t m e chan i s ms

a r e in p l a c e f o r t h a t r e g i m e to the e l e c t e d

memb e r s o f the a s s o c i a t i o n . Genera l l y , a b o a r d

o f d i r e c t o r s i s wha t we h a v e f or t h e s e f o u r

CREEL COURT REPORTI!VG, INC. 1230 Richland Street I Columbia, SC 29201

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t im e s h a r e p l ans . Two o f t h e f o ur t i m e s h a r e

p l ans t h a t w e are h e r e . about t o day have l ong

s in c e b e en t u rned over to b o a r d c on t r o l . And

tha t has p o t ent i a l ly - - we l l , i t does have v er y

i mp o r t an t ram i f i c a t i o n s f or s ome o f t he i s s u es

tha t LLR has r a i s ed in t h e i r p r i v a t e o rd er s .

B u t I w i l l l e t y o u a s k m e about t h o s e

i n d i v idua l l y .

S o l e t m e j u s t take u s . b r i e f ly through e a c h

r e s o r t . S o P o r t O ' C a l l , when was P o r t O ' C a l l

r eg i s t e r e d to s tart s e l l ing t i me s h a r e s ?

P o r t O ' C a l l was o r i g i n a l ly r e g i s t e r e d i n 1 9 8 9 .

S o i t p a i d i t ' s t imeshare r e g i s t ra t i o n f e e

whe t h e r t h a t was $ 5 0 0 o r wha t ever i t was a t t h e

t im e .

C o r r e c t .

And h o w abo u t f o r C o r a l Ree f ?

C o r a l R e e f was regi s t e r e d i n 1 9 9 6 .

And b o t h o f t h e s e r e s o r t s , y o u s a i d , have b e en

t ur n e d o v e r t o h omeowne r s as s o c i a t i ons ?

T h a t ' s c o r r e c t . P o r t O ' C a l l w a s turned ov e r t o

a s s o c i a t i on c o n t ro l i n 1 9 9 2 . And a s to C o ra l

R e e f , t h a t da t e was 2 0 0 5 .

As t o I s l and L inks , wha t y e a r was t h e

H o r i z on t a l Prop erty R e g ime es t ab l i sh e d f o r the


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time s ha r e h o l d ings ?

R i gh t . The I s l and L i nks r e g i m e , a s Mr . P i e r c e

a l luded t o a l i t t l e wh i l e ago , t h e h i s t o r y i s

a l i t t l e b i t c o nvo l u t e d and t o r tu r e d . I t was

o r i g i na l l y e s t ab l i s h e d a s t h e P l an n e r ' s

Quar t e r s Ho r i z o n t a l P r o p e r ty Regime , and t ha t

wou l d have b e en i n

des c r i b e d , i t went

' 8 9 .

t h r ough

As Mr . P i e r c e

a s e r i e s o f

d i f f e r ent dev e l op e r en t i t i es . I t l anded i n t h e

l ap o f C or a l R e s or t s , L L C , whi ch i s t h e c u r r en t

dev e l op e r , i n 2 0 0 4 . At t h a t t im e , C o r a l

Res o r t s L L C , b e caus e t h e r e was s uch a s ea

change , i f y o u w i l l , i n the dev e l op e r e n t i ty ,

they s aw f i t t o subm i t r � g i s t r a t i on �a t er i a l s ,

even t h o ugh i t d i dn ' t have t o b e r e - r e g i s t e r ed ,

t h e p l an . th a � i s , t h e n e w d ev e l o p e r s aw f i t t o

s ubm i t a s l a t e o f r eg i s t ra t i on ma t er i a l s a s i f

i t w e r e a new r eg i s t r a t i o n j u s t t o g e t 6 f f o n

the r i g h t f o o t s i n c e t h e y w e r e t ak i ng over .

Wha t y e a r was tha t ?

That w a s i n ' 0 4 .

O kay . And how about C o r a l S ands ?

C o r a l S ands was app r o v e d f o r r e g i s t r a t i o n in

2 0 0 3 . T h a t i s s t i l l under deve l op er con t r o l ,

and t h a t i s t h e one o f the f o u r r e g imes - - t h a t


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i s the o n l y one of the f our r e g ime s , t h a t i s ,

that ' s s t i l l b e ing bu i l t ci u t . New bu i l d i ngs

are b e i n g cons t r u c t ed ther e .

loiS . TAKAC S : I s that the one on Pop e Av enu e ?

MR . BARF I E LD : I t i s .

Q : And we ' r e go ing t o get i n t o t h i s a l i t t l e more

A :

l a t er , b u t a s a t rus t e e , d i d y o u have o c c a s i o n

t o c ommun i c a t e wi th LLR abo u t a new pha s e o f

that dev e l opme n t ?

I d i d . T h e m o s t recent p ha s e o f C o r a l S an d s i s

wha t ' s c l as s i f i ed as

c o r r e s p onds t o wha t

Phas e

they

7 . Pha s e 7

c a l l i nt erna l ly

B u i l d i ng H . I t ' s a new bu i l di n g o f· c o n d o s .

And i n 2 0 1 0 because that b u i l di ng had b een

c omp l e t e d , t h e t im e came t o s ubmi t the c o n d o s

i n · th a t bu i l ding t o t h e p l an o f i n t e r v a l

o c cupancy a n d t o t h e mas t e r d e e d o f the reg i me .

B u t b e f o r e t h a t c o u l d b e done , t ho s e a ddi t i onal

uni t s h a d · t o b e adde d t o t h e r e g i s t r a t i o n f o r

t h e c o r a l S ands p l an . S o i n S ep t ember o f 2 0 1 0

I c o mp i l ed t ho s e ma t e r i a l s a n d s en t them v i a

F e d E x t o LLR .

Q : We ' r e g o i ng t o g e t i n t o t h a t a l i t t l e more

l a t e r . B u t o n c e a p l an has b e en r e g i s ter e d , i s

t h e r e a n y duty t o cont i nu e t o c ommun i cate w i th


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L LR abo u t tho s e p l ans ?

W e l l , i f - - y e s , but i t ' s a l i m i t ed d u t y . I f

new t im e s ha r e i n t e r e s t s a r e a dded t o t h e p l an ,

s u ch a s what I d e s c r ibed , y e s tho s e t hat

i n f orma t i on mus t be c o nveyed to L L R . T h e r e ' s

art odd p a s s i n g r e f e r en c e i n the s t a t u t e t o a

r equi r ement tha t L L R b e n o t i f i ed o f s ubs t a n t i al

c hang e s t o t h e p l an . B u t tha t ' s what

c ons t i t u t e s a s ub s t a n t i a l change i s unde f i n e d .

And s i n c e w e have n o regu l a t i o ns t o g u i d e u s in

f u r ther d e t a i l , the p l ans t h em s e l v e s a r e r a t her

l e f t t o t h e i r own dev i c e s t o d e t e r m i n e what

t h a t i s .

A s trus t ee , have y o u c ommu n i c a t e d wi t h LLR

a b o u t a ny t h i ng t h a t you c o n s i der a s ubs t an t i a l

c hange i n t h e p l an dur i n g your t enure a s a

t r us t e e ?

I n c o n j unc t i o n w i t h t h e subm i s s i on o f the P h a s e

7 regi s t r a t i o n m a t e r i a l s a t C o r a l S ands , we

a l s o i n f o rm e d , i n the s ame p a c k e t o f m a t e r i a l s ,

i n f o rmed LLR t h a t t h e dev e l o p e r at C o ra l S ands

w a s go i n g to be changed f r o m an e n t i ty c a l l e d

C o ra l H o l di ng s , L L C , wh i ch i s part o f the s ame

g r o up , t o a n e w e n t i ty tha t had b e e n c r e a t e d

c a l l e d H i l t on H e a d I s l and Deve lopment Comp a n y ,


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L L C . An d we p rovi ded s upp o r t i ng d o cumen t a t i o n

f o r tha t . Ap a r t f r om tha t , t h e r e have b e e n n o

s u b s t an t i a l changes t o a n y o f t h e s e p l an s

during m y t enure a s trus t e e .

And a t any t ime s i n c e you b e c am e trus t e e o f the

pl ans , have you had any r e a s o n t o b e l i ev e t h a t

t h e p l ans w e r e n o t i n c omp l i a n c e ?

Abs o l u t e ly n o t . And as c o un s e l f o r the p l a n s ,

i f I had t h ough t that and had n o t done a n y t h i ng

ab o u t i t , then I would b e j e o p a r d i z ing m y own

l aw l i c en s e . S o c er t a i n l y no t .

Okay . S o w i t h that kind o f c on t ex t i n m i n d ,

l e t ' s m o v e t o the o ther i s s u e s , i n s p e c i f i c LLR

p r i v a t e o rde r s . The rema i n i ng i s s ues b e f o r e

t h e Comm i s s i o n a l l · invo l v e wh e t h e r the p l an s

p r o v i d e d c e r t a i n dfsc�eet p i e c e s o f i n f o rma t i on

t o LLR . And s o t h e f i r s t i s s u e l e t ' s de a l w i t h

i s t h e m a t t er o f r eg i s t e r i ng C o r a l S ands P h a s e

7 . And C o mmi s s i on e r Taka c s , t h a t ' s the o n e y o u

a s ked w a s i t o n Pope Aven u e ?

2 1 MS . TAKAC S : C o r r ec t .

2 2 MS . S HUTT : T h a t ' s t h e o n e y o u a s k e d a b o u t .

2 3 Q :

2 4

2 5

And s o , Mr . B a r f i e l d , l e t m e a s k . you a b o u t

t h a t . C a n y o u t e i l - - c a n y o u r em i nd us a b o u t

t h a t p a r t - - t h a t devel opmen t ?

CREEL COURT REPORTING, INC. 1230 Richland Street I Columbia, SC 29201 ·

(803) 252-34451 (800) 822-0896

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A : R i ght . As I s a i d , that was comp r i s ed o f the

addi t i o n o f o n e new r e s i d e n t i a l bu i l d i ng as

we l l as s ome n e w amen i t i e s t h a t were a c c e s s i b l e

t o the en t i r e r e g im e , a s I r e c al l . - I p u t

t o g e t h e r o n e o f the real l y b i g t h r e e - r i ng

b i nders , y o u know, where t h e _ r ings w e r e the

_ s i z e o f y o u r h e a d o f ma ter i a l s and s ubm i t t e d

t h a t p a c k e t t o LLR i n S ep t emb e r o f 2 0 1 0 .

Q : S o L e t m e b r i n g the Commi s s i on ' s a t t e n t i o n o f

A :

wha t we have t agged as Exh i b i t Numb e r 2 , and

tha t i s B a t e s S t amp ed as P l an 0 0 5 - 0 0 6 . Mr .

B a r f i e l d , w i l l y o u t e l l us what tho s e documents

a r e ?

Y e s . T h e f i r s t page i s a l e t t e r s i gn e d by

mys e l f da t e d S ep t emb er 2 , 2 0 1 0 . T h i s w o u l d

have b e e n s imp l y t h e trans m i t t a l l e t t e r t h a t

a c c o mpan i e d t h a t l a rge binde r . The s e c ond p age

i s the F e d Ex r e c o r d f o r tha t p a ck a g e . A

c o u p l e o f t h i n g s t o n o t e . T h e r e c i p i en t the

s ender was m e . The r e c i p i e n t was J o hn P i t t s ,

wh o was t h e A dm i n i s t ra t o r f o r the t i meshare

p l ans a t LLR a t that t i m e . _The da t e o f

d e l i v ery w a s S ep t embe r - 3 rd , s o t he. n e x t day .

And the p a c k a g e was s i gned f o r by s ome o ne named

C . Wink l e r at LLR . And t h e o n l y o ther t h i ng


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t h a t I wou l d draw your a t t en t i on t o wa s t h a t

the ra t e o f w e i gh t o f t h e p a c k a g e was n i n e

p ounds . S o I was n o t l y i ng wh en I s ay i t was

h e f ty .

Q : S o nine p o unds mean i ng two r e ams o f p ap e r ,

about 1 0 0 0 pages ?

A : I t was a l o t .

Q :

A :

O kay . S o t h i s i s the p r o o f that w e a r e

o f f e ring that C o r a l S ands P h a s e 7 w a s

r e g i s t e r ed w i t h LLR b a c k i n S ep t emb e r o f 2 0 1 0 ?

R i gh t . And I wi l l a d� £ o t h a t that unde r the

t i meshar e s t a t u t e , ·- and I am r e f e r r i ng

s p e c i f i c a l l y t o S e c t i on 2 7 - 3 2 - 1 9 0 ( a ) ( 2 ) . The

way th i s r e g i s tr a t i on p ro c e s s works is - - and

t h i s app l i e d t o i n i t i a l r e g i s t ra t i on o r up d a t ed

- - o r addenda t o r e g i s t r a t i on . When you s ub mi t

a p a c k e t l i ke t h i s t o LLR , t hey have 3 0 d a y s to

p r ov i de you wi th f e edback . And i f they g i ve

y o u f e e dback wi t h i n t h a t 3 0 days , they c an

i n i t i a t e a d i a l o g . I n o t h e r wo r ds , the r e c an

b e a b a c k and f o r th . We don ' t l i k e thi s . we

do n ' t l i k e t ha t . .We need y o u t o change t h i s .

I f you don ' t r e c e i v e any f eedb a c k f rom LLR

w i t h i n t h a t 3 0 - day · wi ndow however , t h i s

s t a t u to r y p r o vi s i on p r o v i d e s t h a t r e g i s t r a t i o n


(803) 252-3445 I (800) 822-0896

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· SOUTH CAROLINA REAL ESTATE COMMISSION 64

i s a u t o ma t i c . And there was no f e e d b a c k i n

S ep t emb e r o r oc tober o f 2 0 1 0 . And s o our

p o s i t i o n was LLR was f ine w i t h i t . An d we

t r e a t e d the r e g i s t ra t i on as a u t o ma t i c a n d have

p r o c e e d e d to - - the developer h a s p r o c e e d e d to

s el l t im e s ha r e s o u t of Phas e 7 a t C o r a l S ands

ever s i n c e .

B u t y o u r unde r s t anding i s t h a t Mr . W i nk l er a t

LLR a t t h e t i m e r e c e ived thi s p a c k e t a n d t h a t ' s

wha t t h i s F e d E x r e c e i p t s hows - -

C o r r ec t .

- - on S ep t emb e r 3 , 2 0 1 0 ? Do y o u unders t a n d why

LLR wou l d s a y t h a t they di d n o t r e c e i v e the

m a t e r i a l ?

I have n o i d e a .

M S . S HUTT : Mr . C h a i rman , that i s our p r o o f a b out

t h e p o i n t abo u t t h e r e g i s t ra t i on o f C o r a l S ands

P ha s e 7 . We w i l l g o through e a c h o f t h e o ther

f ou r i s s ue s , b u t we would c e r t a i n l y e n t e r t ain

a ny que s t i on s t h e commi s s i on e r s h a v e now on

t h a t p o i n t .

T H E CHAI RMAN :

M R . ATKINSON :

M r . A t k i n s o n , any ques t i ons ?

I j us t wan t ed to a s k wa s t h e r e an

amendmen t f e e a l s o s ubmi t t e d ? I me a n , n o w i t

m i gh t b e a mu t e p o i n t s impl y b e c a u s e i f w e did

CREEL COURT REPORTING, INC. 1230 Richland Street I Columbia, SC29201

(803) 252-3445 I (800) 822-0896

c

SOUTH CARqLINA REAL ESTATE COMMISSION 6 5

1 r e c e i v e i t within t h a t 3 0 d ay s , l i ke y o u s a i d

2 f o r the l a s t ques t i o n , I w a s j u s t wond e r ing

3 my s el f ?

4 MR . BARF I ELD : R i ght , and I thought you m i gh t a s k

5 t h a t q u e s t i o n .

6 MS . S HUTT : And may I ' a p o i n t o f orde r , Mr .

7 Cha i rman . I think M r . A t k i n s on has n o t b e en

8 s w o r n i n . S o i f h e i s go ing t o b e t e s t i f y ing

9 i t i s our unde r s t anding t h a t LLR wo u l d n o t

1 0 b e t e s t i fying i n t h i s ma t t e r . But i f h e ' s

1 1 g o i n g t o b e t e s t i f y i n g , w e p r obab l y wo u l d n e ed

1 2 h i m t o b e swo rn i n .

1 3 MS . COLEMAN : I b e l i ev e h e w a s a s king a ques t i o n o r

1 4 r e s p ons e t o a qu e s t i on p o s ed b y the Cha i r , and

1 5 t ha t ' s f i ne f o r hlm t o b e s wo rn .

1 6 THE C H A I RMAN : Go in a n d g i v e y o u r f u l l name an·d

17 a d d r e s s f o r the r e c o r d and b e sworn in by the

1 8 c o u r t r e p o r t e r .

1 9 ROGER ATK I N S O N , having b e e n du l y s worn, dep o s e s · and

2 0 t es t i f i e s a s f o l l ows :

2 1 THE C H A I RMAN : P l ea s e s t a t e y o u r name .

2 2 M R . ATKI NS O N : Roderi ck A t k i n s o n .

2 3 M R . B AR F I ELD : The s i mp l e answer t o t h a t i s I d o n ' t

2 4

2 5

b e l i ev e s o . The exp l a na t i on f o r that i s

r e s p o n s i b i l i ty l i e s wi th my o f f i c e .


(803) 252-3445 I (800) 822-0896

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SOUTH CI<.ROLINA REAL ESTATE COMMIS SION 6 6

a prov i s ion i n t h e s t a t u t e that I d i d no t c a tch

at the t ime . I t p r o v i des f o r a f e e o f , a n d I

b e l i ev e the maximum f e e f o r s ubm i t ti n g an

amendment to o r s ubm i t t ing new u n i t s t o a p l an

that i s $ 2 5 0 . And qui t e f rank l y I . w a s f o c u s ed

e n t i r e l y on p u t t i ng toge ther n i n e p ou n d s o f

p ap e r and di dn ' t c a tch t h a t a c h e c k s ho u l d be

s en t . So I a g a i n have no r e a s o n t o b e l i eve

t ha t t h e check was s en t . The f l ip s i de o f t ha t

i s that we n e v e r r e c e i ved any f e edback s a y i ng

h e y , we g o t your r e g i s t ra t i on amendm en t , b u t. we

d i dn ' t g e t your c h ec k ; p l ea s e s en d t h a t t o us .

A g a i n , we t r e a t e d i t as r e g i s t e r e d , and the

f a i l ur e to s end t h a t par t i cu l a r c h e c k was an

overs i g h t on my p a r t ent i r e l y .

THE C H A I RMAN : You may c o n t i nue .

M S . S HUTT : Thank y o u .

M R . BARFIELD - EXAMINAT I ON BY MS . S HUTT :

Q : A n o t h e r i s s u e b e f o r e the Commi s s i o n today i s

a b o u t t h a t i s i den t i f i ed i n t h e p r i v a t e

o rders i s a c o n c e rn about t h e change i n the

s e l l er e n t i t i es o f Coral S ands . T h i s i s an

i s s u e t h a t t h e p r i v a t e orders w e r e r a i s e d as

f a r as C o ral S an d s , P o r t O ' C al l and C o r a l R e e f .

And s o I wou l d l i ke ·to a s k Mr . B a r f i e l d to


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SOUTH C��OLINA REAL ESTATE COMMISSION 6 7

exp l a in abo ut t h a t a s t o C o r a l S ands f i r s t .

S u r e . As I men t i o n e d a f ew moment s ago , the

c h an g e i n the dev e l op e r ent i ty at C o r a l S an d s

w a s a change f rom C o r a l H o lding , LLC , t o H i l t o n

H e a d I s 1 and Development C ompany , LLC . And I

wo n ' t r e p e a t mys e l f , o th e r .than to r e i t e r a t e

t h a t t h a t was d i s cu s s ed · i n the narr a t iv e t ha t

w a s f o u n d a t the b eg in n i ng o f the Pha s e 7

r eg i s t r a t i on mater i a l s , and i t was a l s o

s up p o r t e d by a numbe r o f t h e documents t h a t

w e r e i n c l uded i n t h a t b i n d e r that was s e n t i n

S e p t embe r o f 2 0 1 0 .

S o t h a t i s wha t you ' v e a l r e ady p o in t e d us t o i s

t h e Exh i b i t 2 ?

C o r r e c t .

T h e n i ne pounds o f do c ume n t s t h e r e ?

C o r r e c t . And t h a t i n f o rma t i on has b e en

r e s ub m i t t e d to LLR w i th t h e , I be l i eve , t h e

o r i gi n a l dates t h a t i t was s en t the f i r s t t i m e .

S o t h e p roperty own e r s o f the a l s o L L R

exp r e s s ed conc erns r eg a rdi ng H i l ton H e a d I s l and

D e v e l op m en t ' s r o l e i n the Po r t O ' C a l l . C a n :,rou

addr e s s t h a t f o r u s , Mr . B ar f i el d ?

R i g h t . Th i s i s whe r e the s ta tu t e i s perhap s a

l i t t l e b i t con f u s i n g u n t i l you have r ead i t f o r

CREEL COURT REPORTING, INC. 1230 Richiand Street I Columbia, SC 29201

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t h e 1 5 0 t h t im e . And I f ind s om e t hi ng n e w e v e r y

t ime I r e ad i t . When you t a l k a b o u t the

i n i t i a l reg i s t r a t i on of one o f t h e s e p l an s , the

p rov i s i on that d ea l s wi th t h a t i s s e t u p to ,

and app r op r i a t e l y s o , t o t r e a t p l an , s e l l er ,

and dev e l op e r a s one . T h e r e i s a un i ty a t the

beginn i ng of one o f t h e s e p ro j e c t s t h a t i s

common t o a l l t hes e p r o j e c t s . A d ev e l op e r i s

go ing t o bu i l d a p ro j e c t . H e c o n c e iv e s o f the

p l an , t h a t i s t h e ma s t e r d e e d , - b y - l aws , s o on

and s o f o r t h , how t h e s e t h i n g s a r e g o i n g t o be

governe d . And I s ay he , i t d e t e r m i n e s how the

t hings are g o ing t o be marke t e d and s o l d . S o

i t inak e s p er f e c t s ens e f o r t h e i n i t i a l

r eg i s t r a t i o n m a t e r i a l s are g o i ng t o i n c l ud e al l

o f tha t i n f o rma t i on . But i n t h e i n s t an c e o f

P o r t O ' C a l l , y o u ' v e got a p l an t h a t i s 2 0 -

s omething y e a r s o l d a t t h i s p o i n t t h a t was

t urned o v e r t o b o a r d c o n t r ol i n 1 9 9 2 . The r e i s

n o long e r , t o u s e LLR ' s p h r a s e , a s e l l i ng

ent i ty o f r e c o rd . F i r s t o f a l l , t h a t p hras e

d o e s n ' t app e a r anywh e r e i n t h e s t a t u t e , b u t I

c an o n l y c o n s t ru e t h e p r i v a t e o r d e r to mean

t h a t t h a t i s t h e deve l op e r , t h e o r i g inal

s e l l e r , o r i g i na l r e g i s t e r i ng . Af t e r a p l an has


(803) 252-3445/ (800) 822-0896

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SOUTH CAROLINA REAL ESTATE COMMISS ION 6 9

b e en t u rned over to t h e board . o f c on tr o l o r

as s o c i a t i on contro l , ·the o r i gina l d ev e l op e r ,

who i s t he party t o s ubm i t that o r i g in a l

r e g i s t r a t i on , does no t have t h e r i gh t o r t h e

abi l i ty t o s p eak f o r t h e p l an anymo r e . T h e r e

i s n o s e l l ing · en t i ty o f r e c o rd , wha t e v e r t h a t

t erm m a y be i n tended t o mean , but the p l an h a s

t o s p e a k f o r i ts e l f . So d o c umen t s l i k e s a l e s

c o n tr a c t s the deve l op e r u s ed t o s e l l t h e t hi n g

o u t o r t h e pub l i c o f f e r ing s t a tements , wh i c h i s

a d i s c l o s ure form p a r t o f t h e s ta t ut e , o r the

marke t i n g ma t eri a l s , any o f t ha t s t u f f t h a t was

r e qu i r e d to be i n c l uded i n the o r i g i na l

r e g i s t r a t i on ; that ' s why tha t c an ' t b e

c on s t r u e d as part . o f the p l an . T h a t ' s

s om e t h i ng e l s e . Tho s e a r e o t h e r c r eatur e s . S o

t h e p l an i t s el f s urv i ves a f t er the · dev e l op e r

h a s l e f t the bui l ding , s o t o s p eak�

S o H i l t on Head I s l an d Deve l opment C ompany ' s

r e l a t i on s hi p to the P o r t O ' Ca l l ' s p l an i s w h at ?

O kay . I t i s no t , and I wan t t o b e c l e a r a b o u t

t hi s , t h e n e w s e l l ing en t i ty o f r e c o rd . Ag a i n ,

t h a t ' s n o t a d e f ined term . But H i l t o n H e a d

I s l an d D e v e l opment C ompany w i t h r e s p e c t t o P or t

O ' C a l l o p e r a t es as a r e s a l � ent i ty . .


(803). 252-34451(800) 822-0896

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O ' Ca l l w a s s o l d o u t years ago , And s o any t h ing

that is b e i ng - - any tim e s h a r e i n t e r e s t s t hat

a r e bei n g s o l d at P o r t O ' C a l l now a r e b e ing

s o l d f o r t h e s e c ond, . thi r d , f i f th t i me . Many

o f tho s e r e s a l e t imeshare w e eks are b e ing

r e s o l d b e c aus e they ' ve been f o r e c l o s e d u p on .

And the r e ' s a s ep a r a t e s t a t u t o ry s cheme t hat

Mr . Fos t e r a l l ud e d t o earl i er t h a t de a l s with

a s ep ar a t e f o r e c l o s u r e non- j ud i c i a l f o r e c l o s ure

p r o c e s s t h a t o n l y app l i e s to t im e s h a re s . I t i s

a much s tr eaml i n e d proces s o v e r t h e f o r ec l o s ure '

p r o c e s s t h a t we a r e a l l a c c u s t om e d t o . W e l l ,

the r e a s o n thes e things g e t f o r e c l o s ed o n i s

b e caus e p eo p l e don ' t p a y t he i r a n nual

m a i n t en a n c e f e es . When p e op l e don ' t pay t heir

annual m a i n t en a n c e f e e s , who has to eat t ha t

f e e ; t h e o th e r memb e r s o f t h e a s s o c i a t i o n . I t

b e comes · b u r dens o m e . And s o what P o r t 0' C a l l

has done i s bas i c a l l y e n t e r e d i n t o a

c o n t r a c t u a l r e l a t i onship w i t h H i l t on H ead

I s l an d D e v e l opm e n t Company t o a c t a s a

r e s e l l e r . · S o when the s e f o r e c l o s ed un i ts ,

t im e s har e i n t er e s t s I sho u l d s a y , come back

i n t o the f o l d , H i l t on Head I s l an d Devel opment

C ompany t a k e s t i t l e t o them r a t h e r than the


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a s s o c i a t i o n taking t i t l e t o them and b e c o m e s

respon s i b l e f o r the m a i n t en a n c e f e es s o l on g a s

t hey h o l d t i t l e . And i t then h a s the

opport u n i ty t o res e l l . them . And the q u i d pro

quo . i s that H i l ton Head I s l and D eve l op ment

c ompany i s ent i t l e d to r e t ain any o f the

p ro f i t s that they may r e ap f r om that r e s a l e .

And I s ho u l d a l s o no t e t h a t H i l ton Head I s l and

D evel opment Company i s p er forming r e s a l es

through S unr i s e Vaca t i on P r o p er t i e s , wh i ch i s

t h e l i c e n s ed s al e s arm o f a l l o f the s e e n t i t i es

that we ' r e t a l k i ng about t o day who s e s a l es

p e op l e a r e annu a l l y r e g i s t er e d , regi s t ra t i on

f ee s p a i d , s o on and s o f o r t h through LLR .

O kay . So l e t m e a s k y o u s ome y e s - o r - no

que s t i o n s . · S o f o r P o r t 0' C a l l , i s H i l t o n H ead

I s l an d D evel opment C omp any t h e deve l op e r ?

N o .

S o t h e r e i s no dev e l op e r ?

N o .

O kay . Does H i l ton H e a d I s l and D ev e l opment

C ompany s p ea k f ci r the p lan ?

N o .

A s do e s P o r t O ' C a l l ?

N o t a t a l l .


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O kay . I s H i l t o n Head I s l an d D ev e l opment

C ompany the only res e l l er o f P o r t O ' C a l l

i nven t o r y ?

N o . And t h a t may b ear a b i t o f exp l a n a t i o n .

O kay .

T h e d e f i n i t i o n o f s e l l er under the T i me s h a r e

Ac t i s qu i t e b r o ad . S e l l e r c an mean dev e l op er

a n d i t a l s o means a ny p e r s on or ent i ty t h a t i s

engaged i n the b u s i n e s s o f s e l l ing t im e s h a res

i n the s ta t e o f S o u th C ar o l i na . Now , t h er e i s

a c arve o u t f o r i nd i v i du a l s that J ohn Sm i th

o wns a t im e s h a r e and wan t s t o s e l l i t t o Sue

J o nes , he c an d o that wi thout h a v i ng to go

t h r ough a l l t h e hoops i n t h e s t a tu t e . B u t

a nyone who i s i n the r e g u l a r b u s i ne s s o f

s e l l i ng t im e s h a r e s i s c l a s s i f i e d a s a s e l l e r .

A s s u c h , any t im e s h a r e r e g i m e i n t h e s t a t e o f

S o u th C a r o l ina i s l i k e l y t o h a v e mul t i p l e

s e l l ers t r a ns a c t i ng , o r engag e d i n t rans a c t i on

s a l es o f uni t s w i t h i n that r e g ime a t any g i ven

t i m e . The p l an cannot p o s s i b l y b e e xpec t e d to

k e e p t r a c k o f t h a t or even b e aware o f i t .

I t ' s s imp l y i t ' s comme r c e - - i t ' s e n t i ty- t o -

p e r s o n s a l e s o r p e r s o n - to - p e r s on s a l e s .

S o l e t m e make s u r e I under s t and .


(803) 252-34451 (800) 822-0896

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O ' C a l l , Hi l t o n H e a d I s l and Deve l o pment

C o mpany ' s only r o l e i s to s e l l rep o s s e s s ed

p r o p er t y on beha l f o f the hom e o wn e r s

a s s o c i il. t i on?

A : T h a t ' s c o rrect .

THE CHAI RMAN : But they , i n e s s en c e , h i r e a b r o k e r ,

S unri s e , t o do t h a t f o r them?

MR . BARF I E L D : Yes , s i r .

l•l R . CHAI RMAN : An i n t ermedi a t o r o r h i r e d t o r e s a l e

o r wha t ev e r the - -

l1R . BAR F I ELD : Yes , s i r .

!>I S . TAKAC S : And who owns Sunr i s e V a c a t i on

P r o p e r t i e s ?

l1R . P IE RC E : Sunr i s e Vac a t i on P r o p er t i es ' o wn e r i s

t h e Trews . Dwight T r e w , I men t i oned t o you

e a r l i e r , who i s the f o under o f a l l the

c ompani e s .

Q : And s o , Mr . B a r fi e l d , Sunr i s e h a s 4 0 t o 7 0

l i c ens e d v a ca t i on t i m e s h a r e ·s e l l e r s ; i s t h a t

c o r r e c t ?

A : Tha t i s .

Q : Who h a v e t o r e g i s t e r annua l l y wi t h L L R ?

A : Y e s .

Q : O k a y . T o s e l l t i m e s h a r e s . S o t h a t ' s the c h e c k

and b a l a n c e ther e ? O ka y .


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A : R i gh t .

MR . P I ERCE : L e t m e , i f you don ' t mind , Ms . S h u t t ,

l e t me a l s o , whi l e we are on t h a t s ub j e c t ,

men t i on t h a t they a l s o have a broker i n c h a rg e ,

and they ' v e a lways had a b r o k e� i n c ha r g e . A t

one p o i n t t h a t was Dwigh t T r ew . And t h e n i n

2 0 0 6 , Dwight Trew was no l on g e r t h e b r o k e r i n

cha rge , and a f e l l ow nam e d T e r ry D a l e w a s

s ubmi t t e d t o t h e Real E s t a t e C ommi s s i on a n d L L R

a s the s ub s e quent br oker i n c h a r g e . And t h e n

I b e l i ev e i t was_ in 2 0 1 0 o r s o T er ry D a l e n o

l onger w a s t h e broker i n c ha r g e . And M s .

Sherry S m i t h t o o k over as the b r ok e r i n c h a rg e .

The only p o i n t I wan t to make t o t h e Comm i s s i o n

i s w i t h a l l t h e s e tran s a c t i ons , the r e has

a l ways b een c o n t a c t wi th LLR abou t t h e s a l e s .

There h a s a l ways been t h e s e t i m e s h a r e

s a l e s p e o p l e who have been r e g i s t e r e d wi th L L R

annu a l l y u n d e r the Ac t , - and t h e r e h a s a lways

b e en a b r o k e r i n c ha rge who was in charge o f

any _o f t h o s e a c t i v i t i e s . An d LLR w a s a l ways

up da t e d when t h e r e was a change in any of t ha t .

So t h e r e has b e en cons tant and c o n t i nuous

c o n t a c t b e tw e en LLR and the C o r a l g roup w i th

r e g a r d t o t h o s e s a l e s a c t iv i t i e s a n d Sunr i s e


(803) 252-3445 I (800) 822-0896

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1


v a c a t i on , the . bro k e r s and t he t i m e s h a r e

2 s a l e s p e o p l e .

3 MR . P I ERCE - E XAM INATION BY MS . SHUTT :

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Mr . P i er c e , whi l e we a r e o n t h a t s ub j e c t , l e t ' s

b r ing t h e Commi s s i on ' s a t t en t i on t o Exh i b i t 8 ,

whi ch a r e the r e g i s t r a t i ons f o r the b r o k e r s in

charge . Are tho s e t h e da t e s y o u j us t m en t i o n ed

b e hind T ab Numb e r 8 about the r e g i s t ra t i o n o f

v a r i o u s b r okers i n c h a r g e ?

I think i t s ta r t s w i t h P l an Numbe r 3 7 i s the

p a g e numb er . f o r t h i s exh i b i t . And t h e f i rs t

l e t t e r t h a t I r e f e r to I thought 2 0 1 0 was

p u t t ing t h i s . Smi t h t o o k o v e r f o r Mr . . D a l e ,

a n d that ' s c o r r e c t . And h e r e ' s t h e l e t t e r t h a t

w a s s en t d a t e d M a r c h 4 , 2 0 1 0 t o LLR indi c a t ing

t h a t change . B eh i nd t h a t i s t h e l e t t e r or

t h e f orm , I gu e s s the LLR f o rm t h a t n e e d e d to

b e s i gn e d and s en t . And i t w a s s en t and s i gned

b y Ms . Smi th . And s h e a l s o s en t i n an

a f f i d av i t o f e l i g ib i l i ty a l ong w i t h that a t the

t ime . And a c h e c k was c u t , wh i ch i s i n h e r e a s

w e l l . I t wa s c h e c k number 5 0 1 7 , i t l o oks l i k e ,

f o r t h e f e e t o c hange the b r o k e r i n charge f o r

t h e s a l e s . And t h e r e i s a F e d Ex shipp ing

o r de r i n d i c a t i n g t h a t t h a t was d e l i v e r e d at


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. SOUTH . CAROLINA REAL ESTATE COMMISSION . 7 6

1 0 : 0 3 a . m . o n 3 / 5 / 2 0 1 0 , wh i c h w o u l d b e t h e n ex t

d a t e i n t h e l e t t er . B ehind t ha t , P l a n Number

4 4 is the l e t t e r back on Jun e 1 3 , 2 0 0 6 w h i c h

was s en t v i a overn i gh t ma i l t o LLR t o s om e one

named J es s i e here at t h e K i n g s t r e e bu i l d i ng .

I t indi c a t e s that t h e l e t t er i s f r o m me ,

a c tu a l l y , and i t i ndi c a t es t h a t I had s p o k en

w i th J e s s i e and that I ' m s ending t h e c h e c k

a l ong w i th a ·tran s f er o f · Dwi gh t R . T r ew as

broker i n c harge t o T erry D a l e , wh i ch w a s one

o f the t r ans a c t i ons t h a t I h a d s p o ken t o h ave

repor t ed abo u t ear l i e r indi c a t ing t h a t T e rry

D a l e wou l d t ake over f o r Dwi ght Trew a s the

broker i n c harge a s king that i f there a r e any

ques t i o n s , p l ea s e don ' t h e s i t a te to g i ve m e a

c a l l , a n d again , t h e F e d Ex s l i p s howi n g t hat

i t was d e l ivered over at LLR and a check a g a i n

a s we l l t h a t was s e n t a l ong wi t h t h a t . And

then f i n a l l y on P age 4 7 , t h e r e i s a t h i rd

l e t t e r d a t e d May 3 0 , 2 0 0 6 i nd i c a t i ng t h a t a ga in

Dwigh t T r ew was s ubs t i t u t ing i n T e r ry D a l e as

broker i n charge . Te r ry ' s f o rm f o r t h a t was

s en t i n , and that ' s Page 4 8 , E xh i b i t 1 . He

s i gned t h a t . A check was s en t f o r $ 2 5 0 a l ong

wi t h t ha t , check number 4 3 0 6 . And then t h e r e ' s


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SOUTH CAROLINA REA!. ESTATE COMMISSION 7 7

t h e F e d Ex overn i g h t s h i pp i ng bi l l a s s o c i a t e d

w i th tha t .

And Mr . P i e r c e , wh i l e we ' r e on t h a t s ame

s ub j e c t ma t t e r , b e h i nd Tab Numb er 6 , y o u w e r e

t a lking a b o u t Sunr i s e and t h e l i cens e , v a c a t i o n

c ouns e l o r s . Are t h e s e a s amp l e o f j us t s om e o f

t he vaca t i on couns e l ors , r e g i s t r a t i on f o rms

t h a t they hav e to f i l e annua l l y wi t h LLR ?

Y e s , they ar e . And o f c o ur s e i n the t im e s hare

i ndus t ry yo u ' ve g o t f o l k s t h a t c om e and go .

Y o u know , they m i g h t b e a t H i l t on Head s el l ing

i n the s ummer t ime . B u t b e cau s e t h i ngs a r e s l ow

i n the o f f s ea s on , t h e y m i gh t go s om ewh e r e e l s e

and s e l l them . They might g o t o t h e C a r i b bean

or s omewhere e l s e . S o we have p eop l e tha t c ome

and g o . And the s e a r e s en t i n , you know , a s

t h e p eop l e c o m e a n d g o t o make s u r e that t hey

a r e r e g i s t e r e d wi t h L L R . And t h e s e a r e u p d a t e d

annual l y . And t hes e have b e en done

c o n s i s t e n t l y . And t hey a r e over s e en by the

b r o k e r in charge who s i gn s o f f on a l l of t h e s e

a s they a r e s ending t hem . And the s e have b e en

d o n e c on s i s t e n t l y . T h i s i s j us t an examp l e o f

t h o s e . There wou l d b e hundreds o f t h e s e i f we

h a d b o t h e r ed t o , you know , put them a l l , p u l l e d


(803) 252-34451 (800) 822-0896

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1 them a l l toge ther and p u t t hem i n . B u t we

2 di dn ' t want t o burden the C ommi s s i on w i t h a l l

3 o f this . So we d e c i ded t o p u l l a

4 represen t a t iv e s amp l e f o r t o day .

5 MS . SHUTT : L e t me bring y o u b a ck t o Mr . B a rf i e l d .

6 MR. BARFIELD - EXAMINATION BY MS . S HUTT :

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The ques t i on that we a r e t rying t o c l ea r u p f o r

t h e Comm i s s i on i s wh e ther H i l ton Head I s l and

D e v e l opment wha t Hi l t o n H e a d I s l and

D e v e l opment C ompany ' s r o l e v i s - a - v i s P o r t

O ' C al l ?

R i ght .

And s o l e t me make s u r e I unders t an d y ou r

t e s t i mony . H i l ton H e a d Deve l opment C o mp any

v i s - a - v i s P o r t 0' C a l l i s m e r e l y a r es e l l er ;

c o rr e c t ?

C o r r e c t .

And in y o ur v i ew i s � h a t a s ubs t an t i al change

in the p l an that L L R has t o be no t i f i ed o f ?

N o t at a l l . In f ac t , i t i s n o t any chan g e t o

t h e p l an b e c au s e , a g a i n , r e s e l l e r s c ome a n d go

a l l the t ime w i t h i n any g i ven t i m e s h a r e

d e ve l opment in the s ta t e w i t h o u t the know l e dge

o f the a s s o c i a t i on . T h i s j u s t happens t o b e a

r e s e l l er t h a t has a c o n t r a c t u a l a rrang ement


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wi th t h e a s s o c i a t i o n . I t can be t e rmi n a t e d by

the as s o c i a t i o n at wi l l . S o i t . h a s n o t h i ng t o

d o w i t h the own e r s h i p arr angem e n t o f t h e s e

t i meshar e s o r t h e governan c e o f t h e a s s o c i a t i on

wh i ch a g a i n , under my i n t erpr e ta t i on of s t a tu t e

a r e the t h i n g s t h a t compr i s e t h e p l a n i t s e l f .

S o r a t h e r i s i t f a i r to s ay t h a t H i l t o n H e a d

I s l and D ev e l op m e n t Comp any i s the c omp any t h a t

homeown e r s a s s o c i a t i on de l eg a t e d i t s r e s e l l

r i gh t s t o ?

R i gh t . F o r t ho s e l imi t e d uni t s tha t a r e

t i me s ha r e s t h a t come back i n through the n o n -

j ud i c i a l f o r e c l o s u r e p r o c es s .

U s e d p r o p e r t y ?

U s e d p r o p e r t y .

1 6 MR . F O S T ER - E XAM I NA T I ON B Y MS . S HUTT :

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A n d Mr . F o s t e r , I know t h a t y o u a r e a P o r t

O ' C a l l b o a r d membe r . c a n y o u c on f i rm t h a t

homeown e r s a s s o c i a t i o n i s r e s p o n s i b l e f o r . t h e

a d m i n i s t r a t i on o f t h i s p l a n ?

Y e s , I c an . I am a prop e r ty owner o f P o r t ·

O ' C a l l , and I am o n the b o a r d o f d i re c t o r s .

The b o a r d o f d i r e c t o r s i s f o rme d s o l e l y o f

p r o p e r ty own e r s . They a r e ab s o l u t e l y

r e s p o n s i b l e f o r the p l an . W e do h ave l o t s o f


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help f r om t h e property manag e r s , b u t o n a b i -

annual . b a s i s , we m e e t t o es t ab l i s h an a n n u a l

budg e t whi c h i s funded s o l e l y b y the

maintena n c e f e e s . Own e r s pay m a i n tenan c e f e e s

on a n annual bas i s . We s e t a budget b a s e d o n

t h e f e e s t h a t w e a r e exp e c t e d t o c o l l ec t . And

f rom tho s e f ees we bas i c a l l y· run t h e e n t i r e

p rop e r t y . W e c o l l e c t funds · i n o ur b u d g e t t o

r e - r o o f t h e b u i l di ng s , t o ma i n t a i n t h e e x t e r i o r

appearan c e s , t o make s ur e the p o o l s are

p ro p e r l y mai n ta i n ed , that the l an d s c ap i n g i s

done . We make s u r e t h a t a l l s e r vi c es

a s s o c i a t e d w i th the p r op e r ty are p a i d , a n d we

do i t f o r the b ene f i t o f o u r 4 , 0 0 0

approx i m a t e l y 4 , 4 0 0 . owne r s o f the dev e l op m e n t .

And i t i s e s s en t i a l t h a t w e do that . And

a bs o l u t e l y t h e b o a r d o f d i r e c t ors and the

homeown e r s a s s o c i a t i on i s r e s p ons i b l e f o r the

a dmini s t r a t i o n of the p l an .

Q : Thank you very muc h .

MR . BAR F I E LD - EXAMINATION BY MS . S HUTT :

Q : S o M r . B a r f i e l d , t h e o t h e r i s s u e t ha t LLR

r a i s ed i n one of i t s p r i v a t e o r d e r s >vas a s to

C o r a l R e e f ' s r e l a t i on s h i p w i th H i l ton H ead

I s l and D ev e l opment C ompany .


(803) 252·3445 I (800) 822-0896

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b as i c a l l y t h e s ame f o r Port O ' C a l l a s i t was

for C o r a l Re e f ?

A : I t ' s exa c t l y the sam e f o r C o r a l Ree f a s I

d e s c r i b e d a t P o r t O ' C a l l . C o r a l Reef i s the

o ther p l an that has b e en und e r control o f the

a s s o c i a t i o n f o r many year s . And f o r t h e s·ame

r ea s on s o f c onve n i en c e and e c onomy , t h e y h av e

e n t e r e d i n t o a c o n t ractual arrangemen t f o r

p urpo s e s o f r e s a l e o f f o r e c l o s e d o n

f o r e c l o s ed upon t i meshares w i t h H i l t o n H e ad

I s l an d D ev e l opment Company . That arr a n g e m en t

c a n a g a i n b e t e rminated a t w i l l by the

a s s o c i a t i o n , and i t has abs o l u t e l y no i mp a c t ,

m a j o r , m i n o r o r o t h erwi s e on t he p l an i t s e l f .

MR . P I ERCE - EXAM I NATI ON BY MS . SHUTT :

Q : S o t h e l a s t i s s u e that w a s r a i s e d b y t h e

p r i v a t e o r d e r i s I s l and L i nks ' p ub l i c o f f e r i n g

s t a t emen t . S o Mr . P i e r c e , c a n you t e l l u s wha t

g r oup we have that that pub l i c o f f e r i ng

s t a t em e n t was , in f a c t , f i l e d wi th LLR?

A : W e l l , you kno w , I gue s s the r e i s a coup l e o f

g r o up s w i t h t ha t . The f i rs t i s back in 2 0 0 3

a n d ' 0 4 . I gue s s the s t a t u t e was chang e d , I

b e l i e v e i t w a s i n 2 0 0 3 to p r ov i d e f o r p ub l i c

o f f e r i n g s t a t em e n t s . Pri o r t o t h a t t ime , t h e r e


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was no s uc h a nima l i n t imesha r e . And s o i n any

event , y o u know , K e n K i t t s was busying h ims e l f

b e ing i n t ouch w i t h a l l o f t h e , y o u kn o w , the

t i mesha r e f o l ks to · make s u r e that they knew

about t h e change a n d . tha t , y o u know , he was

working wi t h everyb o dy to m a k e s u r e t h e r e was

a pub l i c o f f ering s t a t emen t i n p l a c e f o r a l l.

t he v a r i ous t imes h a r e s _ tha t , you know, s u i t ed

h i m on b eh a l f o f the Real E s t a t e Commi s s i on and

LLR and a l s o , you kno w , met t h e r e q u i reme n t s o f

t he i nd i v i du a l dev e l opme n t s t o o b e cau s e a l l

d eve l o pm e n t s were n o t c r e a t e d e qua l . S o i n any

even t , I was p a r t o f the p r o c e s s o f t h a t

d i s c us s i on . B i l l Fo i l e s was a l s o i nv o l ve d . He

was the p l an a t t o rn e y at that t ime . Be 1"as the

o n e t h a t had s ubm i t t e d t h e C o ra l S ands

r eg i s t r a t i on and , y o u kno w , h e was wo rking w i th

K e n K i t t s about the p ub l i c o f f e r i ng s t a t e m e n t .

And a c t u a l l y , I b e l i ev e , h e h a d C o r a l S a n ds ,

and I b e l i ev e he h a d , you kno w , s ome back and

f o r th b e t w e e n B i l l a b o u t t ha t . And I wa s a l s o

w o r k i ng wi th Ken and E d P a r n e l l about t ha t .

A nd , y o u kno w , Ken made s om e s ug g e s t i ons . Ed

h a d m a d e s om e s u g g e s t i on s i n a coup l e o f

t e l ep h o n e convers a t i on s . I s en t t o them my

CREEL COURT REPORTING, INC. 1230 Richland Street I Columbia, SC 2.9201

(803) 252-3445 I (800) 822-0896

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s ugges t i on s . Ken wro t e back , i n d i c a t e d h e had

s ome addi t i onal s ugg e s t i o ns t h a t h e t h o ught

n e eded t o be made . And h i s s ugges t i on s r e a l l y

d e a l t w i th RC I , whi ch i s R e s o r t C o n d o m i n i ums

I n t erna t i o na l . I t i s one o f the t w o m a j o r

exchange compani e s o f t i mes h ar e . A l o t o f

f o lks wh o buy i n H i l t on Head m i gh t n o t a lways

c ome b a c k to H i l t o n Head . They might d e c i de

they wan t t o t r a de t h e i r week and go t o M e x i c o

o r s omewhere e l s e . RC I i s o n e o f t h e two

c ompan i e s that f a c i l i t a t e t h o s e s o r t s o f

exchanges amongs t o wn e rs w i t h a l l the d i f f e r ent

p l ac e s . ·r n t erval I n t erna t i o n a l i s t h e o ther

o n e . K e n want e d t o make s ur e , and h i s l e t t er

t o me t a l ks a b o u t , as d i d o u r c on v e r s a t i on ,

wanted t o make s ur e that f o l k s unde r s t o o d s ome

o f the w o r k i n g s o f R C I b e c au s e i t c an b e a

l i t t l e b i t comp l i c a t e d s ome t im e s , . e s p e c i a l l y

f o r f o lk s t h a t a r en ' t alre ady RC I memb e rs . And

s o he w a n t e d t o ma ke s u r e t h a t t ha t was

i n c l uded i n the p ub l i c o f f er i n g s t a t ement . And

he s en t tho s e s ug g e s t ed chang e s and i nd i c a t e d

t h a t i f t h e y s u i t ed m e , t o r o l l t h e m o u t , al l

o f Dwigh t ' s r e s o r t s .

N o w , l e t ' s t a l k c oncre t e l y


(803) 252-3445 I (800) 822-0896

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C ommi s s i on w h a t we . have b e h i nd Tab Numb e r 3 ,

T a b Numb er 4 , and Tab Number 5 . S o aga i n , t h e

p r i v a t e o r d e r s r a i s e the c oncern t h a t I s l an d

L i nks d i d no t f i l � a p ub l i c o f f e r i n g s t a ieme n t .

S o t ak e us through wha t Tab Numb e r s 3 , 4 , and

5 s how in t h at regard .

S u r e . I n T ab Numbe r 3 , I g u e s s i t i s , i t i s

P a g e Numbe r 8 . I t ' s a l e t t e r f r om B i l l F o i l es

d a t e d June 1 0 ,

b a s i c a l l y the

2 0 0 4 a t LLR .

r e g i s t r a t i o n ,

And i t i s

t h e i n i t i a l

r e gi s t r a t i o n t h a t h e s ent i n t o I s l and L i nks - -

o n I s l an d L i nks t o t h e Real E s t a t e C ommi s s i on ,

L L R a n d s o r t o f exp l a i ned s ome o f wha t I h a d

e xp l a i n e d e ar l i e r a b o u t h o w the p r o p e r t y h a d

g o n e t hrough bankrup t cy . Sun t erra h a d

p ur c h a s e d i t o u t o f b ankrup t cy a n d t h e n C o r a l

h a d p u r c h a s e d i t f r om Sun t e r r a . And h e was

r e g i s t e r i n g t h a t . And t h i s indi c a t ed t h a t h e

w a s s en d i ng a l l the d o c umen t s that needed t o b e

s en t . You know , i f t here w e r e any ques t i on s ,

t o p l ea s e l e t h i m know . And aga i n , th i s was

t h e l e t t er s ending t h e r e g i s t r a t i on mate r i a l s

o n I s l an d L i nks . I f K en had had any ques t i ons

o r anyone e l s e , E d o r a t t h e t im e , t h a t

wo u l d h av e b e en B o b S e l lman .


(803) 252-3445/ (800) 822-0896

I f h e had any

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ques t i o n s as adm i n i s t r a t o r of t h e Rea l E s t a t e

c ommi s s i on about I s l an d L inks , h e wo u l d have

r a i s e d t ho s e i s s u e s about the p ub l i c o f f e r i ng

s t ateme n t a t tha t t ime . I c a n t e l l you t h a t n o

s uch i s s u e s were r a i s e d .

An d , in f a c t , we ' v e g o t t h i s l e t t e r b e h i n d Tab

Number 4 , which i s P l an Do cument 0 1 2 t h a t i s a

l e t t er t o K e n K i t t s speaking abo u t the p ub l i c

o f f e r i n g s t a t ement . T e l l us abou t tha t .

T h i s i s a l et t e r d a t e d. Augus t 1 0 , 2 0 0 4 . I t i s

di r e c t e d t o me , . a t my a t t e nt i o n . M r . Ken

K i t ts , who has b e e n the T im e s h a r e P r o g r am

C o o rdina t o r , he c op i ed E d P a r n e l l E dwin

Parne l l wh o was a l s o w i t h L L.R and a s I had

i n dicat e d , had b e en inv o l v e d i n the

c onvers a t i on that K en and Ed and I were h a v ing

about t h e R C I p o i n t s . K e n i s t h a n k i ng m e f o r

t h e l e t t er that I h a d s en t t o h i m o n J u l y 1 4 ,

2 0 0 4 p r o v i d i ng a p r opo s e d new and imp r ov e d

p ub l i c o f f e r i ng s t a t ement f o r C o r a l S ands . He

i nd i c a t e d t h a t h e would l i k e t o a dd s ome

a d di t i o n a l l anguag e , as I had men t i on e d b e f o r e

i n the l e t t e r . And he i n d i c a t e s that t h i s

a ddi t i o n i s s a t i s f ac t ory t o m e . Then add what ·

I propo s e d , comb i n e i t w i t h wh a t he ' s a s k e d �


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a n d i n the s a l es o f a l l the r e s o r t s i n · wh i ch

Dwight ' s company p a r t i cip a t e d . And why t h i s

i s i mp o r tant i s b e c au s e by Augu s t 1 0 , 2 0 0 4 ,

I s l and . L i nks had · a l r e a dy been r e g i s t e r e d w i th

t h e R e a l E s t a t e Commi s s ion . S o Ken w a s n o t

j u s t t a l king abou t C o r a l San ds , h e u s e s C o r a l

S ands a s a temp l a t e t o t a l k abo u t t h e p u b l i c

o f f e r in g s t a t ements g e n er a l l y becau s e , . . a g a :L n ,

t h ey we r e new . The l eg i s l a tu r e had only p u t

t hem i n t o e f f ec t , y o u know , i n 2 0 0 3 . I g u e s s

i t w a s l a t e in 2 0 0 3 , maybe O c t o b e r o r s o m e t h i ng

l i k e tha t . Then , o f c ours e , t h e r e i s a l i t t l e

l ag b e tw een the l e gi s l ature p a s s ing s om e t h ing

and i t g e t t ing c o d i f i ed and g e t t i ng pushed out

t o e v e r yb o dy . S o Ken was doing h i s p a r t t o

i n t e r a c t w i t h f o lks , inc luding us , t o make s ur e

t h a t ev e rything w a s a s i t shou l d be . And as

p a r t o f t ha t , you know , we had b een f o cu s e d on

t h e C o r a l S ands p ub l i c o f f e ring s t a t ement . And

K e n i s s aying there t o ro l l the s ame l anguage

o u t t o a l l the r e s o r t s . And , aga i n , as we have

e xp l a i n e d , there were f our r e s o r t s . f o u r p l ans .

And a t t h a t t i me , as I have a l r eady s hown you

i n t h e p r ev i o u s exhib i t we j us t w e n t over , B i l l

F o i l e s h a d a l r e a dy r eg i s t er e d I s l and L i nks .


(803) 252-34451 (800) 822-0896

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c

SOUTH CAROLINA REAL E STATE COMMIS SION 87

we ' re t a l k i n g ab o u t when Ken s ays r o l l i t o u t

t o a l l t h e r e s o r t s that Dwigh t ' s c omp any

p a r t i c i p a t e in , he was t a l k i ng abo u t C o ra l

S ands and, you kno w , I s land L i nks . H e was a l s o

r e.f eren c i n g the f a c t - tha t , you kno w , S un r i s e

va cation h e knew b e c aus e we have c ons t a n t t ime .

H e had had cons t a n t c o n t a c t wi t h LLR a b o u t

Sunris e . And aga i n , a s I ' v e indi c a t e d e a r l i er ,

had alwa y s , you know, upda t e d t h e t i m e s h a re

s a l esp eop l e and b r o k e r i n charge , which w e ' ve

gone through . H e w a s s ay i ng , y o u know , r o l l i t

o u t a c ro s s the b o a r d . And t h a t ' s wha t w e d i d .

S o ·a c c o r d i n g t o the p r iva t e o r d e r , L L R ' s

r e c o rds s h o w that I s l an d L i nks r e g i s tr a t i o n was

n o t app r o v e d unt i l Mar ch 1 5 , 2 0 0 5 , t en m o n t h s ,

I gue s s , i n b e tw e e n t h e f i r s t year . C a n you

e xp l a i n the di f f e r e n c e b e tween why we n e e d a

p ub l i c o f f er i n g s t a t ement and why there w o u l d

b e - - wha t wou l d b e t h e d i s c r epancy h e r e ?

W e l l , i t w a s n ' t a p ub l i c o f f er i ng s t a t e m e n t .

I t was a g a i n , K en was l o o k i n g to change t h e

p u b l i c o f f er i ng s t a t ement s . You kno w , h e was

l o o king t o a dd t h i s a dd i t i on a l l anguage , t h e 4 5

days o r l e s s l anguage th a t h e t a l ks abou t in

P a r ag raph 2 , and he wan t e d i t r o l l e d o u t a c r o s s


(803) 252-3445 I (800) 822-0896

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t h e b o ar d i f I agreed w i t h i t . Y o u know a g a i n ,

h e wasn ' t s aying this has t o happ en . Y o u k now ,

K en was having a d i a l o g wi t h me . You kno w , we

had a d i a l o g wi th Ed Parne l l . You know , i t wa s

n e w . We were t ry i ng t o g e t o u r head a r o u n d i t .

I t was a new animal that had j us t b e e n p a s s ed

in O c t o b e r of 2 0 0 3 . We w e r e t ry i n g t o f i gure

i t ou·t o ur s elves . I t was new t o LLR . I t was

n ew t o u s . And s o i t wasn ' t r e a l l y , y o u know ,

a t r i e d and true way t o do i t . W e w e r e j u s t

t ry i n g t o make s u r e i t was done i n a w a y that

s a t i s f i e d the Recil E s t a t e C ommi s s i o n , L L R , and

wo rked f o r our r e s o r t s . And s o t h a t ' s w ha t we

w e r e d o i n g .

O kay . And in f a c t , I t h i nk b e h i n d Tab Number

5 , you have g i ven the ·c omm i s s i on a p i e c e o f

p a p e r w h e r e you a r e p ro v i d i n g Mr . K i t t s w i th a

c o py o f t h e f i nal pub l i c o f f e r ing s t a teme n t f o r

I s l an d L i nks .

W e l l , t h i s i s one da t e d November 3 0 , 2 0 0 6 . I t

i s P l an Number 0 1 4 i s the p a g e numb e r in

Exhi b i t Number 1 . Th i s is a l e t t e r f r om me to

K e n K i t t s . And I ' m bas i c a l l y here j us t

b r i n g i n g h i m up t o da t e ab o u t a change t h a t I

am m a k i n g t o the p u b l i c o f f e r i ng s t a t e m e n t .


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o r i g i n a l l y , t h e numb er o f uni t s , you know , was

one numb e r and more un i t s h a v e been bui l t . S o

I wan t e d t o up da t e , you know , j us t · f o r r e c o rd

k e ep ing purp o s e s the c o r re c t number o f u n i t s .

S o t h a t was changed . Al s o o r i g i na l l y t he

p ub l i c o f f e r i n g s t a t emen t t h a t was f i l e d w i th

K e n and t h e C ommi s s i o n , t h e p o o l hadn ' t b e en

b u i l t . T h e r e was a sma l l p o o l a t I s l an d L in k s ,

but t h e r e had b e en p l anned u l tima t e l y a s up er

p o o l , a v e ry l a rge p o o l c omp l ex w i th a l o t o f

f e a t u r e s . T ha t i n the o r i g i n a l publ i c o f f e r i ng

s t a t em e n t w a s t o b e cons t ru c t e d . And s o

b e c a u s e i t was t o be c o n s tructed , i t was

a c k now l e dg e d · a s such in t h e publ i c o f f e r i ng

s t a t emen t . I am i n d i c a t i ng · t o Ken t h a t t h e

p o o l h a s b e e n bui l t and comp l e t e d � I t ' s C O ' d .

I t ' s u� and runni ng . I t ' s g o i ng . S o I ' m g o i n g

t o chan g e t ha t , y o u know , j us t s o there wo n ' t

b e any c on f u s i o n bas i c a l ly w i th f o l k s t h i n k i ng

t h a t t h e r e ' s s om e t h i ng tha t hadn ' t b e en b u i l t

when , i n f a c t , i t h a d been bui l t and c o mp l e t ed .

And t h e f i n a l c hange that I ' ve i n di c a t e d t o Ken

t h a t I am g o i n g to make at t h a t t ime i s that

RC I h a d c h a n g e d the i r f e e s f rom $ 9 9 to $ 1 2 5 .

As I i nd i c a t e d e a r l i e r , R e s o r t s Condom i n i um


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SOUTH CAROLINA REAL E STATE COMMISSION

I n terna t i onal i s an exchange c ompany .

9 0

P a r t o f

how they make money i s charging a memb e r s h i p

f e e t o t h e f o l ks who wan t t o par t i c i p a t e i n

t h e i r s e rv i c e . I t lpoks l i ke a t one p o i n t i t

had b e e n $ 9 9 wh e n t h e o r i g in a l p ub l i c o f f e r i n g

s t a t eme n t was don e . RC I upda t ed the i r f e e s and

i nc r e a s e d them to $ 1 2 5 . Aga i n , I w a s j us t

t rying f o r r e c o r d k e ep i ng p u rp o s e s t o u p d a t e

that s o that t h e r e wa s n ' t any c o n f u.s i o n w i th

f o l ks w h o were buying . They thought i t was $ 9 9

and t h e n they g o t t o RC I �nd i t turned o u t i t

was $ 1 2 5 , and i t c r e a t ed c o n f u s i o n . S o I ' m

wr i t i n g t o Ken t o , you kno w , t o t e l l t h e m t h a t

thos e t h ings a r e happ e n i ng bas i c a l l y . And

a ga i n , s ending h im a n up da t e d publ i c o f f e r i ng

s t a t em e n t f o r I s l an d L inks t h a t s hows t h o s e

changes t ha t I ' m r e f e r e n c i n g i n my l e t t er .

And P l an Number 0 1 8 b eh i nd Tab Numb e r 5 , t ha t ' s

t h e F e d Ex r e c e i p t ?

That ' s t h e F e d E x r e c e i p t , r i gh t .

S o i s i t your t e s t imony that c o n t r ary to L L R ' s

d e s c r ip t i on that I s l and L i nks h a d n o t provi ded

i t s p ub l i c o f f er i n g s t a t emen t , that you

a c tu a l l y d i d p r o v i d e i t , an up d a t e d ve r s i o n

y e a r s a g o .


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My t e s t i mony i s that i t was p r ov i d e d o r i g i n a l ly

to Ken . Y o u know , f rankly , when B i l l a n d I

r e g i s t e r e d I s l an d L i nks , b ecaus e i t w a s a

l i t t l e c on f us ing , B i l l and I drove up h e r e and

we met w i th Ken . Y o u know , s ometimes t h e s tu f f

wou l d j u s t g e t s ent . And i n that p a r t i c u l ar

c a s e , we drove up h e r e . I t was a l o t o f s t u f f .

Y o u kno w , i t was a l i t tl e c o n fus ing . A s I ' v e

i nd i c a t e d , t h e r e w a s a l o t o f th ings t h a t h a d

b e e n g o i n g o n h i s t o ry wis e . And s o B i l l a n d I

drove up h er e . · We m e t wi th K en , d e l i v e r e d t h e

b ind� r s , y o u know . I t was p r obably m o r e t h an

ri i n e p o u nds , y o u kn o w , wo r t h o f documen t s a t

t h e t ime . And w e went · through tha t w i t h h i m i n

t h e o f f i c e . Y o u know , Ken s a i d i f h e h a d any

q u e s t i o n s , h e wo u l d c a l l . H e d i dn ' t hav e any

q u e s t i on s . Aga i n , I don ' t know why L LR ' s

r e c o rds don ' t show that . I don ' t know why

L LR ' s r e c o r ds do n ' t show , you know, the

s ub s equent c o rr espondence about t h i s m a t t er .

B u t , you know , I w o u l d p o int o u t t o the

C ommi s s i on , a s we have a l r e a dy s e en f r o m Mr .

B a r f i e l d ' s t e s t i mony , that L LR ' s r e c o rds a l s o

d on ' t s h o w t h a t the Pha s e 7 reg i s t r a t i o n was

f i l e d w i t h t h e LLR a n d r e c e i v e d by LLR , b u t i t


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was . That was Mr . Bar f i e l d ' s t e s t i mony . I t i s

my unde r s tandi ng t h a t F ed E x bears i t o u t . S o

again , c l ea r l y t h e r e a r e s om e h o l e s i n L L R ' s

r e c o r ds . Y o u know, I ' m n o t f au l t in g L L R .

We ' ve a l ways t r i e d t o w o r k w i th LLR a n d t h e

Real Es t a t e Comm i s s i o n . Y o u kno w , n o b o dy ' s

p e r f e c t . I • m · c e r t a in l y n o t p e r f e c t and , y o u

know , I ' m s u r e

p e r f e c t , e i th e r .

that t h o s e f o l ks a r e . no t

w� are a l l human . s o · I c an ' t

s ay why t hey d on ' t have i t i n the i r f il e s , b u t

I can s ay . that i t was s en t . The m e e t i ng y o u

h e ar d , y o u kno w , wi th K e n and K e n unders t o o d

what was g o i n g on and a c t ua l l y had that d i a l o g

that I ' v e j us t i n d i c a t ed , y o u know , wi t h u s i n

the back and f or th l e t t e r s a b o u t s ome changes

. h e wa n t e d t o hav e . T o l d u s t o r o l l them o u t .

T h a t ' s wha t happen e d .

Thank y o u very muc h , M r . P i e r c e .

MS . S HUTT : A t t h a t p o i n t , Mr . C ha i rman , I t h i n k we

have r e s p o n d e d t o every i s s u e i n the p r i v a t e

o rder , a n d w e have p r o v i d e d amp l e e v i dence that

t h e s e p l ans h av e b e en in c on t i nuous con t a c t

w i th LLR about t h e s e ma t t e r s and v a r i ous o th e r

m a t t e r s . W e ' d b e happy t o r e s p o nd t o any

ques t i on s tha t t h e C ommi s s i on e r h a s b e f o r e we


(803) 252-3445 1(800) 822-0896

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put up o � r f in a l wi tnes ses .

THE CHAIR!-I:AN : Thank you . I ' v e go t a c o up l e

que s t i ons abo u t t h e en t i t i es . S u nr i s e V a c a t i on

P r op e r t i e s i s the s e l l i n g en t i t y ; i s t hat

c o rr e c t ?

MR . P I E RCE : Y e s , s i r . I t ' s the s e l l e r . I t h a s the

b r oker in c h a r g e . As I went t h r ough , t h e r e has

b e en c o n t i nu o u s broker i n charge , a n d i t has

s ome t im e s h a r e s a l es p eop l e .

THE CHAI RMAN : We l l , i n your Exh ib i t on P a g e 3 8 f o r

Ms . Smi t h , she app l i e d f o r the b r oker i n c h a rge

l i c e n s e under Sunr i s e Vac a t i o n P r op e r t i es

r e p l a c i n g M r . D a l e . The own e r o f the c omp any

a t tha t t i m e w a s C o ral Res o r t s / S un r i s e V a c a t i on

P r o p er t i es .

MR . P I E RCE : Y e s , s i r . F rankly cus t ome r s , L L R , and

u s b e c a u s e t h e y a r e r e l a t e d c o mp a n i e s ,

s om e t i m e s , y o u kno w , mix the comp a n i e s and the

names up in t erms o f the c ompany conve r s a t i on .

That ' s why we s o r t o f t a l k e d abou t i t i n t e rms

o f the C o r a l g r oup overal l . B u t C o r a l R e s o r ts

i s s o r t o f t h e o v e ra l l name t h a t i s s ho r t h and

us e f o r , y o u k n o w , our o p er a t i on . B u t t h e s e

a r e d i s t in c t e n t i t i e s , you know, t h a t had j obs

t h a t t h e y do w i t h i n that C o r a l g r oup .


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THE CHAI RMAN : B u t the l i c ens i n g w a s in the name o f

C o r a l R e s o r t s back i n 2 0 0 6 . Tha t ' s w h a t y o u

app l i ed f o r .

MR . P I E RCE : W e l l a c t ua l ly , s i r , the l i c ens i ng f o r

the s a l e s p o r t i o n o f i t has con s i s tent l y b e en

w i t h S un r i s e Va c a t i on . The r e g i s t r a t i on

p a c k e t s t h a t have b e en submi t t ed over t h e y e a r s

has always i n d i c a t e d tha t S u n r i s e Vaca t i on w a s

t h e s e l l i n g agent , i ndi c a t e d who t h e b r o k e r i n

charge was

THE CHAI RMAN : I f you w i l l l o o k o n Page 4 8 , Number

3 , C o ral R e s o r t s / Sunr i s e V a c a t i o n P r op e r t y .

MR . P I E R C E : Y e s , s i r . That i s h o w Mr . Da l e fi l l e d

i t o u t , s i r·, you know, whe n h e d i d tha t . B u t

agai n , a l l o f the r e g i s trat i on mat e r i a l and L L R

has a l ways under s t o o d i t t o b e Sunr i s e V a c a t i o n

s ynonymous wi th o u r g roups . I f , you kno w , y o u

l o o k e d on l i n e y o u would s e e that sunr i s e

Va c a t i on has a l l o f i ts t i m e s h a r e f o l ks t h er e .

And i n a l l t h e r e g i s t ra t i o n p a ck e t s , i t app e a r s

t h e cont r a c t b e tween Sunr i s e Vaca t i on and t h e

d ev e l ope r , who ev e r that m i gh t be , i ndi ca t e d

t h a t they a r e the s a l e s f o l k s and i n d i c at e d who

the s a l e s p e o p l e a r e .

M S . S HUTT : M r . C h a i rman , i f I m a y b e can j us t o f f e r


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a p o i n t o f c l a r i f i c a t i on o n t hi s . S un r i s e i s

t h e o n l y s a l e s f o r t h e s e f o ur r e s o r t s . And the

r ea s o n i s b e c au s e thes e r e s o r t s w i l l s e l l o u t .

S o P o r t O ' C a l l , C o r a l Re e f , they h a v e a l i m i t e d

number o f uni t s , and t h e n t ho s e r e s o r t s a r e

g o n e a n d ano t h e r r e s o r t i s b ui l t . And s o i t

makes s en s e t o hav e s ome c o n t i n u i t y i n t h a t you

have one s e l l i n g agent that is S u nr i s e t h a t

s e l l s the new p ro p e r t y , as e a c h r e s o r t i s bu i l t

and B o l d out . And then a l s o i f a n y u s e d

p r op e r ty comes b a c k , i t a l s o g o e s t h r o ugh

S un r i s e . S o t h a t S un r i s e has been c on s i s t ent .

I t o n l y s e l l s f o r t h e s e f o u r r e s o r t s . I t ' s not

l i k e a r e a l e s t a t e agent that s e l l s f o r , you

kno w , 1 0 0 di f f e r ent individual s e l l e r s . I t

o n l y s e l l s f o r t h e s e r e s o r t s . S o , y o u know ,

t h e r e c o rds show t h a t Sunr i s e i s c l o s e l y l i nked

w i th t he s e four p l ans , i f that h e l p s y o u .

THE C H A I RMAN : P l e a s e answer any q u e s t i on s

C ommi s s i o n memb e r s may have .

the

M R . O ' KELLE Y : Mr . B a r f i e l d , the f ou r e n t i t i e s , and

I ' m s p ec i f i c a l l y l oo k i n g a t t h e l e t t e r t o y o u ,

M s . S hu t t , and a l s o t h e o rd e r s i n d i c a t e t h a t

t h e r e a r e f o ur H o r i z o n t a l P r o p e rty R e g i me s , b u t

t h e r e a r e d / b / a ' s . Are they a c t u a l


(803) 252-3445 I (800) 822-0896

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H o r i z o n t a l P r op e r ty Regimes w i th the p r op e r ty

own e r s a s s o c i a t i on ? And I wou l d imagi n e t he

answer i s yes , but i t ' s n o t · c l e a r f rom t h e

r e c o rds .

MR. BARF I E LD : Y e s , i t i s . And that ' s a g o o d

ques t i on .

MR . O ' KELLEY : B e caus e t h a t makes a d i f f e r e n c e , I

MR .

t hi nk , i n t e rms o f r e g i s t r a t i on and f o l l owing

wha t ' s b een g o i ng o n .

b e en r e g i s t e r e d f o r

ent i t i es w e r e c r e a t e d ?

BARFI ELD : Abs o l ut e l y .

H o r i z on t a l P ro p e r t y

A n d I ' m s u r e they ' v e

how l ong, s in c e

The names o f

t h e

t he

R e g i m e s · thems e l v e s ,

c o r r e spond t o t h e nam e s o f t h e deve l opmen t . S o

i t ' s P o r t O ' Ca l l , H o r i z o n t a l Property R eg i m e ,

C o r a l R e e f Ho r i z on t a l Prop e r t y , C o r a l S a n d s ,

I s l an d L inks . The dev e l o p e r e n t i t i es h a v e

d i f f e r en t name s .

M S . TAKAC S : A r e t h e r e i n d i v i d u a l brokers i n c h a r g e

MR .

f o r S unr i s e P r op er t y a t e a c h o f the di f f e r e n t

p r op e r t i e s ?

P I ERCE : A l l the s a l e s o c c u r a t a c e n t r a l

l o c a t i o n . T h e r e are no s a l e s o f f i c e s on s i t e .

S o , y o u know, a l l the s a l e s o cc u r a t o n e

c en t r a l l o c a t i o n .


(803) 252-3445 I (800) 822-0896

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MS . TAKACS : S o a p e r s o n can t a k e t h em t o any

p r op er ty , j us t depending on what t h e w i s h e s o f

t h e c l i en t m i g h t b e ?

MR . P IERCE : W e l l , i f they are i n t e r e s t e d i n s e e ing

· a c e r t a i n p r op e r t y , they can g o l o o k a t t ha t ,

y·o u . know , · i f they want to . Y o u k no w , t h e only

p r o p e r t y t h a t we h a v e a p r e s en t l y h a v e a

m o d e l t h a t wou l d b e open i s a t C o r a l S ands

t h e r e on P o p e Av enue . But no s a l e s o c c ur

t h e r e . You kno w , t h e s a l es o c cu r a t the s a l es

o f f i c e a t Park P l a z a over n e x t t o t h e M e l l ow

Mushroom .

M S . TAKACS : I . l i ve o v e r there . I l i v e t h e r e .

know whe r e i t i s . O kay . Thanks . L e t m e try

o f get t h i s s t r a i gh t . I know wh e r e a l l the

p r op e r t i e s a r e . Jus t f o r m e b ec a u s e I l ive

t h er e , ind I ' m t ry i n g t o p l a c e them . And t hese

;f o l k s p r obably a r en ' t even w o r r y i n g abou t the

m i n u t i a ab o u t t ha t . Bu t , howev e r , s o D w i ght

T r ew was the dev e l o p er o f a l l o f t h e m ?

2 1 MR . P I E RCE : Y es , m a ' am .

2 2

2 3

2 4

2 5

MS . TAKACS : Two o f t h e m have b e en t u r n e d ov e r to

t h e homeown e r s ?

MR . P I ERCE : Y e s , ma ' am . P o r t 0 ' Ca l l and · C o ral


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MS . TAKACS : And s o do e a c h o f t h o s e proper t i e s do

t he i r o wn a c c oun t i ng ? S o there a r e

d i f f e r e n t a c c oun t i ngs f o r each o f them?

f our

MR . P I ERCE : They have th e i r own bank a c c o u n ts .

Y e s , ma ' am . They r e c e i v e t h e i r own b i l l s .

They pay t he i r own b i l l s . Y o u know , t h e y a r e

t ax e d . They pay i n s uranc e . They ho l d t h e i r

own i n d i v i dual insuranc;e p o l i c i e s , you know,

for f u l l rep l a c ement c o s t whi c h , again , i s . p a i d

f o r o u t o f the m a i n t enan c e f e e s t h a t a r e

c o l l e c t ed .

MS . TAKACS : I ' m a t i m e s h a r e own e r on the i s l and .

S o I g e t tha t . B u t i n the a c coun t ing , I m e an ,

when I g e t a whe n I wou l d imag i n e t h a t I

wou l d l o ok a t the a c c o un t i ng f o r any p a r t i c u l ar

p r op e r ty , wou l dn ' t t her e a u t o ma t i c ally b e - - I

m e a n , every t h ing i s gone a u t oma t e d n ow .

Wou l dn ' t there have b e e n an emp ty spo t f o r the

a c c o u n t i ng on any o f thes e t h a t you wou l dn ' t

know t o have s e n t y o u r annu a l r e g i s t r a t i o n to

L L R ?

M R . P I ERC E : N o 1 ma 1 am . You kno w , that wou l d b e

s om e t h i ng t h a t woul d have f a l l en i n t o a

m i s c e l l an e ous c a t egory b e c au s e , you know , the

way , you know , t h e a c c ou n t i ng depar tment w o u l d


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handl e i t i s they wou l d hav e l i n e i t em s f o r

wh a t I w i l l c a l l t h e maj o r t h i n g s . And t hen

obvious l y t h e r e a r e s ome c a t c ha l l s f o r

m i s c e l l aneous , you know , t h ings t h a t c ome up .

And , y o u know , the way t h a t was , you kn o w ,

a c coun t e d f o r a g a i n was b e c au s e i t w a s a s ma l l

amount o f money . We ' r e t a l k in g a b o u t $ 2 5 0 , you

know , in a s i tu a t i on wh ere t h e s e HOA b u d ge t s

a r e l ar g e , obv i o u s l y b e c au s e a g a i n t h ey ' r e

c o l l e c t ing n o t o n l y money t o t a k e c a r e o f t ha t

year ' s annual r e qu i r emen t s , b u t t hey a r e a l s o

t a king i n c ap i t a l r e s erves t o t ake c a r e o f

r o o f s down t h e w a y a n d t a k i n g i n t h i ng s f o r the

unexp e c t ed , t h a t s o r t o f t h i ng . S o a g a i n ,

b e cau s e o f t h e sma l f amoun t o f money t h a t we

a r e t a l king abou t , i t d i d n o t war ran t i t s own

l i ne i t em . S o un f o r t una t el y t h a t wo u l d h a v e

b e en g r e a t i f t h a t h a d h a d happened . But

a g a i n , b e c a u s e i t was s o s m a l l and b e c a u s e

t here a r e s o many b i l l s tha t c ome i n f o r t h ese

t i mes h a r e s b e c au s e t h e r e a r e s o m any moving

p a r ts t o them , t h e l a r g e p i e c e s wou l d be t h e

o n e s t ha t waul d b e 1 i n e i t erns , y o u know , l i ke

y o u w e r e t a l ki n g ab o u t .

M S . TAKA C S : S o t h en e a c h i nd i v i dua l one d o es t h e i r


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SOUTH CAROLINA REAL ESTATE COMMISSION 1 0 0

own t h i n g w i th the p aym ent n f the main t en a n c e

f e es , y e ah .

MR . P I E RCE : T h e m a i n t enance f ee s ; y e s , ma ' am . W h a t

h appens t h e r e i s , a s M r . Fo s t e r had ind i c a t ed ,

I think h i s to r i c a l l y there w a s only j u d i c i a l

f o r e c l o s ur e . The r e was no non- j ud i c i a l

f o re c l o s ur e . And tha t wo r k s f i n e i n m o s t

c a s e s . But f o r t im e s h a r e i t was a ni g h t m a r e

b e caus e y o u ' v e g o t a l l o f t h e s e indi v i du a l

w e eks . And you ' ve g o t peop l e who y o u l o s e

t r ac k o f , they d i e , and they ' r e not l iv i ng i n

t h e p r o p e r ty obv i o u s l y .

MS . TAKAC S : S o you do n ' t go t o ma s t e r and e qu i ty ,

i n e s s en c e .

M R . P I ERCE : S o , you kno w , i t was a n i gh tmar e . And

s o t h e l eg i s l a t u r e , you know , heard t h a t t h e

p r iv a t e w e n t up f r o m , y o u know, fo lks s ay i ng

t h i s i s k i l l ing u s . And t he y put in a n o n -

j u d i c i a l f o r e c l o s u r e p r o c e s s t h a t a l l o w s t h e

H O A s t o t a ke i n t o a cc o u n t t h e f a c t tha t , y o u

k n o w , i f they h a d t o g o t h r ough a j ud i c i a l

f o r e c l o s u r e i t wou l d t a k e f o r ev e r , Numb e r 1 .

Numb e r 2 , you kno w , i t i s h a r d t o f i n d t h e

p e op l e b e c a u s e t hey don ' t l iv e i n the prop e r ty ,

a n d i t w o u l d c o s t t hem a f o r tune t o g e t i t


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3 .

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done . And in t h e mean t im e , t h e y ' ve s t i l l go t

t o pay t he b i l l s . Un l i ke s ome h o u s e t h a t m i ght

s i t emp t y , and i t ' s b e tween the b ank and , y o u

t h em a b o u t that , m aybe a bo u t t h e

f o re c l o s u r e . He r e , you kno w , you j us t go t

o t her o wn e r s wh o bas i c al l y have t o · cough up

addi t i o n a l money to cover a l l tho s e exp en s e s

t h a t t h e s e f o l k s a r en ' t p ayi n g , y o u kno w , in

t e rms o f bad d ebt , S o , y o u know , i t ' s a

s t r e am l i n e p r o c e s s . And Mr . F o s t er handl es

t h r e e o f t ho s e , and there i s an o th e r a t t o rney

t h a t hand l es P o r t O ' Ca l l .

M S . TAKAC S : O kay . I unders t and tha t p a r t . B u t

t h e n y o u t u r n t h em o v e r t o S un r i s e , a n d then

t h e y r e s a l e t h em .

MR . P I E R C E : Y e s , ma ' am . Sunr i s e vac a t i ons , y e s ,

m a ' am .

MR . O ' KELLEY : And you always a s k t h e $ 6 4 , 0 0 0

q u e s t i o n , wha t in a p er f e c t wo r l d wou l d you

have us d o ?

M S . TAKAC S : The b o t t o m l in e . B o t t o m l in e i s , yeah ,

b o t t o m l in e ; t h a t t h i n g .

M R . O ' K E L L E Y : And b e c a u s e a n d t h i s i s j u s t m e

t h i n k i ng o u t l o ud d o ing s om e s i mp l e math .

a r e t a l k i n g ab o u t $ 6 , 2 5 0 p o s s i b l y due .


(803) 252-3445/ (800) 822-0896

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w e ' r e t a l k i n g ab o u t s om e s o r t o f c o n f i r m a t i o n

t h a t y o u ' v e a l ways b e en r eg i s t er e d . I m e a n i t

l4S . S HUTT : Comm i s s i on e r , t h a t ' s exa c t l y i t . And

t h e o n l y o t her w i t n e s s e s I w a n t e d t o o f f e r w e r e

M r . Fo s t e r and t h e n Ma y o r L a u gh l i n t o t e l l u s

abo u t wha t h app e n s i f w e d i d s ome t h i n g e l s e .

B e c a u s e i f t h e C o mm i s s i on d o e s s om e t h i n g e l s e ,

a n d s o i t t a l k s a b o u t t h i s i n t e r m s o f a l ap s e

o r t a l k s abo u t t h i s i n t e rm s o f a v i o l a t i o n ,

w:tl i ch I do n ' t t h i n k t h e s t a t u t e p r o v i d e s f o r .

T h e s t a t u te , and I do n ' t wan t t o g e t t o o muc h .

i n t o M r . S m i th ' s c l o s i n g . a r gumen t , b u t t h e

T i m e s h a r e Ac t t a l k s a b o u t v i o l a t i o n s . I t ' s n o t

a v i o l a t i o n n o t t o p a y t h i s $ 2 5 0 f e e . Th e r e i s

a c t u a l l y n o t h i n g i n t h e Ac t t h a t s ays t h i s i s

wh a t happens i f y o u do n ' t p a y t h i s $ 2 5 0 f e e .

We ' v e s h own you t h a t i t was i n a dv e r t en t . I

t h i nk , y o u kno w , we ' v e s hown a l o t o f g o o d

w i l l . We ' v e s h own c o n t i nu o u s c o n t a c t . S o I

d o n ' t t h i n k t h a t ' s an i s s u e . I t h i nk l ap s e i s

a l s o n o t an i s s u e . O n c e th e s e t i m e s hare p l a n s

w e r e r e g i s t e r e d , t h e y m a i n t a i n e d t h e i r

r e g i s t r a t i o n . I t ' s n o t l i k e a p r o f es s i o n a l

w h e r e I , as a l awye·r , h a v e t o s h o w c o n t :L n u i n g


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l e ga l e d u c a t i on c o mp l iance e v e ry y e a r , a n d I

h a v e t o s h o w that I haven ' t b e en convi c t e d o f

c r i mes o r wha t ev e r e l s e needs to b e s hown as a

p r o f e s s i on a l . The s e enti t i e s , becaus e t h e y ' re

r e a l e s t a t e , b e c a us e they ' r e r e a l p r o p e r ty ,

l i k e a d e e d , o n c e t h ey ' re r e g i s t e r e d , t h e y ' re

a l ways r eg i s t e r e d . S o we can ' t t a l k abo u t that

i n t e rm s of l aps e . S o wh a t we woul d a s k t h e

C ommi s s i on t o do i s t o l e t u s p ay t h e money and

s ho w t h a t and t o i s s u e t h a t i n p r i v a t e

o r ders . T h e p r i v a t e orders s t a r t e d t h i s c as e .

L L R , b e c a u s e ci f the t ime l in k , c o u l d n ' t m a k e a

d e c i s i on un t i l they i s sued p r i v a t e o r d e r s . S o

w e wo u l d a s k that you dec l a r e u � f r e e 'o f t h o s e

p r i v a t e o r d e r s a n d t h a t you s ay t h a t we have

n o t t he r e h a s n o t been a v i o l a t i on , there

has n o t b e en a l ap s e . You l e t u s pay o u r money

and go f o r th and f i nd that t h e r e have b e en no

v i o l a t i o n , no l ap s e . I woul d l i ke t o o f f er

Mayor L a ug h l i n to t a l k a l i t t l e b i t abou t the

e c on om i c i mp a c t t h a t thes e r e s o r t s have and

h o w , y o u know , harming t h e s e homeown ers c o u l d

c a u s e g r e a t h arm t o H i l t o n H e a d .

f i n a l wi t n e s s t h a t I wou l d o f f er .

M R . LAUGHLIN - EXAMINATION BY M S . S HUTT :


(803) 252-34451 (800) 822-0896

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Mayor Laughl i n , t hank y o u f o r b e i n g h e r e t o day .

I know · we ' ve t a k e n a l l your day . W o u l d yo u

i n t r o d u c e yours e l f f o r us ?

Y e s , my name i s D r e w L augh l i n , Mr . C h a i rman and

memb e r s o f the C ommi s s ion . I app r e c i a t e t h e

o p p o r t un i ty to b e here a n d sp e a k wi t h you

t o day . I have b e e n an a t t o rney o n Hi l t o n Head

I s l and s i nce 1 9 7 7 . I wa-s e l ec t e d M a y o r i n

2 0 1 0 . I have kn o wn Dwi g h t and Judy T r ew f o r

o v e r 2 5 years . S o o v e r t h e p a s t s ev e r a l y e ars

I ' ve g o t t en to kn o w Mr . P i er c e here . And I can

t e l l you wi thout h e s i t a t i o n t h a t I b e l i ev e t h a t

t h e s e p l ans a r e e t h i c a l l y a n d we l l run , and

t h a t they are c o n s i s t ent l y trying to i mp r o v e .

T h ey a r e and they c on t r ibu t e l i t er a l l y m i l l i ons

o f d o l l a r s a y e a r t o the e c o nomy o f H i l t on H e a d

I s l and . They b r i n g a l o t o f p eo p l e t o the

i s l and . They d o a l o t o f mark e t i n g o f t h e

i s l an d . Vi s i t o r s , o wn e r s , and g u e s t s , o f

c o u rs e , e a t i n o u r r e s tau r a n t s and p a r t i c ip a t e

i n o u r event s . T h e C or a l i s one o f t h e ma j o r

emp l oy e r s o f t h e i s l an d . And s o t h e y

c o n t r i b u t e a l o t t o t h e e c o nomy . And i t ' s on

a yea r - r o und bas i s b e caus e t imes h a r e s , p eop l e

c om e a n d s tay in t h em year r o und . .


(803) 252-34451(800) 822-0896

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a yea r - r o und i n f l ux o f vi s i t o r s who are by and

l a rge o u r p o o l o f f u t ure p r op e r t y o wn·e r s . Our

v i s i t o r s , i t ' s v e ry c ommon t o hear f r om

s omebody b u y i n g a home on H i l t o n H e a d I s l and

t h a t t h ey . f i r s t came t o H i l t on H e a d I s l a n d as

a vi s i t or , s t ayed a week , f e l l i n l o v e wi th

i t , l i k e d i t , and d e c i ded t h a t t h e y wo u l d l i ke

t o o wn m o r e prop e r t y t h e r e . S o we . have

t h o u s an d o f f o l k s b e i ng b r o u g h t t o the i s l and

e a c h y e a r b y C o r a l and t h e o ther m a j or

t i m e s h a r e d e v e l opmen t s . I w o u l d t e l l y o u t h a t

i n my exp e r i en c e the t imeshar e p ro j ec ts t en d t o

b e be t t e r ma i n t ained p rop er t i e s than a l o t · o f

r e g u l a r c o ndomi n i um r e g i mes . And I t h i nk t h e

r e a s on f o r t h a t i s t h a t t h e y kno w tha t t h ey

have t o · ma i n t a i n a t a h i gh l ev e l f o r p e op l e who

w a n t t o c o n t i nue t o come and s t a y there . And ,

a s y o u h a v e h e a r d , i f t h ey have a s i t u a t i on

wh e r e a n o wn e r i s no t paying t h e i r m a i n t en a n c e

c h a r g e s , t h e y c an g e t t h e un i t b a c k and r e s o l d

t o s om e b o dy e l s e a l o t qu i ck e r t han a n o rm a l

j u d i c i a l f o r e c l o s ure . And , o f c o ur s e , t h e

n o rmal c on d o m i n i um t h e s e day s , i f t h e y a r e n o t

g e t t i n g t h e i r r eg i m e f e e s and t h e f i r s t ho l der

o f t h e m o r t gage i s n o t i n t er e s t e d

CREEL COURT REPORTIN� INC. 1230 Richland Street I Columbia, SC 29201

(803) 252-34451 (800) 822-0896

i n

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f o re c l o s ing a n d t a k ing own e r s hip and b e c om i ng

r e s pons i b l e f o r th o s e , i t ' s very d i f f i c u l t to

g e t tho s e uni t s m o v e d i n t o t h e h a n d s. o f

s om e b o dy who w i l l p ay . So t h e r e i s j us t a b i g

e c onom i c i mp a c t h e r e . And , o f c o u r s e , on

H i l ton H ead l i ke e v erywhere over t h e l a s t

s everal year s , we a r e very much c o n c ern e d wi th

t h e s t a t e o f o u r e c onomy and p r o v i d i ng

o p p o r t un i ty f o r our r e s i dents and c i t i z en s apd

m a i n t a i n ing a h e a l thy e c onomy . So I t h i n k i t ' s

t e r r ib l y i mp o r t a n t wh a t happens t o t h e s e f o l ks .

THE CHAI RI�AN : Thank you , s i r .

M S . S HUTT : M r . C h a i rman , a t that p o i n t we h a v e n o

o t her t e s t imony t o o f f e r , and we wo u l d l i k e to

c o n c lude by -

T HE C H A I RJ.IAN : We l l , l e t ' s s e e i f t h e C o mm i s s i o ns

h a v e any que s t i ons for the m ayor . Thank y o u ,

s i r .

M R . LAUGHLI N : Thank you .

M S . SHUTT : Mr . S m i t h i s g o ing t o c l o s e f o r u s , Mr .

Cha i rman .

2 2 M R . S M I T H : Thank you , M r . Chai rman , memb e r s o f the

2 3

2 4

2 5

C o m mi s s i on . J u s t b r i e f l y , I t h ink C om m i s s i on e r

O ' K e l l ey w a s g e t t in g a t m y p o i n t f o r t h e

c l o s ing t h i s even i n g . And I ' m n o t g o ing t o go


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l ong b e cause I t h i nk we ' v e hop e f u l l y

c o l l e c t i v e l y r e a ched the p o i n t whe r e we

unders t an d why we are a l l h er e . And on b e h a l f

o f my c l i en t s , as y o u know , we a r e v e ry

g r a t e f u l f o r th i s opp o r t un i ty . W e a r e r e l i ev ed

t h a t w e a r e here t o day b e c a u s e o f t he

c i r cums t anc e s t h a t have evo l v e d f r om . An d I ' m

g o ing t o give a l o t o f c r e d i t t o t h e LLR s t a f f

who have worked hard r e c e n t l y t o l o ok a t t h i s

s t a t u t e and t r y t o unde r s tand h i s to r i c a l ly

wha t ' s b e en g o i n g on i n S o u th C a r o l ina . And

they ' ve b e e f ed up the i r s t a f f , and as b e e f i n g

u p the i r s ta f f , t hey ' re l o o k i n g a t s ome th i ng s ,

a n d they ' r e d i s c overing t h i ng s t h a t hav e b e en

g o i ng o n , and t h ey ' r e w o r k i ng t o c o r r e c t . i t .

And they ' r e working w i t h my c l i en ts t o do t h a t .

And i n d o i n g tha t , we c ame t o an i mp a s s e w h e r e

we s aw s omethi ng that was c omp l e t e l y an

i nn o c e n t overs i gh t . An i nn o c e n t overs i g h t o n

b e ha l f o f m y c l i ents a n d a n inno c en t ove r s i gh t

o n beha l f o f LLR becaus e s i n c e ' 0 6 a n d i n m o s t

o f t he s e c a s e s ' 0 6 and ' 0 7 , t h i s p ayme n t o f

t h i s r e n ewal f e e hadn ' t b e e n don e . Obvi o u s l y ,

i t was a p r a c t i c e i n the p a s t t h a t they i s s u e d

i nvo i c e s and then they di dn ' t .


(803) 252-3445 1(800) 822-0896

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and on a f t e r that . We l l , what u l t ima t e l y i s

t h e imp a c t o f t h i s ? W e l l , we know f rom the

t e s ti mony and f r om the evi dence in f r o n t o f

y o u , t h a t L L R s i nce ' 0 6 has a lways · t r ea t ed

t h e s e e nt i t i e s , a l l thes e p l ans a s r e g i s t e r e d .

T h ey a c t e d , i n t e r a c t e d wi th them a s r eg i s t e red

p l ans . They a r e r eg i s t er e d p l ans and u n d e r the

l aw they ' ve a l ways b e en a r eg i s t e r e d p l an .

Wh a t ' s i n t e r e s t i ng abot+t thi s p a r t i c u l ar

s t a t u t e , whi ch i s di f f e r ent than dea l i n g w i th

a p r o f e s s i o n a l l i c ens e , there i s n o th i n g i n the

s t a t u t e about l ap s e . There i s n o t h i n g t o s ay

t h a t a f a i l u r e t o pay a f e e w i l l c au s e the

r e g i s t r a t i on t o l ap s e bec aus e i t d o e s n ' t . And

t h e r e i s an i mp o r t a n t reason f o r t h i s . The

l e g i s l a t u r e o f t en p u t s f e e s i n t o

p a r t i cu l a r l y L L R e n t i t i es , n o t ne c e s s ar i l y a s a

p en a l ty , but i t i s a n admi n i s t r a t i v e f e e t o

f u n d the p r o g ram . And we ' ve done t h i s i n a

wh o l e h o s t o f a r e a s . We charge a f e e that

h e l p s fund the p r ogram and that ' s wha t thi s i s .

I t ' s an a dm i n i s t r a t i v e f ee . I t n e e ds t o b e

p a i d , and we n e e d t o p ay i t . But t h e r e i s no

p en a l ty f o r t h e f a i l u r e to pay i t . And s o what

w e ' r e h e r e t o day a s k i ng f o r y o u r h e lp an d L L R ,


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a s wel l , s t a f f needs t h e h e l p b e c au s e t h e y f e e l

l i ke · they c o u l dn ' t make t h e d e c i s i on o n t h e i r

o wn , i s t e l l u s how much w e n e e d t o p ay , a n d we

w i l l happ i ly pay i t and c o n t i nu e t o m o v e

f o rwa r d i n the r e spon s i b l e f a s h i on t h a t my

c l i en t s · have wo rked f o r f o r many y e a r s . The

i s s ue o f the var i o u s do cumen t s , and we c ou l d go

t h r ough t hem a l l a ga i n , but I t h i nk i t ' s b e en

a bundan t l y c l ear . .I t was i n t e r e s t i n g i n

l i s t ening t o your que s t i on s about t h e

d o cumen t s . But I t h i nk i t was p r e t ty c l e a r

t hey w e r e a l l de l iv e r e d , and they w e re

de l i v e re d t i mely . And I w i s h I had a l l my

c l i en t s t h a t h a d t h i s k i n d o f p ro o f o f

d o c um en t s b e ing d e l i v e r e d s ome s i x y e a r s

e a r l i er , i n c luding the s i gn e d F e d Ex r e c e i p t s

a n d t ho s e

c o mp e l l i n g

kind o f

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e v i d e n c e .

t o s ho w y o u

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that t he

d o cument s that w e r e r equ e s t e d , t he docum e n t s

w e r e r a i s ed i n t he P r iva t e o r d e r , were a l l

t i me l y · d e l i v e r e d and/ o r no t a t i s s u e anymor e .

And s o u l t i ma t e l y i n c onc l u s i o n , I think what

y o u have h e r e is a s ophi s t i c a t e d r e s p on s i b l e

o p e r a t o r who has p r o v i d ed a g o o d and impo r t an t

s er vi c e . And an i mp o r t a n t r e g i on i n our s t a t e


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who has brought a l o t of money and opp o r t u n i ty

and j ob s and econom i c imp a c t on that r e g i o n i n

a very po s i t iv e f a s h i on ; who has a c t e d i n a

s oph i s t i � a t e d manner a l l up u n t i l a p o i n t where

j us t t h e s ys t em change d . And w e know LLR does

a l o t w i th very l i t t l e . And they do an a m a z ing

j ob a t p r o t e c t ing the pub l i c when budge t s have

gone d o wn and they ' ve had t o doub l e d own

inves t i ga t o r s . I t ' s been hard t o make s ure

that , y o u kn o w , that every do cumen t got p l a c ed

whe r e i t was s upp o s ed to go . But we k n o w the

docum en t s got s en t . We know the f e e s w e r e p a i d

s i n c e t h ey were the r e gi s t r a t i o n s were

c r ea t e d un t i l t�i s p r o c e s s o f invo i c e s t opp ed .

N o w , t h e y b e e f e d up LLR s ta f f and they are

l o oking at r ev i ewi ng t hi s , and they d i s c ov e r ed

t h i s , w e d i s c ov e r e d th i s ; and we w o u l d l i ke you

a l l ' s h e l p , the h e l p , in

c o r r e c t i n g i t . S o I think we o n l y a s k and only

d e s i r e a n d o n l y n e c es s ary a c t i on on beha l f of

the C om m i s s i o n is t o t e l l u s , you kno w , how

much w e s h o u l d pay . And we wou l d happi l y pay

t h a t a n d then move f o r w a r d and co n t i nue

o p e r a t i n g a s we have .

THE CHA I RMAN : Thank you , s i r . P l e as e answer any


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ques t i on s the Comm i s s i o n memb e r s might hav e .

MS . TAKACS : I ' d h o p e i t ' s l e s s than wha t h e ' s

MR .

p aying e i ght l aw y e r s t o be h e r e today .

SMITH : I t e l l y o u wha t , t h i s i s a f ine

obs erva t ion . I c an t e l l y o u th i s . I t h i nk

wha t you have a n d t h e a t t o rney t eam t h a t i s

h e r e t o da y i� a v e r y cons c i o u s e f f o r t . Th i s is

i mp o r t an t . Ther e i s a down s i de h e r e t o d ay .

I t ' s r e a l l y that s i mp l e . I t i s . Bu t t h e r e ' s

a f e a r t h a t i f t h i s wou l d b e conc l uded a s a

l ap s e p r that th i s w a s s omehow t o b e conc l uded

that the c o n t r a c.ts that w e r e in t h e r e f r o m a

p e r i od o f t ime w e r e a t i s s u e , whi c h t h ey ' re

n o t . S o I think wha t you s e e i s an e f f o r t t o

m a k e s u r e t h a t w e d o a g o o d j ob f o r you , t h a t

y o u have t h e i n f o rm a t i on y o u need i n f r o n t o f

y o u , and t h a t w e c an h e l p make t h e c o r r e c t

de c i s i on . S o t ha t ' s why we ' r e a l l h e r e b e c a u s e

we want t o m a k e s u r e w e do a g o o d j ob a n d get

i n f o rm a t i on t o y o u .

M R . B I GGERS : I wo u l d j u s t l i k e to t e l l y o u

p er s ona l l y thank y o u a l l f o r e a c h o n e o f you

how you p r e s en t e d a n d how that you did your

r e s e a r ch . And w e c e r t a i n l y appre c i a t e i t . I

de f i n i t e l y w i l l t ake a l l


(803) 252-3445 I (800) 822-0896

o f i t i n t o

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c o n s i d e r a t i o n .

M R . · SMITH : We t hank you a l l f o r y o u r t i me h e r e

t o da y , a n d I know i t ' s b e e n a l on g a f t e r n o on .

And w e app r e c i a t e the w o r k that you d o a t

p r o t ec t i ng the pub l i c and S ou t h C a r o l i na

c o n s ume r s . And we know t h a t ' s imp o r t an t a n d we

a r e g r a t e fu l for i t , and we app r e c i a t e t h e

opp o r tun i ty t o come b e f o r e y o u today .

T HE CHAI RMAN : Thank you , s i r . At t h i s t ime , I t h i n k

i t wou l d b e p r obab l y approp r i a t e t o g o i n t o exe c u t i v e

s e s s i o n .

MR . 0 ' KELLE Y : I move .

M R , P O PL I N : S e cond .

T HE CHAIRNAN : The mo t i on i s s e conde d .

f avo r , p l e a s e s i gni fy by s ay i ng aye .

( Aye s )

A l l i n

THE C HA I RMAN : I n exe c u t i ve · s e s s i o n , a r e a s o f t h e

c a s e w i l l b e d i s c us s ed . No v o t e s t o be t aken .

( O f f the Rec o r d )

THE CHAIRMAN : I c a l l the mee t in g back t o o rde r . I s

the r e a mo t i on that we ·come out o f Exe c u t i v e

S es s i on ?

M R . O ' KELLEY : S o move d .

N R . P O P L I N : S ec o n d .

THE CHAI RMAN : A l l in f avo r , p l ea s e s i gni f y b y


(803) 252-3445 I (800) 822-0896

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s aying aye .

( Ay e s )

THE CHAI RMAN : I n execu t i v e s e s s ion , app l i c a t i o n was

M R .

d i s cus s e d . N o v o t es were take n . D o w e h a v e a

mo t i on a s t o the dispos i t i o n o f t h i s

app l i c a t i on ?

EDWARDS : M r . Chai rman , I wou l d

that th e s e f o l k s b e p ermi t t ed t o

m a k e a m o t i on

pay th� f e e s o r dues i n a r r e a r s and go o n t h e i r wa�.

T H E CHAIRMAN : O kay . S o bring i t c u r r e n t a s o f

t oday?

M R . P O PLIN : I s e c o n d t ha t .

T H E CHAI RMAN : And l e t ' s move f o rward . The m o t i on

i s s ec o nded .

M R . B I GGERS : I s e c o n d i t .

. TH E C HA I RMAN : Mr . P op l i n a l r eady s ec on d e d i t . The

m o t i on i s s ec on d e d . D i s cus s i o n ? A l l i n f av o r ,

s i gni fy b y s ay i ng aye .

( Ay e s )

T H E C HA I RMAN : O pp o s e d ? The ayes h a v e i t . Thank

you a l l .

M R . O ' KELLEY : O h , you know what we f o r g o t t o do?

Th i s wi l l b e p r i v a t e . I wi l l make a s e c ond


(803) 252-3445 1(800) 822-0896


1 rm . B I GGERS : S econd .

2 THE CHAI RMAN : D i s cus s i on?

3 s i gn i f y by s aying aye .

4 ( Aye s )

A l l i n f a vo r , p l e a s e

5 THE C H A I RMAN : The ayes hav e i t .

6 ( There being nothing furthe r , t h e hearing concluded

7 at 4 : 5 9 p . m . )

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(803) 252-3445 I (800) 822-0896

c

CERT I FI CATE

T h i s i s t o c e rt i f y that the w i th i n h ea r i n g

c o n s i s t i n g o f O n e H u n d r e d F o u rteen ( 1 1 4 ) pag e s , i s a

t r u e a n d c o r r e ct tran s c r ipt o f the t e s t i m o n y g i v e n b y

s a i d w itne s s e s a f t e r b e i n g d u l y S l·l o r n ; s a i d h e a r ing

w a s r e p o rt e d b y th e m e th o d o f Ste n o ma s k w i th B� c kup.

I f u r th e r c e rt i f y that I am n e i th e r e mp l o y e d b y

n o r r e late d t o an y o f the par t i e s i n t h i s m a tt e r o r

t h e i r c o u n s e l ; n o r d o I have an y i n t e re s t , f i n a n c i a l

o r o th e nv i s e , i n t h e o u t c o m e o f same .

IN W I TNESS W H E RE O F I hav e h e r e u n t o s e t my

han d a n d s eal on F e b r u a r y 1 3 , 2 0 1 3 .

S a r a L . Q u a t t l ebaum C ou r t R ep o r t er

N o t a r y P u b l i c f o r S o u t h c a r o l i n a M y C ommi s s i o n Exp i res : 9 / 2 4 / 2 0 2 2


(803) 252-3445 I (800) 822-0896

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' ) ' '

; I \

.oral :.anos 111'K - Keg1strat1on 1apseo 4·ll·LUUll1 Island links Resort - Registration lapsed 9-11-2005) Port O'CaU Development - Registration lapsed 3-1-2006) Coral Reef Villas at Shipyard Plantation II - Registration lapsed 6-13-2007)

'

I

.orar ::.anos Ht'K- KegrstratJon rapseo 4-11-LUUI!}

!sland Links Resort- Registration lapsed 9-11-2005) ·,Port O'CaU Development- Registration lapsed 3-1·2006) Coral Reef Villas at Shipyard Plantation 11 - Registration lapsed 6-13-2007)

transcript: sc real estate commission's jan. 23, 2013, administrative hearing re coral resorts

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