Southeastern NC (WWAY) – An attorney who lived on Bald Head Island will spend up to 17 years in prison for bank fraud.
Joseph Hal Kinlaw, Jr., 64, must also serve 3 years of supervised release and pay $23,796,372 in restitution to his victims.
According to a news release from the U.S. Department of Justice, Kinlaw operated various real estate investment and development entities on behalf of investors in the Hubert area of Onslow County. Kinlaw used the entities to obtain real estate development loans from BB&T and First Citizens Bank. BB&T and First Citizens Bank extended loans to these entities to build homes in various subdivisions near Camp Lejeune.
Between 2004 and April of 2013, Kinlaw used the real estate development entities to defraud BB&T and First Citizens Bank by falsifying the legal descriptions of the loan collateral and by falsifying releases of the collateral. By doing this, Kinlaw was able to use the collateral for other real estate investments and loans.
By fraudulently releasing the banks’ collateral before the loans had been satisfied, Kinlaw was able to use the collateral to third parties and continue the scheme.
To avoid getting caught, Kinlaw used outside funds to make loan interest payments to BB&T and First Citizens Bank. In some instances, Kinlaw used loan proceeds on one
transaction to make loan interest payments on another transaction.
Banks stopped loaning money to Kinlaw, as a result, the existing loans went into default. Because the bank collateral was gone, BB&T and First Citizens Bank were unable to recover their loan losses in foreclosure.
Various other investors and title insurance companies lost money due to the scheme. Numerous victims spoke at the sentencing concerning how Kinlaw had harmed them.
The exact amount of money lost is still under investigation, but losses are anticipated to exceed $18 million.