ALBANY — A sentencing hearing is expected to resume at 9:30 a.m. today for a father and son, Brad Heard Jr. and Brad Heard Sr., at the C.B. King U.S. Courthouse before U.S. District Judge Louis Sands.
The two were among four individuals named in indictments in November 2012 and initially pleaded not guilty in federal court in December 2012 in connection to loan fraud allegations — after which Heard Jr., former owner of Backwoods Outdoors in Leesburg, admitted to one charge of commission or gifts for procuring a loan and Heard Sr. entered a guilty plea in the case in October.
They were indicted as part of a probe of the business dealings of Larry Malone, the former chief lending officer at Southwest Georgia Farm Credit, who eventually pleaded guilty to fraud. In exchange for rubber-stamping the loans, Malone and family members reportedly received thousands of dollars in kickbacks from the Heards, the indictment contends.
At the start of Wednesday’s hearing, attorneys from both sides offered witnesses for testimony. The first witness was Richard Monson, CEO of SWGFC, who directly supervised Malone until his termination in 2008 for failing to act in accordance with policy and procedure.
In his testimony, Monson said that the underwriting had been manipulated by Malone by using intimidation tactics on young analysts, and that the verification processes for such loans were not followed.
The indictment stated that Heard Jr. borrowed roughly $5 million from SWGFC in Bainbridge to purchase real estate in Southwest Georgia and North Florida. The indictment charged also that Heard Sr. borrowed $5 million from SWGFC and, according to the U.S. Attorney’s Office, acted as a “straw borrower” — meaning he borrowed money from the SWGFC on behalf of his son, who had nearly reached the $6 million cap imposed on farm credit loans by the federal government.
Since that time, the SWGFC CEO said, the company has seen higher insurance rates as a result of the scheme — but that was not the only consequence.
“Reputationally, there was no doubt we were hurt,” Monson said Wednesday. “I had to write a letter to (hundreds of) stockholders saying we had lost $10 million.”
Also indicted was the Rev. Craig Howell of Leesburg, who is alleged to have borrowed nearly $817,000 from SWGFC on behalf of Heard Jr., as well as $195,000 from the program to purchase a home for himself. Lawton Heard, the brother of Heard Sr., was indicted for allegedly borrowing $1.7 million from the SWGFC on behalf of his nephew.
Heard Jr. was also indicted on charges that he illegally concealed his assets in connection to a bankruptcy petition for Backwoods Outdoors in 2008 when he testified under oath that he had no side deals with the buyer — identified as “J.S.” and “Mr. Sizemore” in the indictment. According to the U.S. Attorney’s Office, Heard Jr. and “J.S.” had a written agreement dated Sept. 2, 2008 in which “J.S.” agreed to pay $300,000 directly to Heard Jr. and not to the debtor business or to the bankruptcy court.
Howell was also indicted for making false statements to a bank when on May 10, 2006, prosecutors contend that he falsely told loan officials at HeritageBank of the South that the $100,000 down payment he was making to purchase a house was a gift from his mother when, the indictment contends, Howell knew the money was from a loan he had made on April 28, 2012 from SWGFC and was obligated to repay.