Business

Daufuskie resort ex-owner spent $1.5 million on self while not paying staff, indictment says

A look at the entrance of the abandoned Melrose Resort on Daufuskie Island, SC.
A look at the entrance of the abandoned Melrose Resort on Daufuskie Island, SC. File

A former owner of Melrose Resort and his business partners were indicted Tuesday, accused of wire fraud and conspiracy to commit wire fraud against investors in the Daufuskie Island property and the Beaufort County Treasurer’s Office.

The indictment, filed in U.S. District Court in Charleston, alleged that James Thomas “JT” Bramlette, Anthony Mark Hartman, Travis Kozlowski and “others known and unknown to the Grand Jury ... agreed together to execute and attempt to execute a scheme” centering around the resort.

While employees, vendors and contractors of the resort were not being paid, Bramlette used more than $1.5 million for personal expenses such as mortgage payments on his Utah residence and rent on his girlfriend’s apartment, Range Rover payments, country club dues and his daughter’s college tuition, according to the indictment.

Melrose Resort, which was developed on Daufuskie in the 1980s, includes an inn, a Jack Nicklaus-designed golf course and rental cottages. The resort closed in 2008 and filed for bankruptcy in 2009, the indictment stated.

Bramlette borrowed approximately $17.5 million from a Dutch lender to purchase the resort from 2011 to 2013, when Hartman became part-owner, the indictment alleged. It said the businessmen raised more than $10 million from investors, who were told their money would be repaid when the resort was refinanced or sold.

“By 2013, Melrose Resort was in dire financial condition, and it lost money every month. The resort struggled to pay employees, vendors, property taxes, insurance, payroll taxes and utilities,” the indictment said.

IMG_5056.JPG
One of the many abandoned cottages that sits empty on coastal property in Melrose Resort on Daufuskie Island. File

In May 2015, Bramlette and Hartmann defaulted on a $700,000 loan from a group of Utah attorneys but did not disclose to investors that they had lost ownership, according to the indictment.

Emails cited in the indictment illustrate the failing financial condition of the resort.

“After the Dutch lender demanded an additional $200,000 not to foreclose in June 2015, Bramlette forwarded the email to Hartman and stated that ‘we are screwed,’” the indictment said. Other emails were exchanged about the resort’s failure to pay $33,000 in past due water bills.

Melrose Inn construction 1987
The Melrose Inn on Daufuskie Island nears completion in the summer of 1987. File

Bramlette and Hartman falsely represented that investors’ funds would be used to renovate and expand the resort, but instead paid the Dutch lender not to foreclose, according to the indictment.

Bramlette allegedly falsified a receipt showing more than $502,000 in overdue taxes had been paid to the Beaufort County Treasurer’s Office so that Melrose Resort would be removed from a 2016 tax sale, the indictment said.

An SEC complaint filed in federal court in Salt Lake City last September characterized the case as a “Ponzi-like” scheme.

The former owner of Daufuskie Island’s Melrose Resort and three of his business partners were sued for carrying out a long-running and complex fraud on the resort’s investors that federal investigators have described as a “Ponzi-like” scheme, The Island Packet previously reported.

The SEC’s complaint alleged that Bramlette was the “ringleader of the fraud” and that Hartman, Kozlowski and Aaron Wernli helped raise more than $10.8 million by providing investors with false progress reports, misleading account statements and inaccurate information.

Related stories from Hilton Head Island Packet

Lisa Wilson is a breaking news reporter for The Island Packet and The Beaufort Gazette. The 25-year newsroom veteran has worked for papers in Louisiana and Mississippi and is happy to call the Lowcountry home.
  Comments