Crime & Public Safety

2 indicted on fraud charges as parts of Daufuskie’s Melrose Resort fall into disrepair

The former owner of Melrose Resort faces additional charges related to the failed Daufuskie Island property, according to an indictment filed on Tuesday in U.S. District Court in Charleston.

Melrose Resort and the Bloody Point Golf Club, which were originally developed in the late 1980s and early ‘90s and merged around 1996, once were a luxurious oceanfront getaway. Amenities included a Jack Nicklaus Signature golf course with views of the Calibogue Sound and Hilton Head, an inn, a conference center, swimming pool, equestrian center, tennis courts and beach cottages.

But life on an island that’s accessible only by boat is expensive. The property first declared bankruptcy in 2009.

The 19-page indictment details the longtime financial struggles of the resort, which was still in bankruptcy when it was purchased by James Thomas “J.T.” Bramlette between 2011 and 2013. Approximately $17.5 million toward the purchase of four parcels, renamed as Melrose on the Beach, came from a Dutch lender.

In or around 2013, Anthony Mark Hartman became part-owner.

IMG_5066.JPG
A look at the entrance of the abandoned Melrose Resort on Daufuskie Island, SC. File

Bramlette, owner of the Utah-based Pelorus Group real estate development company, and Hartman, owner of Private Placement Capital Notes and Stone Mountain Equities investment companies, now are accused of conspiracy to commit wire fraud. Bramlette faces three counts of wire fraud, and Hartman faces two counts.

In addition, Bramlette is accused of three counts of willful failure to collect and pay withholding taxes for Melrose employees for three years, from 2014 to 2016.

An earlier indictment, filed April 9, included Pelorus Group partner Travis Kozlowski, but he was dropped from the Oct. 1 filing. Prosecutor Rhett DeHart of the U.S. Attorney’s Office said Kozlowski has agreed to plead guilty separately.

IMG-9304.JPG
Submitted

Property in limbo

When Bramlette purchased the property, he told The Island Packet, “We’re going to revitalize this entire project.” He talked about developing an outdoor amphitheater and establishing a market where people could buy necessities without leaving the island.

Instead, the property and its inn fell into disrepair. At one point, according to the indictment, the water was turned off because of unpaid bills amounting to $33,000. Bankruptcy was declared a second time in 2017.

IMG-9357.JPG
Submitted

According to the indictment, Hartman and Bramlette raised more than $10 million from private investors, telling them their money would be used to renovate the resort.

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, the indictment stated. The men continued to raise money in the name of the resort.

While employees, vendors and payroll taxes 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 mistress’ apartment, Range Rover payments, country club dues and his daughter’s college tuition, according to the indictment.

Recent photos show damage unrepaired since Hurricane Matthew in 2016.

IMG-9337.JPG
Submitted

“Bramlette and Hartman falsely represented to investors that their funds would be used to renovate Melrose Resort and acquire additional property near the resort when they used much of the funds to pay the Dutch lender not to foreclose, to pay previous investors and for Bramlette’s personal use,” the indictment says. “As a result, there were few major improvements to Melrose Resort. ... The resort is now dilapidated and largely abandoned.”

It wasn’t only investors who lost out.

The poor state of the Melrose property was cited among the reasons for the failure of the Bloody Point Golf Course.

“The challenge for the entire island, in my opinion, has been the lack of momentum at Melrose,” owner Brian McCarthy told The Island Packet in 2017.

And Beaufort County’s coffers also took a hit.

To keep the property from being sold at a Beaufort County tax sale in the fall of 2016, the indictment says Bramlette created a fake wire receipt making it appear that he had paid $502,759 in taxes owed to the Beaufort County Treasurer’s Office.

“In reality, Melrose Resort had very little money in its bank account at the time,” the indictment says.

IMG-9378.JPG
Submitted

Bramlette and Hartman were first indicted in April 2019.

In July, The Post and Courier newspaper reported that Bramlette was arrested on charges of violating the terms of his release on $100,000 bond. Bramlette had failed to appear at a hearing related to a misdemeanor assault case. He was re-released “under more restrictive terms, including home detention and location monitoring,” the newspaper reported.

Each count of conspiracy and wire fraud carries a potential sentence of up to 20 years in prison and a $250,000 fine. The maximum sentence on the tax offenses is five years in prison and a $10,000 fine.

“Criminal case aside, we all hope there is a future for the property,” said DeHart.

The Melrose Resort property is now owned by Odeon Singapore Limited, an affiliate of Netherlands-based Lex van Hessen Holding BV.

The Wall Street Journal, in a 2107 report, said about 17 families lived full-time in Melrose.

While the golf course and Island House Inn remain closed, other parts of the resort property have reopened. The Melrose Beach Club restaurant — located within Melrose Resort — begin serving customers in November 2018.

Related stories from Hilton Head Island Packet

Lisa Wilson is a 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