Living large? Harding pleads guilty in fraud case
Real estate agent/developer Michael Wayne Harding, brother of Albemarle County Sheriff Chip Harding, pleaded guilty to two counts of fraud in U.S. District Court March 8 for bilking some prominent local businessmen of more than $2 million.
"This is a fraud scheme of some complexity beyond what we usually see in this district," said U.S. Attorney Tim Heaphy.
Heaphy outlined several separate ways Harding defrauded at least 10 victims, including forging certificates of completion to satisfy liens, submitting false contractor invoices to mortgage companies for work never performed for Harding's HMC Holdings LLC, and embezzling about $125K from an investor on real estate transactions.
At the same time, said Heaphy, "Mr. Harding lived a lavish lifestyle."
Harding, originally charged with seven counts, filed forged land documents relating to a 17.4-acre property at 4257 Seminole Trail known as the Badger-Powhatan property that he purchased in 2008 with HMC Holdings LLC, according to a statement of facts filed in federal court.
Among those lending him money were Virginia Oil founder F.F. White and Massanutten-owner Dice Hammer, whose Vision Mortgage lent Harding $2.75 million.
To secure deeds of trust on the Badger-Powhatan property, Harding filed forged certificates of partial satisfaction in Albemarle Circuit Court, which gave successive lenders the impression previous loans had been paid off, according to court documents. For example, he forged White's signature to release the lien from a $500,000 deed of trust.
To get the certificates notarized, Harding would take a stack of documents to the notary at Real Estate III, where he worked, and slip the forged release into a pile of papers he was signing, so that the notary was unaware she'd notarized a forged signature, says the prosecution.
Harding used fraudulent contractor invoices as well, submitting them to Vision Mortgage for improvements on Badger-Powhatan. Checks written to a contractor totaling $265,000 were deposited to Harding's own accounts.
According to court filings, Harding used the bogus-invoice scheme while purportedly developing a parcel on Pantops owned by Jarman's Sportcycle's James Jarman II. Crescent Mortgage, sister company of Vision Mortgage, provided $621,655 in financing on that deal.
Jarman also was bilked when Harding embezzled funds from the sale of a parcel Jarman owned at U.S. 250 east and the I-64 interchange.
At the same time Harding was defrauding lenders, he was making lavish purchases, say the prosecutors, including $443,400 for race horses in 2007 alone.
When Harding filed for bankruptcy protection in 2011, he lied about his income and expenditures, and didn't reveal all his bank accounts, according to court documents. Bank records showed that in September 2012, Harding spent $38,000 at the Greenbrier, Virginia Wine Warehouse and the Palms Casino in Turks and Caicos.
Harding, 59, who's been in Central Virginia Regional Jail since September, was released March 8 on a $200,000 bond, secured by his mother's house, said Heaphy. He'll remain free until his sentencing June 24. Harding did not return a phone call from the Hook. His Richmond-based attorney, Bill Dirkin, declined comment.
The bankruptcy fraud charge carries a maximum sentence of five years; a wire fraud conviction has a 20-year maximum. Heaphy estimates Harding could serve around four years, and points out that his victims have the right to pursue restitution.
"We're glad that he's being brought to justice," says attorney Garrett Smith, who represents Dice Hammer's Vision Mortgage. "He's truly abused the system, and it's unfortunate white collar crime isn't penalized as harshly as drug offenses are."
Smith notes that Harding's forgeries of court documents undermine the land record system and says he'd like to see that punished more harshly. "I don't believe the penalty he's going to receive is satisfactory to the seriousness of the offense," says Smith.
The charges and conviction have put Harding's brother, Albemarle Sheriff Chip Harding, in an awkward position.
"I love my brother and his family," says the sheriff. "I would do what I can as a brother to support him and his family outside the legal process as his case moves toward resolution."
Adds Chip Harding, "I would like to make it clear I've not had any participation in any phase of the investigation or the prosecution process."
Commercial real estate agent Lane Bonner, who lost money on the Badger-Powhatan property and who worked with Harding at both Hasbrouck Realty and Real Estate III, offers a different perspective on Mike Harding's dealings.
"I think Mike Harding came across a lot of unscrupulous people who turned the screws on him in an unethical and maybe illegal way and made him do things he didn't want to," says Bonner.
And he objects to the portrayal of Harding as a big gambler. "He wasn't gambling. He was investing in horses. Maybe that's stupid, but it was legitimate."
As for his own losses, says Bonner, "I don't blame Mike Harding. I blame myself. It wasn't very smart."