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Prison to Be Construction Family Affair

Thursday, May 1, 2014

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The Fraziers, owners of C.E. Frazier Construction Co. Inc. and a variety of long-troubled spinoffs, are all going to jail.

H. Claiborne Frazier; his brother, Austin W. Frazier; and their father, Cresco Elmore (C.E.) Frazier Jr., all formerly of Jackson, MS, have all been sentenced to several years in federal prison and ordered to pay restitution for a scheme that defrauded lenders of millions of dollars over nearly a decade.

Claiborne Frazier C.E. Frazier
Police mugshots; right via jailbase.com

Construction company owners H. Claiborne Frazier (left) and his father, Cresco Elmore (C.E.) Frazier Jr., of Jackson, MS, have been sentenced to prison in a multiyear, multimillion-dollar fraud scheme.

The three principals in C.E. Frazier Construction Co. Inc. and a host of troubled shell companies pleaded guilty Sept. 16, 2013, in U.S. District Court for their roles in a conspiracy to commit bank fraud, mail fraud, and wire fraud, federal authorities said.

Pleas and Sentences

At the time of the pleas, H. Claiborne Frazier was 41; Austin Frazier was 38; and their father was 65.

Now, all three have been sentenced.

On April 16, H. Claiborne Frazier was sentenced to five years in federal prison and fined $10,000.

On March 10, Austin Frazier was sentenced to 51 months in prison, followed by three years of supervised release. Their father was sentenced to 31 months in federal prison, followed by three years of supervised release. Restitution for Austin and C.E. Frazier will be determined later.

The sentences close the book on a 10-year fraud that preyed on subcontractors, banks, insurance companies and customers.

Juggling Loans, Companies

In addition to Frazier Construction, Claiborne and C.E. Frazier created a firm called Frazier Development LLC. In March 2001, Claiborne also created a subsidiary of the development company called Van Buren Group LLC, allegedly to build condominiums in Oxford, MS.

FBI

The FBI unraveled the Fraziers' companies and schemes over several years. Two brothers, a step-brother and their father were all indicted.

Frazier Construction would be the general contractor for the condo development, for which Van Buren obtained a $5.4 million construction loan from BancorpSouth Bank, according to the indictment.

All three Fraziers signed for the loan, the indictment said.

About 20 of the $250,000 condo sales then went forward—in cash, however, "significant portions" of which the Fraziers diverted for their personal use and for other construction and development projects that were in arrears at the time, authorities said. Many of the sales were detailed by the Jackson Jambalaya.

To keep the scheme afloat, the Fraziers did not tell the condo buyers about the bank loan behind the project. Meanwhile, they told the bank that the condos were not selling.

By the time the bank realized problems and tried to call the loan, the money was gone.

Round 2

Meanwhile, in October 2001, Claiborne Frazier formed another company, Olde Colony LLC, that supposedly planned to develop commercial property in Ridgeland, MS. For this venture, the Fraziers obtained a $2.86 million loan from M&F Bank, authorities said.

To draw on that loan, the Fraziers made up documentation by an architect that purportedly attested that the project was making progress, when it wasn't. (Claiborne Frazier also created his own dummy design documents, including the forged name of an architect, to submit to the City of Ridgeland.)

Parking garage
© iStock / Ursula Alter

Authorities said the Fraziers obtained millions of dollars in funding, which they spent on themselves and on other commercial projects (not pictured) that were in trouble.

Again, authorities said, the Fraziers spent the loan proceeds on themselves and on other projects that were then in trouble.

Round 3

The growing fraud also swept in Travelers Casualty and Surety Company of America, the bonding agent for the family companies. The Fraziers applied to Travelers Insurance for a $12.6 million bond on a project at  Mississippi Valley State University.

Backed by verbal lies and phony documents, the Fraziers continued to draw funds from Travelers—supposedly, in part, to pay subcontractors.

Travelers continued supporting the project but added conditions, including a provision that the money not be used to pay the Fraziers' high salaries. Nevertheless, the indictment said, funds continued to flow to Claiborne Frazier.

Following the Money

But the subs weren't getting paid, either, and they began to file claims with Travelers in 2007, authorities said.

Some of the Travelers money was also washed through a company called Star Masonry, the indictment says. The indictment does not clarify the ownership of Star Masonry.

Yet another apparent Frazier shell company, Construction Tech Solutions Inc., also received Travelers money.

Another Brother

Still other proceeds were deposited into multiple bank accounts of a Frazier half-brother named Spencer Copeland, who was eventually indicted with the three Fraziers. Copeland's name was used specifically to hide the connection to the Fraziers, the indictment said.

(The Copeland indictment was later withdrawn.)

Some of the money also ended up in the hands of an unindicted and unidentified co-conspirator, who supposedly used it to buy a storage unit business.

In June 2008, the Fraziers admitted to their lenders that they were abandoning the projects and shut down the construction company.

Claiborne Indictment

 

 

   

Tagged categories: Business management; Commercial Buildings; Commercial contractors; Construction; Enforcement; Laws and litigation

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