A Frisco developer who bilked more than 300 people out of millions of dollars in a real estate investment scheme was sentenced this week to 45 years in state prison. Christian Custom Homes CEO Phillip Michael Carter also was ordered to pay $30 million in restitution. Carter also served as the principal of Texas Cash Cow Investments Inc. and North Forty Development Inc.
The developer and his wife Shelly Noel Carter were indicted by a grand jury in 2018. Phillip Carter was convicted of fraud in March in the 296th District Court of Collin County and sentenced May 24. Shelly Carter, who was charged with money laundering and misapplying investor funds, is awaiting sentencing.
The U.S. Securities and Exchange Commission charged that Carter and co-defendants Bob Guess and Richard Tilford violated the anti-fraud provisions of the Securities and Exchange Act, participating in the unregistered offer and sale of securities, functioning as unlicensed brokers.
“Carter, Guess, and Tilford repeatedly touted investment in the real estate development projects to prospective investors as ‘low risk,’ but never revealed to investors that they actually relied on the success of each link of a long chain of real estate development projects for repayment,” the SEC complaint said. “Because Carter misused investor funds for unrelated purposes, because of undisclosed risks inherent in Carter’s real estate projects, and finally because he was indicted on Texas criminal securities fraud charges on November 6, 2018, Carter’s house of cards collapsed.”
Carter’s co-defendant Guess was sentenced to 12 years in prison; Tilford got 40 years with 12 concurrent 10-year terms for violating registration laws. Timothy Lloyd Booth, a former McKinney pastor and principal of a digital advertising company, was sentenced to 68 years for his role in the scheme.
Officials say the scam targeted more than 330 individuals, most of whom lived in North Texas. Carter used funds from investors for expenses unrelated to real estate development, although investors were told their money would go toward commercial and residential real estate.
“The Texas State Securities Board vigorously works to stop fraudulent investment schemes and secure justice for victims of white-collar crime,” said Securities Commissioner Travis J. Iles in a statement obtained by the Runnels County Register. “We appreciate the good work of the Collin County District Attorney’s Office and the opportunity to work with the office to successfully prosecute these cases. These cases not only achieve redress for the defrauded but also level-the-playing field for legitimate businesses seeking capital.”
