Kentucky preacher, former lawyer gets prison time for taking millions in real estate fraud

A former Central Kentucky attorney has been sentenced to prison time after he defrauded clients for millions of dollars through a real estate scam.

Douglas Hawkins, of Richmond, was sentenced to 10 years in prison for defrauding clients of $2 million by concealing information about real estate properties he was encouraging them to invest in.

Hawkins was convicted by a federal jury in February for investor advisor fraud, securities fraud and two counts of wire fraud. Hawkins’ law license was suspended by the Kentucky Bar Association shortly after his conviction, according to the Bar’s website.

As part of his sentence, he was ordered to pay nearly $1.6 million in restitution to the victims. He will also have forfeiture seized in the amount of $85,590.

Prosecutors had criticized Hawkins in court documents, saying he took advantage of clients who trusted him.

“Despite having the professions that are to help people, he defrauded those who trusted him,” prosecutors wrote in a sentencing memorandum. “His motivation, in this crime, was not to help his clients, but to save his own reputation.”

Hawkins was an attorney, preacher, investor advisor representative and certified financial planner. He also owned his own company, Rite Financial Group, according to court documents.

In May 2013, Hawkins began working with two companies in Oregon, True Wholesale Houses and Portland Funding, that offered investors the chance to purchase promissory notes secured by real estate deeds of trust. A promissory note is a written promise by one party to pay money at a later date.

Hawkins let clients purchase notes as a way to diversify their investments. He was paid a commission for sales, according to court documents.

Although the paperwork described a note and mortgage, Hawkins led clients to believe they were purchasing ownership interest in real estate, according to court documents. The properties were located in Jackson, Mississippi, according to the U.S. Attorney’s Office.

Many of the properties the clients were purchasing were not in good condition and needed substantial repairs, despite Hawkins telling them otherwise, court documents stated. Hawkins also convinced investors the property that secured their mortgage was rented when it was not. He continued to make false suggestions about the properties.

In most instances, Hawkins led his clients to believe their money was designated for the purchase or renovation of a certain piece of real estate, according to court documents. But the money was mixed with other investors’ money and it was actually “used whenever Douglas Hawkins needed it,” according to court documents.

Fraud turned victims’ lives ‘upside down’

Many of Hawkins’ victims recounted in court documents and testimony how they trusted him because of his financial literacy, as well as his status as a preacher. They also testified that Hawkins’ fraudulent actions turned their lives “upside down.”

In a victim impact statement, a widow identified as “M.B.” said the money she lost was more than she could afford to lose, and needs the money to hire home health workers.

A retired teacher, identified as “P.P.” in court documents, said she has had to cancel vacations, is unable to repair a fence, and is unable to replace her aging vehicle due to the fraud.

“The life she worked so hard to make and was looking forward to will now no longer occur due to the defendant’s actions ... this situation has been stressful and depressing,” a prosecutor wrote in court documents.

The offense was described in court documents as “a serious crime resulting from a brazen breach of trust by a man who was concerned not for his clients, but for his own reputation.”

Attorney: Hawkins made ‘misguided decisions’

Hawkins spoke in court Tuesday and said he “remained committed to the clients becoming whole.”

“There has not been a bigger burden to carry in my heart than the financial burden I have caused the clients,” Hawkins said.

He apologized to his family and friends for any embarrassment he had caused them.

“The road to hell is paved with good intentions,” Whitney True Lawson, Hawkins’ attorney, said in court Tuesday. “...(Hawkins) made misguided decisions of what was, and what was not told to these individuals.”

U.S. District Judge Karen Caldwell said the prison sentence would need to serve as a deterrent to others who were similarly situated as Hawkins was.

“Educated and privileged people will be held accountable for these crimes,” Caldwell said. “But I believe the crimes have left destruction and harm beyond any sentence that I could impose.”

Lawson previously said she and Hawkins were disappointed with the conviction.

“We feel that the jury considered the evidence and did not take their decision lightly, but we are certainly disappointed,” Lawson told the Herald-Leader previously.

She argued in court documents the case against Hawkins is largely based on his omission of material information. Lawson wrote Hawkins was not proven to engage in false advertising related to investments, or or made repeated fraudulent claims about the financial sureties.

“The conduct leading to the finding of fraud was simplistic in nature, requiring the execution of identical documentation for each investment made,” the defense’s sentencing memorandum said. “And, while Mr. Hawkins failed to disclose the purchase price of the property acting as collateral, there are no outright fraudulent representations in the documents.”

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