A Virginia businessman who sold Ocean City time shares has pleaded guilty to theft and misappropriating $4 million from 1,097 buyers.
In accepting the plea yesterday, Worcester County Circuit Court Judge Theodore R. Eschenburg commented that there were more victims in this one case than he normally sees in an entire year.
Harold Lloyd Hensley of Annandale, Va., was taken into custody yesterday and was being held without bond in the Worcester County Detention Center. Sentencing has not been scheduled. The maximum penalty for theft is 15 years in prison and a $1,000 fine. The maximum penalty for fraudulent misappropriation by a fiduciary is five years.
Hensley stole money from customers between 1986 and 1990 in two schemes, according to the Maryland attorney general's office and the Worcester County state's attorney.
The thefts involved time-share properties at eight developments in Ocean City: the Point on the Bay, Atlantic Resorts, Sandy Square, the Waves, St. Tropez, Ocean High, Ocean Time and the Bay Club.
In time-share arrangements, purchasers buy the use of a property for a specific period -- typically a week or two every year. The owner can sell the time-share interval in much the same way an owner would sell a home or condominium.
In one scheme, Hensley misappropriated $2.2 million from victims by promising to reduce the price of their time share by $500 if they paid off their notes rather than financing the deal through his credit company, prosecutors said.
However, Hensley did not tell the victims that he already had sold their notes to First Atlantic Savings and Loan Bank. When Hensley received time-share payments, he deposited the money into his own bank account and did not send the money to First Atlantic as agreed. He told First Atlantic that the victims had not made any payments and were delinquent on their accounts, prosecutors said.
The theft conviction stems from Hensley's failure to pay off liens on the time shares he sold. Instead of using a percentage of the money from the sale of time shares to pay off liens, Hensley used the money to keep his business going.
Owners discovered the theft when they attempted to sell their time-share intervals and found they could not because of the outstanding liens, prosecutors said.
Hensley avoided paying off the lienholders, which included banks and construction companies, by simply not telling them when a time-share interval had been sold.