PICKENS, S.C. - On the front porch of a ramshackle house, Larry Madden blinks back a tear.
He is 51, and he has lost his life savings as well as an account set aside to care for a disabled younger brother. Now, he's about to lose his business, Madden's Plants, a nursery that he has operated in this small rural town in South Carolina since 1986.
What brings Madden near tears is the money he and his daughter, Carey, saved so she could have surgery on an eye and leg damaged in a car accident that nearly killed her in 1996.
"That is what hurts," said Madden, whose voice tightens with emotion. "I can't provide for her. What we want to know is, where is the money?"
On March 21, Carolina Investors Inc., a small local mortgage and investment services company with a handful of offices, closed its doors and filed for bankruptcy court protection about three weeks later - leaving 8,000 local investors wondering where their $275 million in deposits had gone.
Drawn by the hefty interest rates it paid, local residents treated the company like a bank - but it wasn't. The money appears to have been passed to another South Carolina institution that made high-risk loans and has also filed for bankruptcy court protection.
The money wasn't insured, and the result is a rural tragedy that has ruined the lives of many elderly, retired and working people across this county tucked in the foothills of the Blue Ridge.
`Rattled the state'
"It has ruined a lot of lives," said South Carolina state Sen. Larry Martin, who represents the district. "I don't know of a single political issue, business issue that ... ever had the magnitude of anything like this. It is sort of reminiscent of the Charleston earthquake back in the 1800s when it rattled everything up here. This literally rattled the state."
"It is just one sad, tragic story after another," added Henry McMaster, South Carolina's attorney general. "People who are not going to go to college, churches that aren't going to be adding a new Sunday school - there are literally thousands of stories."
McMaster has launched an investigation into the debacle along with the Justice Department, the FBI and the Securities and Exchange Commission.
Investors have bombarded politicians with phone calls demanding justice. A handful of class-action lawsuits have been filed against the company and its directors.
Investors have also pressured lawmakers to introduce legislation to remove the name of Carolina Investors' chairman, Earle E. Morris Jr., the former lieutenant governor and the state's comptroller general for more than 20 years, from state Highway 153.
Someone has even threatened to kill Carolina Investors' president, Larry C. Owen.
"These people take it very personal in this area here," said Lee Patterson, the former owner of LeJuans Restaurant in Pickens, who sits at a table with a group of men planning a fishing trip. "You never know when somebody would crack under the pressure."
Many questions
Along with the mystery of where the money went, there are lots of other questions related to the Pickens debacle - some just as difficult to answer and some mysteries unto themselves.
How could so many people, including some with considerable fortunes, invest so much money with no apparent safeguards? Where were the regulators? And what crimes, if any, were committed?
The answers appear partially rooted in the culture of mutual trust that still survives in many corners of America. Simple greed also played a role. And state regulators arrived too late to make a difference.
Carolina Investors and other institutions like it had been in business in northwestern South Carolina for decades. People trusted Earle Morris and never questioned how the company could afford to pay high interest rates - from 5 percent to 7.5 percent and sometimes even higher - when nearby banks were paying just a fraction of those rates.
"Pickens County is based on trust. You've got people here who would take the shirt of their back and give it to you," Madden said.
Morris and Owen insist they have done nothing wrong.
"I never did anything in my life that was dishonest, and my own reputation has suffered greatly," Morris told The Greenville News last week. "As far as I'm concerned, I had absolutely nothing to do with anybody losing anything."
Morris could not be reached for comment, and his attorney did not return phone calls.
Owen, a tall muscular man who stood at the heavy glass doors of Carolina Investors' headquarters in Pickens last week, said: "The truth will prevail."
He referred questions to his attorney.
`A mess'
Everyone in Pickens, a town of 4,000, knows someone who has lost money in Carolina Investors, whether it is an aunt, uncle, cousin, father, mother, sister or brother.
Rich and poor alike have been stung by the collapse.
Don C. Bobo, owner of Bivens Hardware Co. on Main Street, lost $2.1 million, a huge sum in any part of the country, let alone Pickens, where hulking brick textile mills, which once employed hundreds of people, lie abandoned.
