RALEIGH — Former Robeson County Attorney Hal Kinlaw has been sentenced to 17 years in prison for bank fraud, the U.S. Attorney’s Office announced Thursday, and must repay more than $23 million.
Kinlaw, 64, who now lives on Bald Head Island, was also ordered to serve three years of supervised released following his sentence and to pay $23,796,372 in restitution.
Kinlaw served as county attorney for 23 years. He resigned in 2013 after it became known that he was being sued for more than $18 million in unpaid loans.
He had faced up to 30 years in prison, plus five years of supervised release, a $1 million fine and restitution payments. Kinlaw pleaded guilty in federal court in June to bank fraud and was disbarred in July after surrendering his attorney’s license.
According to the U.S. Attorney for the Eastern District of North Carolina, Kinlaw set up real estate investment and development entities on behalf of investors in Onslow County and used those entities to obtain loans from BB&T and First Citizens Bank. Banks, insurance companies and investors lost more than $18 million.
“BB&T and First Citizens Bank extended loans to these entities under the auspices that the entities would be engaged in the development of residential real estate in various subdivisions in the area of Camp Lejeune in Onslow County,” the U.S. Attorney’s Office said in a statement Thursday. “Between 2004 and April of 2013, Kinlaw used the real estate development entities to defraud BB&T and First Citizens Bank by falsifying the legal descriptions of the loan collateral, and by falsifying releases of the collateral.”
Kinlaw used the falsified collateral for other investments and loans, the statement said.
“To perpetuate the scheme and prevent its discovery, Kinlaw also used outside funds, that is, funds unrelated to the real estate development activity that was the subject of each loan, to make ongoing loan interest payments to BB&T and First Citizens Bank,” the statement said.
Kinlaw used loan proceeds to make other loan payments and “extracted” money from other investors to make loan payments, according to the U.S. Attorney’s Office.
Banks eventually stopped lending to Kinlaw and the loans defaulted. Because the bank collateral was falsified, the banks were unable to restore their losses through foreclosure.
Several victims spoke at the sentencing, the statement said.
The investigation was conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney William M. Gilmore of the Economic Crimes Division represented the United States.