MYRTLE BEACH — More than 1,700 shares of stock in Burroughs & Chapin Co. Inc. apparently are missing – or, perhaps, never existed – and their alleged disappearance could lead to civil fraud and civil conspiracy charges against one of the company’s directors.
Marshall Biddle, a Myrtle Beach area lawyer and member of B&C’s board of directors, pledged the shares of company stock as collateral for a 2011 loan he received from casino boat operator and developer Alvin Shuman. Larry Biddle – Marshall Biddle’s father and a former B&C director – agreed to hold the shares in trust in case his son defaulted on the loan, according to a security agreement the elder Biddle purportedly signed that is included in court documents.
Shuman sued Marshall Biddle in February when the younger Biddle defaulted on the $98,450 loan.
Larry Biddle, a member of Coastal Carolina University’s board of trustees, now says he doesn’t have the collateral or know anything about the security agreement that purportedly bears his signature.
“Either the original [security agreement] was fraudulent, or something has happened to the stock,” said Robert Hedesh, a Myrtle Beach lawyer who represents Shuman.
The Biddles could not be reached for comment on Tuesday.
Shuman, who originally sued Marshall Biddle for breach of contract, has asked a judge for permission to add fraud, conversion and civil conspiracy charges against the Biddles.
Marshall Biddle has denied the breach of contract allegations in court documents and has filed a counterclaim accusing Shuman of violating the state’s Frivolous Civil Proceedings Act.
No trial date is scheduled, but a preliminary hearing in the case is scheduled for Sept. 4 in Conway.
The B&C stock that Marshall Biddle pledged in 2011, according to court documents, includes 200 shares he owns and 1,521 shares that are part of a family trust. Marshall Biddle’s mother – and Larry Biddle’s wife – is Virginia Biddle, a descendent of the Burroughs family that co-founded B&C, one of the largest land owners and developers in the Myrtle Beach area.
Marshall Biddle also pledged a certificate of deposit worth $50,000 and all stock distributions and profits from his 200 shares of B&C stock, according to court documents.
Hedesh in April served Larry Biddle with a request for admissions – a legal document in which a civil defendant is asked to admit or deny a series of statements or allegations – asking whether Larry Biddle was holding the collateral and whether he was the trustee of that collateral. Larry Biddle answered “denied” to those questions.
“These statements are obviously false, in that Larry Biddle acknowledged the collateralization in a document prepared by Marshall Biddle,” Hedesh said in court documents asking a judge to add the fraud and other charges against the Biddles.
Shuman, in an affidavit, said Marshall Biddle repeatedly assured him for more than a year that the collateral was being held by Larry Biddle, as trustee for the loan.
“It is my belief that he [Marshall Biddle] has removed the collateral and has done all he could to deceive me and deprive me of either the funds due or the collateral,” Shuman said in the affidavit. “It is also clear to me that if the collateral is not in the possession of the trustee, then he also has participated in this deception.”
Larry Biddle this year sold up to $1.2 million worth of B&C stock he and his wife owned back to the company as part of a deal to pay off loans the Biddles owed in their bankruptcy reorganization case. The stock in the bankruptcy case was valued at $157.85 per share.
A bank had planned to auction off the stock, which Larry Biddle had pledged as collateral for loans, to the public before B&C struck a deal to purchase the shares. Most of B&C’s stock is owned by family members of the company’s founders, and the company previously has taken steps to restrict its sale to so-called outsiders.
Shuman also wanted to auction off the B&C stock pledged as collateral for his loan to Marshall Biddle, but Hedesh said he doesn’t know what will happen now that the collateral apparently has disappeared. Hedesh said he doesn’t know if Larry Biddle used the stock that had been pledged to Shuman to repay debt in his separate bankruptcy case.
“They [the Biddles] say they don’t know anything about the collateral,” Hedesh told The Sun News. “They’ve defrauded my client if that’s true. I’m hoping that stock is there.”
Contact DAVID WREN at 626-0281.