S.C. Judge's Family Bought Foreclosed Properties at Auctions Run by Relatives

By Thad Moore/Post-Courier Uncovered 

GREENWOOD — Once a month, investors across the state turn up to the local seat of government looking for a bargain on real estate. On a Monday morning in Greenwood, they form a loose circle beside the big windows in the courthouse’s mid-century lobby, awaiting a chance to buy properties away from owners who can’t afford them anymore.

Curtis Clark figures his family is no different from the others who gather here. Like other real estate investors in Greenwood, they see foreclosure auctions as an opportunity to get a deal, so they have come to many of them. Over the years, his family members have won dozens of properties.

The difference is the auctioneer at the middle of the circle is their husband and father. It’s Clark, a former judge who still presides over foreclosure cases in Greenwood County.

Clark has sold more than three dozen properties to his wife and their adult children at judicial auctions he presided over, an Uncovered investigation found. In one case, they later put some of that land into his name, making him the owner of 33 acres he once ordered foreclosed.

The family’s behavior once drew the attention of state officials, who asked him under oath about his wife's participation in auctions. He acknowledged that she sometimes placed bids on behalf of others, but he did not mention that she had purchased several properties herself. And the officials did not follow up, raising fresh questions about how rigorously the state vets its judges.

The Post and Courier investigated the sales as part of Uncovered, an initiative to shed light on questionable government conduct and voids in oversight across South Carolina, in partnership with local newspapers such as The Index-Journal of Greenwood.

Clark is Greenwood County’s foreclosure judge in everything but title. In counties too small to justify hiring a sitting foreclosure judge, lawyers are appointed to fill that role on a case-by-case basis. In Greenwood County, Clark almost always gets the call. In the past three years, for instance, he has been tapped to handle all but one foreclosure out of more than 100, court records show.

From 2001 to 2019, he also handled cases in neighboring Abbeville County, where he was the part-time master-in-equity judge.

In foreclosure cases, judges are given the power to force delinquent borrowers from their homes, and they are tasked with selling properties to cover as much of the debt as possible. That’s where the monthly auctions come in.

Legal observers say the Clark family’s participation in the sales threatens to violate one of the judiciary’s central tenets. Judges are instructed to avoid any conduct that creates even the “appearance of impropriety” — an especially high standard intended to ensure that the public won’t doubt whether they’ll get a fair shake in court.

“Having your wife buy the properties … if that isn’t at least the appearance of impropriety, I’m not sure how else you would characterize it,” said Jan Jacobowitz, a legal ethics adviser and past president of the Association of Professional Responsibility Lawyers, an organization for attorneys who work on ethics issues.

In fact, Clark acknowledged that he once had concerns himself about his family coming to auctions, before eventually making peace with the idea. He concluded that it was OK without consulting the state’s judicial branch, which has a formal process to help judges with ethical questions.

Clark said he decided on his own that his family could place bids because the auctions are open to the public. He said that turning family members away would be “penalizing them … just because they’re related to somebody.”

"As bidders, they are members of the public, period," Clark said. "At no time have I favored any member of my family who participates in judicial sales nor provided them with any information to give them an advantage."

But years ago, someone else had concerns.

Under oath

Every time a judge is reelected in South Carolina, the state runs a battery of background checks to sniff out controversy; a staffer searches their criminal record, pulls their credit report, searches their name in newspaper archives and sees if their rulings are often overturned on appeal.

They also ask the South Carolina Bar to send a survey to attorneys, inviting them to weigh in on their experience practicing before the judge. It’s an important tool for the Judicial Merit Selection Commission, which decides if someone is qualified for the bench.

In 2012, Clark was up for reelection as the Abbeville County master-in-equity, and someone made a comment that got the commission’s attention: The lawyer mentioned that Clark’s wife had bid at auctions he ran.

The details of what the lawyer saw are unclear, as are the specifics of their concern. Attorneys answer the survey anonymously, and their submissions are shielded from public view.

The only glimpse of the lawyer's concern came from a hearing during Clark's reelection bid, when commission staffer Jane Shuler told him the screening commission had been notified that “your wife bids on judicial sales over which you preside.”

Then she asked, “What response would you offer to this concern?”

By the time the question came up in November 2012, Clark’s wife had purchased 15 properties, including a lakefront home eight months earlier. Some of the purchases were made with business partners; by then, they had spent more than $600,000 at auctions her husband ran.

But Clark did not mention that. Instead, he offered that she sometimes filled in for a bidding service that banks hire to attend auctions on their behalf.

“In the past, at times, they've made calls to my office, saying, Can we help get them a bidder?” Clark said, according to a transcript of the hearing. “And we've told them, Yes, we would try to get them (one).”

It isn’t clear whether the commission’s staff checked to see if Clark’s family had bought property. Shuler, who led the commission’s staff at the time as its chief counsel, refused to discuss its work.

Regardless, Shuler did not follow up on Clark’s answer, according to the transcript. Neither did members of the commission, a combination of lawmakers and outsiders intended to screen out unqualified political cronies. Clark was the last of 13 candidates interviewed that day; his hearing began just after 5 p.m. and lasted about seven minutes. It was the end of a marathon nine-hour meeting, the commission’s last hearing for the year.

Shortly thereafter, the commission voted to find Clark qualified to hold office, clearing the way for the Legislature to reelect him. The commission’s report on Clark, distributed to legislators, noted that its investigation “did not reveal any evidence of unethical conduct.” It did not mention the bidding allegation.

Clark said he did not remember the details of his hearing, but said he "addressed the information requests and questions that I understood were being requested of me."

Then-state Sen. Larry Martin was the vice chairman of the screening commission during Clark’s hearing. He said he didn’t remember the bidding allegation, but he said that if the lawyer who raised the concern about the bids was really worried about it, they should have elevated the matter by filing a formal complaint and coming to testify.

The commission, he said, wasn’t built to hash out ethical questions. Instead, he said, the panel was largely focused on determining whether someone had the right temperament to be a judge — to keep calm, treat people with respect and act professionally.

But if Clark meant to mislead the commission, that would be a significant issue, Martin said.

“If he tried to lead the commission to believe that she was just filling in and she didn’t actually purchase properties when, in fact, she did, yeah, that would be a material problem with his answer,” Martin said. “That would give me concerns as a commission member.”

Judicial deeds

The extent of the Clark family’s purchases emerges in property records, a stack of deeds signed by the judge to his wife and children.

They show the family has purchased more than three dozen parcels of real estate, beginning in 2000 and scattered over the next two decades. All told, they show the family, at times in conjunction with business partners, has spent more than $1.6 million on foreclosed properties — and pulled in some $2.2 million by reselling them.

The gross profit generated by the sales — more than $570,000, property records show — does not account for the value of the 15 pieces of land they still own, and it does not reflect any additional income, like rent, they could have earned from the properties.

It also does not reflect the cost of repairs. Clark said that while he does not have specific numbers on the properties, he estimates the actual profit would be closer to half that amount.

Most of the properties were purchased by Clark’s wife, but according to the deeds, each of his children have won auctions, including a daughter who Clark said works as his assistant, coordinating foreclosure hearings and the list of properties for sale each month.

The properties include an undeveloped lot in a gated community on the banks of Lake Greenwood and one near a fireworks store on Highway 25. They include two trailers uphill from a body shop, a manufactured home with a covered porch on a busy highway, and a brick home with red shutters and front steps painted light blue in an old mill village.

They also include a couple of parcels a half-mile up the road from Clark’s home. In 2016, Clark oversaw the foreclosure of his neighbor’s undeveloped land and the private road they shared. When he auctioned it off, his son placed the winning bid of $49,000, property records show, taking possession of the road and 33 acres of woods.

Two years later, Clark’s son signed a deed handing the land over to his sister and her husband, who immediately signed a deed giving it to Clark. According to county property records, they were the official owners of record for exactly two seconds. The official sale price was $5 “and love and affection.”

In response to questions from The Post and Courier, Clark said, "I presided over the foreclosure sale where the property was purchased by my son. Anything after that was beyond the scope of my judicial duties."

That Clark was gifted property whose sale he once presided over is concerning and “lends itself to the appearance of impropriety,” said Sue Berkowitz, director of the S.C. Appleseed Legal Justice Center.

Berkowitz, whose group trains attorneys to represent borrowers in foreclosure cases, said she understood why a family of real estate investors would find foreclosure sales appealing; they often represent a bargain. But she said foregoing those kinds of opportunities is part of the sacrifice of having a judge in the family.

“If his family wanted to get in the business of buying up foreclosed property, maybe he should have not offered himself as special referee,” Berkowitz said.

No opinion

South Carolina’s rules for judges are filled with broad guidelines and relatively few specifics. They leave room for interpretation, which is why the state’s judicial branch set up a committee to advise judges on how to handle murky situations.

The committee, composed of two judges and a lawyer, issues opinions when judges ask for them, so they have worked through dozens of questions that come up in life on the bench. They have covered issues like whether a judge could be the “celebrity judge” at a fundraiser (no), moderate a debate for their homeowners association’s election (yes) or help their son-in-law with a political campaign (it depends).

Since 1989, it has issued more than 600 opinions, but there is one issue it has not addressed, apparently because it hasn’t been asked: whether a judge’s family can participate in auctions they run. Clark said he has not requested an opinion.

It’s unclear how the judicial advisory group might view the issue. Former University of South Carolina law school dean Rob Wilcox, who teaches legal ethics, said the purchases don’t appear to violate a specific rule, but they could violate the “appearance of impropriety” standard depending on how much discretion Clark has in how sales are conducted.

Clark said he does not exercise discretion at auctions, and he doesn't inspect properties during the foreclosure process, so his family doesn't get inside information.

Regardless, former circuit judge Gary Clary said Clark should have asked for an opinion. When judges’ actions raise ethical questions, Clary said, it’s incumbent on them to either get advice about what’s allowed or stop what they’re doing.

Clary said he would have been concerned about having family involved with sales when he filled in as Spartanburg County’s master-in-equity during the foreclosure crisis. Selling to the highest bidder makes sense on paper, but what if his wife’s bids have an unintended consequence? If other bidders know they’re competing against the judge’s wife, he asked, are they more likely to back off in a bidding war?

“For me personally, it would cause me some concern, and I would get an answer,” Clary said. “I worked for a U.S. senator a number of years ago, and he said, ‘Not only does it need to look right; it needs to smell right, too.’ You need to apply the look test and the smell test to any type of transaction that you’re involved in as a judicial officer.”

In an interview, Clark said he used to have concerns himself. But he said he resolved them on his own, determining that there were no restrictions on who can bid. He said his family is outbid more often than not, and regulars at his auctions buy far more properties than them.

“I came to the conclusion in my mind a number of years back that it’s a public auction, and if somebody else wants to buy it, they bid a dollar more, and it’s theirs,” Clark said.

He said regulars know when his family is there, and none have complained to him about favoritism. And he said the purchases have come up in "informal discussions and tangential remarks" with other lawyers and masters-in-equity, and none expressed a concern. He could not recall when he had those conversations, or with whom.

When he first held auctions, while he still had his concerns, Clark said, the family “didn’t try to do anything for a little while.” But eventually he dropped the issue, and the children grew up and developed their own interest in real estate.

Since then, he acknowledged, the Clarks have joined the circle of bidders more often.

This story was produced in collaboration with The Index-Journal of Greenwood. Damian Dominguez of The Index-Journal contributed to this report.