Prominent Raleigh businesswoman Carolyn Grant pleaded guilty to one count of mail fraud, her attorney confirmed Saturday.
Grant “misrepresented certain material facts to investors and prospective investors in her various business entities,” her attorney, Woody Webb Sr., said in a statement. Grant has admitted that some of the funds from investors were misspent, he said.
The mail fraud occurred in a June 2007 mailing and was related to a real estate project on Louisburg Road in Raleigh, Webb said. Grant is a former chairwoman of the Greater Raleigh Chamber of Commerce.
A plea agreement will be filed Tuesday in U.S. District court in Raleigh, Webb said. On Friday, an assistant U.S. attorney held a conference call with about 50 of Grant’s investors to update them on the status of the case.
Grant borrowed as much as $7 million or more from dozens of friends and acquaintances – many of them prominent local business people – between 2006 and 2010. Some of the loans were personal loans, while others were for real estate projects that her company, Omega Property Group, was involved in.
Grant offered generous terms to those she borrowed money from. In addition to high interest rates, many included regular interest payments over the term of the loan.
The loans were promissory notes that included her signature under a personal guarantee. Copies of more than 70 such notes totaling $7.8 million were turned over in a lawsuit related to a coal mine investment in West Virginia that Grant was involved in.
A number of investors, including several former friends, sued Grant after they became aware of the scale of her borrowing. Judgments of more than $3.2 million have been awarded against Grant in Wake County.
Webb said Grant got caught up in the real estate bubble and when it burst she engaged in “unlawful conduct designed to cover losses and to pay off prior investors.
“Quite frankly, Carolyn Grant was caught between the proverbial rock and a hard place with her investors, and she made some profoundly bad decisions,” he said. “Now she is stepping forward and taking responsibility for her actions. She will accept her punishment from the federal court and will do everything in her power to fully reimburse her investors.”
Grant first rose to prominence in the Triangle in the 1990s when she became the Raleigh chamber’s first female chair. She had spent nearly two decades building a successful small business, Plants by Grant, which provided houseplants to companies.
She later became active in politics. She was a Democrat when she ran unsuccessfully for Raleigh mayor in 1999. In 2002, after switching her party affiliation to Republican, she lost to Democrat Brad Miller in a bitter contest for the U.S. House of Representatives.
Grant formed Omega Property Group in 2005 and began soliciting funds for a number of developments.