The former head of the Housing Authority of Winston-Salem, the second of three people accused of fraud in connection with a land-swap deal, pleaded guilty yesterday during a short hearing in U.S. District Court.
Reid Lawrence changed his plea from not guilty to guilty, admitting his part in what prosecutors say was a fraudulent land swap in 2003 involving the Lansing Ridge development off Lansing Drive.
As part of Lawrence's deal with prosecutors, he agreed to plead guilty to one count of wire fraud. Other charges of mail fraud and lying to investigators were dismissed.
Lawrence and businessman Tom Trollinger have now both pleaded guilty, leaving only Trollinger's business partner, Ernie Pitt, awaiting trial. Pitt was the chairman of the housing authority's board at the time of the land deal. Chris Clifton, one of Pitt's attorneys, declined comment when asked if Pitt intended to go to trial.
Asked if Lawrence would testify against Pitt, Lawrence's attorney, David Freedman, said that it's too early to say.
"I think that's certainly a possibility, but I don't know how that will proceed at this point," Freedman said.
Lawrence and Trollinger are scheduled to be sentenced June 29.
Pitt, Trollinger and Lawrence are accused of fraud by arranging for East Pointe Developers, Trollinger and Pitt's company, to buy Lansing Ridge in 2003, and then sell it to a HAWS subsidiary at a steep markup.
East Pointe had owned Lansing Ridge before 2002, then sold it but kept a second mortgage on the land. When the new owners struggled, the two men had an interest in keeping the property from foreclosure, which would have cost them the second mortgage, according to prosecutors.
Pitt is the publisher of The Chronicle, a weekly newspaper. Trollinger owns the local company Contract Office Furnishings. Lawrence left HAWS in 2005, when the HAWS board paid him a $100,000 settlement.
Both Pitt and Lawrence had signed agreements as part of their HAWS work that prohibited HAWS from making deals with any of its employees or board members, prosecutor Frank Chut said.
Chut said that the men violated their duty to the public "to provide honest services free from corruption and self interest."
Lawrence's guilty plea includes an admission that he knew that HAWS could have bought the property for much less at a foreclosure sale and that he knew that Pitt would make a profit by selling to HAWS.
The two men arranged for Trollinger to buy the land in 2003 to try to hide Pitt's interest, Chut said, and Lawrence then bought the land for HAWS without getting the required approval from the HAWS board.
While Lawrence initially claimed he didn't know Pitt's connection to East Pointe, it's clear that was a lie, Chut said. He said that a placard in the HAWS offices says that Pitt was a partner in the company. Pitt's attorneys have denied the government's allegations.
Pitt was in court yesterday for a separate hearing in which he asked that his trial be delayed. It had been scheduled to start Monday. Judge Malcolm Howard ended the hearing without announcing a decision, but an order filed in the federal court's online system shows the new trial date for Pitt is March 23.
The final years of Lawrence's tenure at HAWS were dogged by allegations of mismanagement, including a lawsuit filed by a former employee claiming that she was fired in 2001 for reporting to federal authorities her concerns about financial irregularities.
The former employee, Lynn Hughes, won a $500,000 settlement in the lawsuit in 2002. She sat in the small courtroom yesterday watching Lawrence, the man who fired her, plead guilty. She declined comment afterward.
Lawrence referred questions to Freedman, who said that Lawrence understood he did wrong.
"Although there was no money that he received as a result of this transaction, he still understands that because of his position and Mr. Pitt's position that he shouldn't have taken the action that he did."
Freedman said that Lawrence's motivation for the crime would be discussed at his sentencing, but that part of it would be blamed on Pitt. "Mr. Pitt was Mr. Lawrence's superior," he said.
■ Dan Galindo can be reached at 727-7377 or at dgalindo@wsjournal.com.
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