Four years ago, homebuilder Craig Edward Smith was basking in the limelight of ABC's "Extreme Makeover: Home Edition" as he led hundreds of volunteers to erect a new house in only a week to provide a safer place for a 10-year-old boy who suffers from brittle-bone disease.
On Monday, Smith was in the spotlight again, but not for anything he wanted this time. The former owner of Vision Homes, who built luxury houses for retirees in Sequatchie County, was sentenced Monday to 21 months in federal prison for felony fraud.
Smith pleaded guilty to defrauding a lender by diverting money he was lent to keep his struggling construction business going during the Great Recession. Federal prosecutors charged that only a year after his TV appearance building a dream home for Patrick Sharrock and his family, he began diverting money given him to build homes on Fredonia Mountain for other purposes.
The government also said Smith pledged collateral for the loan without permission of his partners.
Smith was originally charged with three incidents of fraud, including check kiting and forgery, for his role as co-owner of Vision Homes and a partner in the Tennessee Land Co., which took over the 2,500-acre Fredonia Mountain development from the original developers, brothers James and Barry Wagner.
Smith plead guilty to a single charge of fraud and said he was sorry during a sentencing hearing Monday in federal court.
Craig Smith, former owner of Vision Homes, talks about the construction of Michael and Cindy Sharrock's residence in Rossville, Ga, in 2011 during the filming Extreme Makeover Home Edition. Smith was sentenced to federal prison Monday for defrauding a lender for homes built on Fredonia Mountain in Sequatchie County."I have a heavy heart because I've hurt so many people, but in no way did I intentionally try to hurt anybody," he said. "I apologize to my friends, my family and my church. I am responsible for my own actions and I am sorry."
Smith will report to federal prison on Nov. 30 and will be on three years of supervised probation after his release. The home builder also will have to pay $200,000 in restitution fees.
His attorney, Leslie Cory, appealed to the court to allow Smith to keep working and not go to jail to help repay his debts. She said he got behind in his business and kept shifting money around to try to keep up with his bills.
"Craig Smith lost everything too - his house and his business" along with his reputation," Cory said. "He has accepted responsibility for what he did."
Smith was building a $1 million home and told the home buyer he needed $200,000 in seed money to erect other homes. Smith secured a loan from the home buyer with a 7 percent interest rate, but prosecutors said he diverted the money elsewhere and the loan was never repaid.
U.S. Assistant Attorney Perry Piper said Smith "wasn't telling the truth to anyone.
"He left financial distress in his wake," Piper said.
Smith tried to dispose of $2.1 million in debts through bankruptcy, but Piper said that did not go through. Smith even borrowed $750,000 from his mother, which he could not repay, and some home buyers complained that he did not finish homes he was paid to build.
After Monday's hearing, Geoff and Kathy Korous, a retired couple who moved to Fredonia Mountain from a Chicago suburb three years ago, said Smith took $400,000 to build their dream retirement home but failed to pay some of the subcontractors or adequately finish their home.
"This was our dream home in the mountains, but it became a nightmare," Korous said.
The couple had to spend $30,000 of their own money to finish their 4,200-square-foot home that Vision Homes was supposed to complete.
Korous said a handful of home buyers who contracted with Vision Homes had similar problems on Fredonia Mountain.
But the problems were with a few home projects, not with the overall Fredonia Montain project, developers insist.
Smith was one of the partners in the Fredonia development at one time. But when the problems surfaced with Vision Homes, he was removed "and he hasn't been involved in the development for the past three years," Land of Tennessee Chief Operating Officer Tim Coleman said Monday.
"There are 3,500 property owners from 36 states and over 100 homes have been built so far," Coleman said. "We continue to sell land and build homes on this beautiful development. With the trails, lakes and ponds, it's an incredible piece of property."
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.