Virginian-Pilot Newspaper Runs Coghill Story

[Don Melcher]

Today's issue of the Virginian-Pilot has published and posted online the following story about our boy:

Donald Melcher says he lost nearly everything after loaning Thomas E. Coghill Jr. money for his homebuilding business. The Charlottesville businessman claims he was out more than $527,000 after helping Coghill build houses in the Charlottesville area during the 1990s.

To get financing from Melcher and others, Coghill claimed houses had been completed or were being built when in fact the sites were vacant lots or properties owned by others, according to a federal indictment.

"I have no savings, no 401(k), no retirement money, as a result of losing virtually all my money to this liar, this psychopath, this fraud," Melcher testified in federal court.

Coghill, who now lives in Virginia Beach, pleaded guilty to wire and bank fraud in connection with that case. In 2006, a federal judge sentenced him to 30 months in prison and ordered him to pay more than $3 million in restitution to his victims, including Melcher.

Coghill, 49, was told by the court to report any future business dealings to his probation officer.

But he didn't.

Now, nearly four years later, Coghill is scheduled to be sentenced again today in Lynchburg for obstruction of justice. Prosecutors say that from 2005 to 2009, Coghill involved himself in several Florida real estate development deals worth millions without disclosing them to his probation officer - and kept doing business even as he served time on the fraud charges.

Coghill's multimillion-dollar business dealings date back at least a decade and stretch from Virginia to Florida.

A surfing and biking enthusiast born and raised in Virginia Beach, Coghill graduated from Old Dominion University with a physics degree and followed his father into real estate. He spent some of his time in Florida, working on family business there. More recently, Coghill patented a beach bike and cart.

The fraud outlined in the first federal case against Coghill dates back to the 1990s.

Victims Michael and Rena Gordon first came into contact with Coghill after he placed an ad in a Washington newspaper, Michael Gordon testified at Coghill's 2006 sentencing.

The couple ran Anchor Capital Corp. in Maryland and provided financing to Coghill beginning in 1995.

"We have obviously made a very huge mistake in trusting him," Michael Gordon testified. "And we clearly were not up to this job of dealing with a crook and a con man."

Coghill forged certificates of occupancy and government documents and provided fraudulent financial statements and surveys, Gordon testified.

"At the time of discovery of the fraud, there were about 75 lots which we thought had houses on them, which was the only reason we lent the money we lent," he testified. "We lent $55- $60,000 on a house. It turned out it was just a $5,000 lot."

In 2005, Coghill was indicted for faxing fraudulent investment documents to two of his lenders.

They indicated the construction of houses were substantially complete, when they were actually vacant lots.

Melcher said in a phone interview this week that a real estate agent they both knew introduced him to Coghill, who did not return two messages for comment left at his family's Beach Investment Research Corp. One of his attorneys, John Edwards of Roanoke, declined comment Thursday.

Coghill asked Melcher to lend money to his homebuilding business in 1991, Melcher said.

He initially provided the financing to build only one house: $40,000, he said.

But after Coghill kept paying him back the full amount, Melcher kept investing in more houses, he said. Coghill also financed his business by borrowing from a Richmond bank.

After a few years, he invested to the point where he wasn't taking his principal back, just moving it from project to project, Melcher said.

"Things went sweetly for eight years," he said.

Coghill stayed in Charlottesville and had offices there, though he sometimes commuted from Virginia Beach, Melcher said.

The last two years Melcher was involved with Coghill, in 1998 and 1999, they generally had about eight to 10 houses under construction at any time.

And Coghill was paying him $10,000 a month in interest, Melcher said. He received checks from several different entities associated with Coghill's homebuilding business, he said.

Then in late 1999, the payments stopped, Melcher said. He was out more than $527,000, he said.

Melcher testified at Coghill's sentencing in 2006 that as a result of his dealings with Coghill, was living on less than $30,000 a year, had no credit, and had to struggle to send his daughters to college.

Coghill's father, Thomas E. Coghill Sr., a real estate developer, testified at his son's sentencing that he told him he committed fraud and was sorry for it.

"He never really intended to defraud anybody out of anything," Coghill Sr. testified. "But he was using the fraud that he was committing, which he did commit, to keep the construction business going, so that he could hopefully build his way out of it.

"But that was not going to happen."

Coghill Jr. admitted during his sentencing that he was a terrible bookkeeper and "was trying to run a 60-house-a-year business in my head." He and his father also blamed an alcohol problem, for which they said he received treatment.

" When I was borrowing money from you all, I had a drinking problem," Coghill testified. "It wasn't as bad as it got later. And I kept thinking that just hard work was going to pay you all back. But it wasn't, because there wasn't enough - enough profit in the houses that I was building."

Coghill's then-attorney, Curtis Fallgatter, said his client was impaired by both alcohol and severe financial constraints from the high interest rates in the deals he made.

Coghill was ordered to pay the Gordons more than $2.8 million and Melcher $170,000 in restitution. Melcher said he's seen about $200 so far.

Coghill served his sentence on the fraud convictions and was released from federal custody in July 2008. Prosecutors say he wasn't idle while in prison. In March 2009, a federal grand jury indicted Coghill on charges of obstruction of justice and perjury.

Coghill understated the value of his business interests in Florida and got involved in real estate deals unrelated to his family's business without informing his probation officer as required by the court, according to the indictment.

In a letter, Coghill sought a return on one of those investments:

"You probably don't know who I am but I am the one that originally put together the purchase of the Conch House property, which we own...I will be out in July of this year and will file suits against the managing members if things are not resolved...All I want is my money back plus attorney fees and some of the money that the managing partners have taken...I have $395,000 in this property."

Jen McCaffery, [phone], [e-mail]

Last year I contacted the Virginian-Pilot to see if they had any interest in doing a story on Coghill, who lives in Virginia Beach, an area served by this, the states 2nd largest newspaper. I spent a good deal of time faxing documents and answering questions with one of the reporters, but after several weeks of no communication, I lost contact with the paper and assumed they were no longer interested. I had forgotten about it until I was contacted last month by Jen McCaffery, who had picked up the file and wanted to get an update on the story. The fact that this is being published on the same day Coghill is scheduled to be sentenced makes it that much more enjoyable. I think Jen McCaffery did a very nice job of summarizing a long saga, and capturing the recalcitrant Coghill. Perhaps there will be a follow up after sentencing.

CTC will never take our eye off the ball, and we will continue to inform and educate those who might consider doing business with this liar and thief.