Knoth gets 21-month sentence
Published on 08/18/00
BY JIM PARKER
The Post and Courier
A judge sentenced Robert R. Knoth on Thursday to 21 months in prison for fraud and money laundering in the bankruptcy of Knoth's $12 million estate in the mid-1990s.
"It's a sad day," said U.S. District Judge Falcon Hawkins. "I have to admit I do not understand his actions."
Knoth, with his wife and three grown children behind him, rubbed his eyes but showed little emotion when Hawkins handed down the sentence, the minimum under federal sentencing guidelines.
"I apologize this happened. I think it's devastating," Knoth told the judge at the sentencing. "I didn't intend to create the problem. I tried in my mind to be a good person."
Sally Knoth, who has been married to Knoth for 30 years, said the family has been through an ordeal in the eight years since the financial troubles started.
"I know he has to leave," she said. "My love for him has never faltered and never will. He has a kind heart. He has made mistakes."
Before the sentencing, Hawkins denied Knoth's request that the judge give him probation or otherwise reduce the term. Federal guidelines call for between 21 and 27 months for the offenses.
He did recommend that Knoth, 56, serve his sentence at a minimum security prison in Estill so Knoth could be near his family.
"It was a correct sentence under the law. It was a just sentence under the circumstances of the case," Assistant U.S. Attorney Matthew R. Hubbell said after the sentencing.
Knoth entered his guilty plea in February 1999 as part of an agreement with prosecutors. He admitted converting $113,000 in checks and other funds to his use over a two-year period. The money was supposed to go toward the reorganization of his debts under bankruptcy.
The sentencing followed two days of testimony and arguments last week.
In a bid to get Knoth's sentence reduced,
his lawyers sought to portray Knoth as a caring family man who couldn't think straight due to Attention Deficit Disorder but who redeemed himself by starting a successful carriage business in 1996."He was born with the proverbial silver spoon in his mouth," Knoth's lawyer Robert B. Wallace said. "Now, here he is with a shovel of manure in his hand."
The prosecution, in turn, offered evidence that Knoth knew what he was doing all along and had chances to make amends but ignored them or failed to cooperate. (like with the city's ordinances concerning carriage horse care)
Further, prosecutors said, Knoth managed to maintain a wealthy lifestyle even while in debt. He denied having two polo ponies he was supposed to turn over to the bankruptcy court and kept his membership current in the Carolina Yacht Club, they said.
"Out in the real world, polo ponies and the Yacht Club are not the necessities of life," Hubbell said.
According to testimony, Knoth inherited a $23 million estate in the 1980s upon the deaths of his mother and father - who oversaw income-producing plantations worldwide. Wallace said the inheritance was "like a birthright."
Over the years, Knoth managed land and bought businesses, including a farm tractor dealership and a fast-food franchise. The family lived south of Broad Street and owned 24 polo ponies.
But by the early 1990s, the financial fortunes had soured. Knoth filed for personal bankruptcy in November 1993, and various businesses also sought bankruptcy protection. His estate was estimated at $12 million to $15 million.
"It is obvious to me the thread of Knoth's condition started on the day of his inheritance to the day he plead guilty, a thread of impaired capacity," Wallace said.
The prosecution, though, said Knoth masterminded a scheme to defraud the bankruptcy court.
John F. Curry, trustee for Knoth's Chapter 11 bankruptcy, testified that Knoth was told from the beginning "there must be no transfer, change of assets, records destroyed." Knoth said he understood the rules, Curry testified.
Yet during the bankruptcy, prosecutors said, Knoth illegally took money for his own use in 37 separate transactions. The money included checks for rental properties he was permitted to manage, a check from a farm credit bank and income from billboard rentals.
Knoth stashed funds in accounts at a local bank that Curry uncovered only after subpoenaing all the banks in town. Knoth also sold a Mercedes car without permission using a duplicate title. Curry testified that he had the original title in his possession.
He also received a commission on a land sale - against court orders - by inducing a third party to borrow money to pay Knoth with.
"It wasn't the smartest scheme in the world but it worked for two years," Hubbell said.
Wallace said the case reminded him of "Gone with the Wind," comparing Robert Rhett Knoth to the fictional Scarlett O'Hara, who persevered to save her plantation Tara.
In 1996, Knoth got a $35,000 loan from a neighbor that he repaid to start Carolina Polo and Carriage Co. It now employs 21 people.
"Like Scarlet, he made something from the ruins of this disaster," Wallace said.
Earlier, Knoth's family, friends and associates - including
Charleston Mayor Joseph P. Riley Jr. and U.S. Sen. Ernest F. Hollings - testified in support.
"Five years ago, I saw him stretched to the limit," said Hank Holliday, who developed the Planters Inn next to Knoth's carriage company. "I saw bit by bit on a daily basis, Bobby Knoth reach down deep inside him to help his family, be a good citizen and start a business."
Meanwhile, a forensic psychologist testified that Knoth's adult ADD made it difficult for him to concentrate and could explain his lapses in financial matters.
(And, now, perhaps his lapses in basic horse care, such as what they were fed or whether they died)Dr. C. Barton Saylor said people with ADD act by impulse instead of trial and error, and have a magical belief that luck will bail them out of jams.
In response to supportive testimony about Knoth's character, the prosecution said it presented testimony from a female undercover Charleston County Sheriff's narcotics agent alleging a December 1995 meeting with Knoth in which a profit-splitting drug deal was discussed. There apparently was no further contact after the meeting. Knoth was never charged, Hubbell said.
Knoth's lawyer
Capers Barr also said there's no evidence that Knoth resorted to drugs.
Hubbell said Knoth's financial misdeeds went on even as he testified in 1995 in the investigation of bank fraud at Citadel Federal Savings Bank involving Charles D. "Pug" Ravenel and others.
Knoth lost much of his fortune through investments with Ravenel, but he also made some money funneling illegal loans from the floundering thrift to associates of Ravenel, according to testimony in the Citadel Federal cases.
Knoth and three other "straw borrowers" got immunity from prosecution to testify how they borrowed money and loaned it to others for cash fees. Knoth has said he thought the transactions were legal.
Ravenel pleaded guilty in 1995 to conspiring to get others to secretly borrow $70,000 for him that was never repaid. He also admitted taking part in a check-kiting scheme. U.S. District Judge Sol Blatt Jr. gave him 11 months in prison. The judge said at the time of the sentencing that he had received an unprecedented number of letters on Ravenel's behalf.
ED:Jim Parker covers banking, insurance and investments. Contact him at 937-5542 or at
jparker@postandcourier.com. Richard Green Jr. of The Post and Courier contributed to this article.