Banks added as defendants in multi-million dollar Village of Penland real estate fraud case

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Jason Sandford

Jason Sandford is a reporter, writer, blogger and photographer interested in all things Asheville.

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The Charlotte Observer reprints the Raleigh News & Observer story about a mountain real estate fraud case that’s pretty damn massive:

BB&T added to mountain fraud lawsuit
TIM SIMMONS
(Raleigh) News & Observer
BB&T of Winston-Salem and two other banks from outside North Carolina were added as defendants Thursday to a multi-million dollar real estate fraud case.

A fourth bank, First Charter of Charlotte, was not included in the suit because it is involved in a virtually identical court case in Mecklenburg County.

The civil case involves the collapse of a 1,300-acre mountain development in Mitchell County known as the Village of Penland, about an hour northeast of Asheville.

Attorneys for investors in the development argued Thursday in Wake Superior Court that the financing scheme used to sell lots at Penland was impossible without the banks’ participation.

The court’s eventual decision is critical to investors because those who borrowed money are required to keep making payments on the loans even though the land is worth far less than the money they owe.

Information from the banks could also be helpful to other criminal and civil cases triggered by the collapse. Those cases include an Apex man who pleaded guilty this month to charges of securities, mail, wire and bank fraud and agreed to cooperate with federal investigators.

A former bank investigator at BB&T also has filed a suit, alleging she was fired from her job for refusing to participate in a coverup of a $20 million loan fraud connected to Penland.

And the N.C. Attorney General’s Office has a suit pending against the developers of the project alleging securities and mortgage fraud.

When the Penland development failed in May, dozens of investors owed the banks as much as $100 million.

The banks’ inclusion does not indicate guilt and their addition was expected, given the millions of dollars in loans they provided. The banks from outside North Carolina are United Community Bank of Georgia and Carolina First of South Carolina.

All four have denied involvement, saying they were tricked by the developers and are victims of the fraud.

Jason Sandford

Jason Sandford is a reporter, writer, blogger and photographer interested in all things Asheville.

  • 1

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