Five of the eleven defendants charged in connection with a scheme involving straw buyers and the development of Seven Falls, a golf course and luxury residential community in Henderson County, North Carolina, have been sentenced to prison.
U.S. District Judge Martin Reidinger sentenced Avery Ted “Buck” Cashion, III, 61, Lake Luke, North Carolina, to 36 months in prison, and three years of supervised release; Raymond M. “Ray” Chapman, 68, Brevard, North Carolina, to 36 months in prison, and three years of supervised release; Thomas E. “Ted” Durham, Jr., former President of the failed Pisgah Community Bank, 60, Fletcher, North Carolina, to 30 months in prison, and three years of supervised release; and Aaron Ollis, 68, a former licensed Real Estate Appraiser, Arden, North Carolina, to two years of probation, including 12 months and 1 day home detention. Cashion, Chapman, Durham and Ollis each pleaded guilty to conspiracy to defraud the United States. The defendants were also ordered to pay restitution.
George M. Gabler, 60, Fletcher, N.C., was convicted of one count of willfully failing to report misconduct associated with two Seven Falls lot loans in March 2010. In court documents, Gabler admitted that he withheld documents from a federal grand jury knowing that they were related to fraudulent loans taken out on behalf of conspirator Keith Vinson. For this offense, Gabler, a former Certified Public Accountant, was sentenced to two years of probation, including 500 hours of community service and a $5,000 fine.
Keith Vinson, was convicted at trial in October 2013 of conspiracy, bank fraud, wire fraud, and money laundering conspiracy. He is scheduled to be sentenced on June 25, 2015 in Asheville, N.C.
According to court documents filed in the case, trial evidence and statements made in court during the sentencing hearings:
Beginning in 2008, the defendants conspired and obtained money from several banks through a series of straw borrower transactions, in order to funnel monies to Vinson and his failing development of Seven Falls, a golf course and luxury residential community in Henderson County, N.C. Lending institutions cannot properly assess the risk of making such loans as they do not know the true circumstances of the loans or the creditworthiness of the true borrowers. The co-conspirators devised this scheme in order to funnel monies to Vinson and his failing development of Seven Falls.
In order to advance this scheme Vinson, Chapman, Cashion and others recruited local bank officials including George Gordon “Buddy” Greenwood and Ted Durham, who at the time were, respectively President of the Bank of Asheville and the President of Pisgah Community Bank. When bank officials realized that they had reached their legal lending limits with respect to some of the straw borrowers, additional straw borrowers were recruited to the scheme and more straw borrower loans were made to them. Additional straw borrower loans were also necessary to keep loans current, a scheme known as “loan kiting.” The loan kiting scheme became necessary when conspirators were unable to make payments on loans made early in the scheme. Seven Falls and another luxury residential golf development by Vinson named “Queens Gap” failed resulting in millions in property losses. In addition, both the Bank of Asheville and Pisgah Community Bank failed and were taken over by the FDIC.
Previously, Buddy Greenwood was sentenced to 42 months in prison; Nicholas Dimitris was sentenced to 12 months plus one day in prison; the former Pisgah Community Bank Chief Credit Officer, Robert Craig Gourlay was sentenced to 15 months in prison; David G. Smith, who worked as a loan officer for Pisgah Community Bank was sentenced to nine months in prison, and Andrew Hager was sentenced to eight months in prison in connection with the Seven Falls scheme.
Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina, announced the sentences.
Acting U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); Jason Moran, Special Agent in Charge of the Federal Deposit Insurance Corporation (FDIC), Inspector General’s Office of Investigation, Atlanta office.
The investigation was being jointly handled by the FBI, IRS-CI, and FDIC-OIG. Assistant U.S. Attorneys Don Gast and Michael Savage are in charge of the prosecution.