Land Developer Involved In Failed Project Of Luxury Homes Is Sentenced To 18 Years in Prison For His Role In A $23 Million Bank Loan Scheme And Related Charges
ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger sentenced Keith Vinson to 18 years in prison for his role in a scheme involving the failed land development deal of Seven Falls, a golf course and luxury residential community in Henderson County, N.C., announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Vinson, age 57, of Arden, North Carolina, was also ordered to serve three years of supervised release and to pay restitution in the amount of $18,384,584.53. A federal jury convicted Vinson in October 2013 of conspiracy, bank fraud, wire fraud, and money laundering conspiracy.
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); and Jason T. Moran, Special Agent in Charge of the Federal Deposit Insurance Corporation (FDIC), Inspector General’s Office of Investigation, Atlanta office.
“Keith Vinson was the central figure among a group of rogue bankers, CPA’s, appraisers, investors and others who together not only violated federal laws, but violated the trust of legitimate investors and potential home owners. The U.S. Attorney’s Office engaged our full resources to investigate and successfully prosecute this greedy group, but the greater message is to those who seek to engage in similar fraudulent activities: we are not finished. Western North Carolina is enticing to investors and developers because of the beauty of the landscape and continued growth; however, those who seek to conduct business in this area should prepare to do so fairly, legally and transparently because we are paying close attention to business transactions by investors, developers and would-be gate keepers” stated Acting United States Attorney Jill Westmoreland Rose.
According to filed court documents, evidence presented at Vinson’s trial and today’s sentencing hearing:
Beginning in 2008, Vinson and his co-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 proposed golf course and luxury residential community in Henderson County, N.C. A straw borrower is an individual whose name appears on a loan and on the books and records of a bank as the beneficiary of a loan, but whose name is substituted for that of the true borrower and does not in fact receive the benefits of the loan. 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. Vinson and his 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 and his co-conspirators, including Avery Ted “Buck” Cashion, III, Raymond M. “Ray” Chapman, 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.
Many of Vinson’s co-conspirators were sentenced on June 2, 2015. Avery Ted “Buck” Cashion, III, 61, of Lake Luke, N.C., was sentenced to 36 months in prison; Raymond M. “Ray” Chapman, 68, of Brevard, N.C., was sentenced to 36 months in prison; Thomas E. “Ted” Durham, Jr., former President of the failed Pisgah Community Bank, 60, of Fletcher, N.C., was sentenced to 30 months in prison; and Aaron Ollis, 68, a former licensed Real Estate Appraiser, of Arden, N.C., was sentenced 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 as follows
Avery Ted “Buck” Cashion, III, $14,266,256.47
Raymond M. “Ray” Chapman, $14,266,256.47
Thomas E. “Ted” Durham, $ 6,237,453.37
Aaron Ollis, $10,199,106.87
George M. Gabler, age 60, of 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.
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.
Vinson is currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
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.