Three Banks Added As Defendants In Multi Million $ North Carolina Civil Fraud Case

In North Carolina, The Charlotte Observer reports:

• 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.

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• 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 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.

For more, see BB&T added to mountain fraud lawsuit.

Go here for other posts on the alleged scheme underlying the failed North Carolina Village of Penland project. Tony Porter