ASHEVILLE, N.C.
A federal court judge this week sentenced five of eleven defendants charged in connection with a scheme involving the development of Seven Falls, a golf course and luxury homes in Henderson County, officials said.
The defendants got together to hoodwink several banks through a series of straw borrower transactions so they could funnel this money to Keith Vinson and his failing development of Seven Falls, officials stated.
A straw borrower is a person whose name appears as the beneficiary of the loan. But his name is substituted for the true borrow and doesn’t get the loan, officials stated.
This deprives banks and other financial institutions from properly assessing the risk of making such loans as they don’t know the true creditworthiness of the true borrower.
Officials stated that the co-conspirators devised this scheme in order to funnel monies to Vinson and his failing development of Seven Falls.
U.S. District Judge Martin Reidinger sentenced the following defendants:
- Avery Ted “Buck” Cashion, III, 61, of Lake Luke, N.C., to three years in prison
- Raymond M. “Ray” Chapman, 68, of Brevard, N.C., to 36 months in prison
- Thomas E. “Ted” Durham, Jr., former President of the failed Pisgah Community Bank, 60, of Fletcher, N.C., to 30 months in prison
- Aaron Ollis, 68, a former licensed Real Estate Appraiser, of Arden, N.C., to two years of probation, including 12 months and one day home detention.
Officials said Cashion, Chapman, Durham and Ollis each pleaded guilty to conspiracy to defraud the United States. They were ordered to pay restitution:
- Avery Ted “Buck” Cashion, III, $14.2 million
- Raymond M. “Ray” Chapman, $14.2 million
- Thomas E. “Ted” Durham, $ 6.2 million
- Aaron Ollis, $10.1 million
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.
Gabler, a former Certified Public Accountant, was sentenced to two years of probation, including 500 hours of community service and a $5,000 fine.
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.
According to the evidence, this is what happened:
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, more straw borrowers were recruited to do more loans.
Additional straw borrower loans were also necessary to keep loans current, a scheme known as “loan kiting,” authorities stated.
The loan kiting scheme became necessary when conspirators were unable to make payments on loans made early in the scheme, officials stated.
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, according to authorities.
Previously, Buddy Greenwood was sentenced to three years and six 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.