Post by Sapphire Capital on Aug 13, 2008 5:39:25 GMT 4
CHARLOTTE, N.C. - AUgust 12, 2008
Three key players in a $100 million real estate scheme in the western North Carolina mountains will plead guilty to criminal charges related to the bogus development, the U.S. Justice Department said Tuesday.
Anthony Porter, Frank Amelung and John Foster were named in a bill of information filed last week in U.S. District Court and have agreed to charges detailed in those documents, said Suellen Pierce, a spokeswoman with the Justice Department's Charlotte office.
They were among a group who sold overpriced lots in what was supposed to become an upscale housing development called the Village of Penland in Mitchell County between 2002 and 2007. Prosecutors said the scheme bilked more than 200 investors in several states.
North Carolina Attorney General Roy Cooper shut the project down last year, citing fraudulent business practices.
Porter of North Carolina is charged with conspiracy to defraud the government, money laundering and perjury. He faces up to 18 years in prison and a possible fine, Pierce said. Amelung of Boca Raton, Fla., faces conspiracy and tax evasion charges. He faces up to 10 years in prison and a potential fine. Foster, who lives in Georgia, is charged with one count of conspiracy. He could receive five years in prison and a $250,000 fine.
The next step is a court hearing where they will enter guilty pleas, Pierce said. An Aug. 20 hearing has been set for Foster. No hearings have been scheduled for Porter and Amelung.
Telephone messages to the three men's attorneys were not returned Tuesday.
The charges and plea agreements are a result of an ongoing FBI investigation. Porter and Amelung are among several Penland developers being sued by investors in multiple lawsuits.
"No question, this thing is mushrooming," said John Yanchunis, an attorney suing the developers and several banks that provided financing for the project. He said unanswered questions remain.
Among them: How did it happen and what happened to the money?
"The banks lent in excess of 100 million ... It's just mind boggling to me," Yanchunis said.
The scheme began in 2002 when Porter recruited Frank Amelung and his brother, Richard, as partners in the project, envisioned as a sprawling complex with luxury homes, wide streets with shops and boutiques set in the Blue Ridge Mountains, according to state and federal authorities.
The Amelungs, who owned a manufacturing business in Florida, were looking to get into real estate development. They set up a company - Peerless Real Estate Service - and bought 1,200 acres, which they subdivided into more than 2,000 lots to create Penland.
They also devised a complicated scheme to attract investors to raise money for the development, according to federal documents.
The investors were told they could borrow money from banks for the lots and that Peerless would repay their loans. According to authorities, Porter and the others said their money would be used to develop Penland, and when the lots were sold, they would see a big return on their investment. They had banks ready to lend money for the quarter-acre lots - which sold for $125,000.
But the bill of information said the lot prices were "inflated" and that the developers diverted the money to other projects, including a spa in Brazil. It said the money also was "diverted to pay kickbacks and referral fees to individuals and entities that referred new investors."
Today, the land is abandoned - no homes, roads or other infrastructure were built there.
Two other Peerless officials - Neil O'Rourke of Apex, N.C., and Michael Yeomans of University Park, Fla. - have pleaded guilty to federal charges and are awaiting sentencing. Both are cooperating with authorities.
Three key players in a $100 million real estate scheme in the western North Carolina mountains will plead guilty to criminal charges related to the bogus development, the U.S. Justice Department said Tuesday.
Anthony Porter, Frank Amelung and John Foster were named in a bill of information filed last week in U.S. District Court and have agreed to charges detailed in those documents, said Suellen Pierce, a spokeswoman with the Justice Department's Charlotte office.
They were among a group who sold overpriced lots in what was supposed to become an upscale housing development called the Village of Penland in Mitchell County between 2002 and 2007. Prosecutors said the scheme bilked more than 200 investors in several states.
North Carolina Attorney General Roy Cooper shut the project down last year, citing fraudulent business practices.
Porter of North Carolina is charged with conspiracy to defraud the government, money laundering and perjury. He faces up to 18 years in prison and a possible fine, Pierce said. Amelung of Boca Raton, Fla., faces conspiracy and tax evasion charges. He faces up to 10 years in prison and a potential fine. Foster, who lives in Georgia, is charged with one count of conspiracy. He could receive five years in prison and a $250,000 fine.
The next step is a court hearing where they will enter guilty pleas, Pierce said. An Aug. 20 hearing has been set for Foster. No hearings have been scheduled for Porter and Amelung.
Telephone messages to the three men's attorneys were not returned Tuesday.
The charges and plea agreements are a result of an ongoing FBI investigation. Porter and Amelung are among several Penland developers being sued by investors in multiple lawsuits.
"No question, this thing is mushrooming," said John Yanchunis, an attorney suing the developers and several banks that provided financing for the project. He said unanswered questions remain.
Among them: How did it happen and what happened to the money?
"The banks lent in excess of 100 million ... It's just mind boggling to me," Yanchunis said.
The scheme began in 2002 when Porter recruited Frank Amelung and his brother, Richard, as partners in the project, envisioned as a sprawling complex with luxury homes, wide streets with shops and boutiques set in the Blue Ridge Mountains, according to state and federal authorities.
The Amelungs, who owned a manufacturing business in Florida, were looking to get into real estate development. They set up a company - Peerless Real Estate Service - and bought 1,200 acres, which they subdivided into more than 2,000 lots to create Penland.
They also devised a complicated scheme to attract investors to raise money for the development, according to federal documents.
The investors were told they could borrow money from banks for the lots and that Peerless would repay their loans. According to authorities, Porter and the others said their money would be used to develop Penland, and when the lots were sold, they would see a big return on their investment. They had banks ready to lend money for the quarter-acre lots - which sold for $125,000.
But the bill of information said the lot prices were "inflated" and that the developers diverted the money to other projects, including a spa in Brazil. It said the money also was "diverted to pay kickbacks and referral fees to individuals and entities that referred new investors."
Today, the land is abandoned - no homes, roads or other infrastructure were built there.
Two other Peerless officials - Neil O'Rourke of Apex, N.C., and Michael Yeomans of University Park, Fla. - have pleaded guilty to federal charges and are awaiting sentencing. Both are cooperating with authorities.