Two in real estate fraud scheme plead guilty

Sep. 23, 2013 @ 09:28 PM

ASHEVILLE — Two more defendants accused in a scheme to cheat banks out of more than $20 million in connection with a failed western North Carolina development have pleaded guilty.

Court records show Avery Ted Cashion III and Raymond Chapman Jr. each face up to five years in prison and $250,000 fines when they're sentenced,

Both men pleaded guilty last week in U.S. District Court in Asheville to one count of conspiracy to defraud the United States. Terms of the plea agreement remain sealed.

Prosecutors say Cashion and Chapman were involved in a scheme with Seven Falls developer Keith Vinson to have "straw borrowers" buy lots in the development they did not intend to repay.

Vinson and three other defendants are scheduled to go trial next month.

Vinson owned and operated Seven Falls Golf and River Club LLC, which was supposed to build a golf course development on 1,400 acres near the Henderson County mountain community of Etowah.

According to an indictment, Vinson, through his development company, borrowed $25 million from the National Bank of South Carolina in 2006 to buy land and start work on Seven Falls. He launched a marketing campaign that promised an Arnold Palmer-designed golf course and sold about 70 undeveloped lots for between $250,000 and $650,000 each, the indictment said.

When the recession and housing crash hit in 2008, Vinson lacked enough money to pay subcontractors, the indictment said. Vinson needed cash, but was unable to borrow more money because of rules designed to limit banks' exposure to any one borrower.

It was then that Vinson, Chapman, Cashion and others conspired to generate a series of fraudulent loans, the indictment said. The defendants "had hidden agreements to pay kickbacks to one another and others as part of the conspiracy," the indictment said.

The flow of faked loans "provided funds for the conspirators to continue their lifestyles, including the purchase of two jet aircrafts and the maintenance of homes in North Carolina, Florida and Colorado," the indictment said.