Asheville Mountain Real Estate Blog

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Location: Mars Hill, NC, United States

A small, highly personalized real estate firm specializing in mountain homes and land in greater Asheville.

Friday, February 08, 2008

Guilty Plea in Village of Penland Scam


The Village of Penland, NC, (unincorporated), is located not far from here, and WAS, before the real estate bubble burst, perhaps best known for the renowned Penland School of Crafts.

Since June of 2007 however, the major news from that part of the world has given us a local window into some of the less scrupulous parts of the housing bust by way of a local real estate development gone bad. NC Attorney General Roy Cooper said at the time:
"These developers squandered more than $100 million in financing, leaving consumers stuck with property that isn't worth what they owe on it," said Cooper. "We're putting a stop to this scheme before any more consumers get caught up in it."
Additionally, it was alleged at the time that:
...the defendants promised consumers that they would profit from the Village of Penland without ever having to invest any of their own money. The developers used several different schemes to entice consumers to use their credit to purchase lots. In one scenario cited in Cooper's complaint, the developers told consumers to apply for credit to buy 10 lots for a total of $1.25 million and promised to buy back the lots at the same price within three years. Consumers were told that these ten lots would then be developed and that they would receive $100,000 when each home sold.
The Asheville Citizen Times reported yesterday that the first guilty plea has been returned. The Charlotte Observer has more. The maximum penalty is 5 years in prison, $250K penalty, and 3 years probation. It looks as though individual investors will have to seek separate recourse.

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