Former Cornerstone Bank Employee Says Bank Lost $1.8 Million In Dade County Land Deal

Tuesday, April 9, 2013

A former bank examiner at Cornerstone Bank said the bank wrote off $2.6 million on 19 loans that had been approved for a failed development at Johnson's Crook in Dade County, Ga.

Anthony Ray said Tuesday at the trial of two of the officials of the Southern Group that discounting some additional lots transferred by the developers as well as the value of assets it took over, the loss is still some $1.8 million.

Joshua Dobson, 35, and Paul Gott, 40, are facing money laundering and wire fraud charges at Chattanooga Federal Court. 

Mr. Ray said he began looking into the 19 loans after payments stopped on them in 2009. He said he was startled to learn that the developers themselves had paid the down payment and mortgages for 14 months before running out of cash.

He said the bank would not have made the loans had it been aware that the buyers "had no skin in the game." He stated, "If your money's at risk, you're more likely to repay the loan."  

The witness said of the payments by the developers that "it didn't make sense. If you want to do something for the buyer, then lower the price." Lots at The Preserve were selling for as high as $250,000.

Mr. Ray said, in studying the loans, he found several "indications of fraud."

He said he checked with Sam Moody who had worked closely at the bank with the developers on the loans and he denied that the loans involved "options" in which the firm was eventually to take the lots back.

He said he asked Mr. Moody how loans were approved, for example, for a Florida Methodist pastor with little cash on hand. "He didn't give me a good answer," he said.

The minister, Patty Daniels, said she was told that she would not have to pay any money on the down payment and that the mortgage payments would be paid for her. She said she was advised that the developers would take her three lots back before three years were up and that she would make money "for the use of her good credit."

Rev. Daniels said two different banks were used on her two lot loans.

She said she planned to spend the money on retirement and for her daughter's schooling and wedding.

But she said she began to get calls from bankers saying the loans were not being paid. She and her disabled husband eventually had to declare bankruptcy.

She said when the first bank calls came she telephone Dobson and he assured her that "everything is going to be OK."

Dennis Sanchez of Tampa said he did not have enough money for a down payment, but was told that was no problem. He wound up with $175,000 loans on two lots and also got extra lots.

Mr. Sanchez said he also began to hear from the banks, saying he needed to pay up. "I couldn't afford it," he said.

He said he still has two lots at The Preserve and he has had no offers, even though he has lowered the price to $4,000 each.

He stated, "I have not been paying the taxes, hoping that the bank will take them."

Another Florida man who became involved in the development said he visited Dade County a couple of times to check on the progress of The Preserve. He said he planned to build a house on one of the lots and make money off the other.

He said the project at first "sounded too good to be true." Later, he said, "It sounded like fraud."

He also went into bankruptcy and finally sold his lots for $20,000 each. 





Gregory Stephens, 48, Arrested For Kidnapping And Aggravated Assault In Whitfield County

A man is being held on kidnapping and aggravated assault charges in Whitfield County. On Thursday at approximately 9:40 p.m., deputies were dispatched to 2142 Beaverdale Road in reference to an assault that had taken place. Upon arrival, the officers found Terry Whaley, 53, with lacerations and abrasions to the head. Mr. Whaley informed officers that he and Monica Cunningham ... (click for more)

Upcoming City Council Agenda For Tuesday

Here is the upcoming City Council agenda for Tuesday: I. Call to Order. II. Pledge of Allegiance/Invocation (Councilman Hakeem). III. Minute Approval. IV. Special Presentation. V. Ordinances – Final Reading : (None) VI. Ordinances – First Reading : (None) VII. Resolutions: GENERAL SERVICES a. A resolution to amend Resolution No. 28696 authorizing ... (click for more)

Accountability Doesn't Have To Be A Bad Word

Am I making a difference? Isn’t that the basic question we all ask ourselves, and seek to demonstrate to others?  Ronald Reagan said:  “Some people spend an entire lifetime wondering if they made a difference in the world. But, the Marines don't have that problem.”   We would argue teachers do not have that problem either.    Educators make a huge difference ... (click for more)

Roy Exum: Guess Who Backed Kelly?

Two weeks before the August election where three members of the Hamilton County School Board were angrily replaced, the organizer of what was called “a great way for the (challengers) to raise great money to help them run smart campaigns” made a bold statement. “I'm sure the current board is well-intentioned, but the results are not there," said Paul Brock. "Leadership matters ... (click for more)

CPA Blanks CCS, 1-0, in A-AA State Soccer Semis

MURFREESBORO - The scoring opportunities were few for both teams, but Christ Presbyterian used a shot and a deflection off a defender for a 1-0 win against Chattanooga Christian in an A-AA state semifinal match here Thursday at the Richard Siegel Soccer Complex. District 12 player of the year Sarah Sievertsen scored the winning goal in the 54th minute as the Lions advance ... (click for more)

DeBord Happy To Have Kelly, Hurd In Vols' Backfield

Tennessee offensive coordinator Mike DeBord, defensive coordinator Bob Shoop and tight ends coach/special teams coordinator Larry Scott spoke reporters at Wednesday's press conference in the Ray and Lucy Hand Digital Studio. No. 18 Tennessee (5-2, 2-2 SEC) takes on South Carolina (3-4, 1-4 SEC) on Saturday at Williams-Brice Stadium with a 7:15 ... (click for more)