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. 

 

 

    

 


Latest Hamilton County Jail Booking Report

Here is the latest jail booking report from Hamilton County: ARCENEAUX, CARLA RUTH  406 HIGHWAY 299 LOT N WILDWOOD, 30757  Age at Arrest: 41 years old Arresting Agency: Hamilton County VIOLATION OF PROBATION (POSSESSION OF DRUG PARAPHE VIOLATION OF PROBATION (POSSESSION OF CONTROLLED S VIOLATION OF PROBATION (THEFT OF PROPERTY) POSSESSION OF ICE METHAMPHETAMINE ... (click for more)

East Ridge Passes Budget Without Tax Increase; New City Manager Re-Organizing

The fiscal year 2017 budget was approved on first reading by the East Ridge City Council Thursday night. The property tax rate remains unchanged at $1.4227 per $1,000 of assessed value. Citizens will be able to participate in the public budget hearing that will be held just before the next council meeting on Thursday, Aug. 11, at 5:45 p.m. and changes can be made before the second ... (click for more)

Olympic Events On The Ocoee River Made History – But It Wasn’t Easy

It started with a simple “what if” question while Atlanta officials were working on a bid to host the 1996 Summer Olympic Games.  A group of amateur kayakers from the city began asking themselves: “What if Atlanta’s bid is successful? Then where would the Olympic whitewater canoe and kayak races be held?”  To some of the members of that group, the answer was obvious. ... (click for more)

Roy Exum: Mr. Siedlecki, Sit Down!

This is a personal thing but one of my pet peeves is the little advertising stickers I sometimes find on the top of the front page of my newspaper. An editor at the newspaper has already determined a bit of news he or she feels I should read. And then the sticker covers it up so I have to peel it off before I can read “All the news that is fit to print.” As I groveled over my ... (click for more)

Lookouts Get Walk-Off Win Over Smokies Thursday, 4-3

With the score tied at three with one out in the bottom of the ninth inning, Lookouts outfielder Zack Granite singled home Edgar Corcino to give the team with 4-3 walk-off win over the Smokies.   Tied going into the bottom of the ninth inning, Corcino led off with his second hit of the game. He advanced to second base on a bunt. A Levi Michael single pushed Corcino to third ... (click for more)

TSSAA Sets Future Division I, Division II Classifications

The Tennessee Secondary School Athletic Association’s Board of Control has released the minutes from Wednesday’s meeting in Hermitage pertaining to football classification period for the 2017-18 and run through 2020-2021 1.  Roll Call 2.  Division I and Division II Classification The Board of Control voted the following for the classification period that ... (click for more)