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

Tuesday, April 09, 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. 

 

 

    

 


La Onda Gets 30-Day Beer License Suspension; J.J.'s Bohemia 14 Days

A bar check made by the Chattanooga Police at 1:30 a.m. on July 27 at La Onda Nightclub and Lounge, 6175 Airways Blvd., resulted in a 30-day beer license suspension. At issue was the legality of allowing people under the age of 21 in the establishment unaccompanied.   The beer code specifies that a business must have over 50 percent of total gross sales comprised ... (click for more)

City Council Taking Applications From Those Interested In Serving On City IDB

The City Council is taking applications from those interested in serving on the city industrial Development Board (IDB).   There are four vacancies on the board that has been in the news for its controversial approval and re-approval of $9 million in Tax Increment Financing (TIF) for developers of Aetna Mountain. Resumes are due by Sept. 29.   ... (click for more)

Walking Among Memories, The USS LST-325

I have walked among the head stones at Flanders Fields and have seen the entrenchment of soldiers with only bayonet tips sticking out of the earth. Later I traveled to Normandy where I stood on the sand and made scuff marks with my shoes on Omaha Beach and climbed the hill to the magnificent American Cemetery there. I again walked among the many, many tomb stones so neatly and ... (click for more)

Roy Exum: My Aunt Martha

During my first year at Ole Miss, I was so distracted by the stunning coeds on campus that I paid too much attention to the wrong kind of figures. I ended up flubbing a math class, which at the time was most serious and potentially deadly for an American boy. It meant I didn't have enough credit hours to avoid the draft and in almost no time I got a red, gut-retching postcard that ... (click for more)

Lookouts and Minnesota Twins Sign 4-Year Agreement

In a fast-paced, high stakes game of musical chairs with the three players from Major League Baseball - Minnesota, Arizona and Colorado - vying for one chair (Chattanooga Lookouts), the Twins from Minneapolis came up the winner Wednesday. Officials from the Minnesota ball club flew to Chattanooga Tuesday and signed contract papers for a four year player development ... (click for more)

Lady Mocs Volleyball Team Set To Host Scenic City Showdown

The Chattanooga Mocs returns to action Friday and Saturday at Maclallan Gym is they host the Scenic City Showdown – Presented by Hampton Inn & Suites.  Its second three-team tournament of the season, Chattanooga welcomes UT Martin, Stetson and South Carolina State to Downtown. “This is another great opportunity for us to display our city, campus and facilities ... (click for more)