N.C. ends probe of massive scam

RALEIGH, N.C. -- North Carolina Attorney General Roy Cooper's office said Friday it was ending its civil investigation of a scam involving the sale of overpriced mountain lots to buyers who were told they could profit without investing their own money.

One of the largest fraud cases in North Carolina's history came to light in 2007 when Cooper shuttered the Village of Penland real estate project, citing fraudulent business practices. He acted after a BB&T Corp. investigator contacted the FBI.

Florida developer Michael Yeomans agreed in state court to a series of conditions including that he can't sell real estate that involves the seller making down payments or mortgage payments, Cooper's office said. This development effectively ended the lawsuit brought by Cooper's consumer protection division. Yeomans previously pleaded guilty to a federal mortgage fraud charge.

Appraiser A. Greg Anderson's license was suspended, and he can never conduct appraisals on property where the seller is offering incentives of more than $100.

Alleged mastermind Anthony Porter was sentenced in July to three years in prison for fraud, money laundering conspiracy and making a false statement on a tax return.

Authorities said the bogus development began in 2002 when Porter recruited brothers who owned a Florida manufacturing business as partners for what was envisioned to be a sprawling complex with luxury homes, wide streets with shops and boutiques set in the Blue Ridge mountains. Their company bought 1,200 acres in Mitchell County, near the Tennessee border, which they subdivided into more than 2,000 lots to create Penland.

The scheme then used inflated appraisals and phony second mortgages as down payments, resulting in consumers borrowing $100 million to buy property in the development, authorities said.

The developers used the money to fund failed projects in South Carolina and St. Thomas, as well as pay for a Greek island cruise and a ski trip to Switzerland, Cooper said.

The companies have been under the control for the past three years of a court-appointed receiver whose mission is to sell off assets and repay creditors with any money available.