Developer pleads guilty in Spruce Pine real estate scheme

Jason Sandford

Jason Sandford is a reporter, writer, blogger and photographer interested in all things Asheville.

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The Charlotte Business Journal has the story:

Neil O’Rourke of Apex has pleaded guilty to conspiracy in relation to a failed real estate development that reduced earnings at Charlotte-based First Charter Corp. and other banks.

O’Rourke has held the title of president and vice president of Peerless Real Estate Services. That is one of several development companies named in N.C. Attorney General Roy Cooper’s case against the Village of Penland project in Western North Carolina.

In June, Cooper won a court order against the Penland developers, who he contends used inflated appraisals and phony second mortgages to collect $100 million before abandoning the project.

First Charter has said it was unaware Penland lot purchasers were filling out loan applications with other banks to buy multiple lots in the development, which are worth less than what the buyers owe.

First Charter made 70 loans worth $14.1 million to individuals who bought lots in Penland in Spruce Pine, about 50 miles northeast of Asheville.

First Charter’s provision for loan losses totaled $9.1 million in the second quarter of 2007, including $7.8 million related to the Penland loans. In the same period in the previous year, the company’s provision for loan losses was $900,000.

In July, the bank said loan losses related to the failed residential project contributed to a 21.9 percent decrease in its second-quarter earnings. First Charter (NASDAQ:FCTR) posted second-quarter net income of $9 million, or 26 cents per diluted share, down from $11.5 million, or 37 cents per diluted share, in the year-ago period.

O’Rourke was charged in the U.S. District Court in Charlotte with one count alleging conspiracy to commit violations of federal law, including making a false statement and application in relation to a loan and mail, wire, bank and securities fraud. A date for his sentencing has not been set.