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Bank says property owners lied to get hefty N.C. loans

By Lucy Morgan, Times Senior Correspondent
In print: Friday, August 8, 2008

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ADVERTISEMENT Related Links July 19, 2008: Mountain of money, mystery in N.C.

SYLVA, N.C. — SunTrust officials this week accused 14 property owners in a controversial North Carolina real estate development of falsifying their income when they obtained mortgages totaling more than $20-million.

SunTrust Mortgage vice president Cary L. Mudge said in affidavits that the 14 borrowers inflated their monthly income, lied about their job titles or falsely claimed employment when they really were retired. Some borrowers had joint bank accounts with Domenic Rabuffo, a Florida developer who went to federal prison in 1994 for a $49-million New York mortgage fraud.

The bank affidavits, added to the foreclosure suits filed in Jackson County, note that each of the borrowers signed a certificate required by federal law acknowledging that it is a criminal act to provide false information on a mortgage loan application. Anyone convicted of violating the law can be sentenced to 30 years in prison and fined up to $1-million.

Bank attorney Robert K. Imperial of Raleigh said he could not answer questions about the allegations and would not say whether bank officials have asked law enforcement to investigate. He also declined to answer questions about 10 other SunTrust loans outstanding in the same development.

All the loans involve lots in Blue Ridge Mountain Estates, a development on Big Ridge, a remote mountain community about 10 miles north of Cashiers. The area is a haven for Florida retirees escaping the summer.

Despite a huge downturn in the real estate market, Rabuffo is building huge luxury homes sandwiched on 1-acre lots. He acquired the land, mostly in the name of his ex-wife, Mae, often paying substantially more than it was worth and selling for even more. Some of the buyers never laid eyes on the property and say they bought after hearing about the project from Rabuffo at dinner meetings in the Tampa Bay area.

The 14 borrowers — nine from Florida, five from Pennsylvania — each borrowed $1.5-million to finance construction of houses in the development. The 14 borrowers owe a total of $8.5-million, money distributed by SunTrust for construction.

Jackson County Superior Court Clerk Ann Milton has approved the sale of the lots at public auction.

John Pavey, a Sylva attorney who has handled most of the paperwork for Rabuffo, represented 13 of the lot owners at a hearing before Milton on Monday. He said that the SunTrust allegations are untrue and that there is no debt to be paid at this time. "The fact that they can't verify the income doesn't mean they don't make it.''

The only one of the 14 that Pavey did not represent is Yolanda Serrano of Rockledge. She is in the Brevard County Jail, accused of stealing $12.5-million from her employer, Southeast Petroleum Distributors.

SunTrust investigators say Serrano claimed monthly income of $67,000 and said she was the owner of Southeast Petro. The foreclosure suit was filed against an unimproved, 1.63-acre tract Serrano purchased in 2005 and does not mention six other lots and two partially constructed houses she owns in the same development.

Serrano has signed over her Florida property, including a multimillion-dollar estate in Rockledge, to the owners of Southeast Petro.

Five of the loans were made to Tampa Bay area residents:

• Natalie Boutros, 29, of Lutz, an employee of Crenshaw Enterprises, a business that operates out of a UPS mail drop office in Tampa. Owned by several members of the Boutros family, the business operates a pornographic Web site. Boutros is accused of stating her income at $29,113 a month. She said she was an accountant at a CPA firm. SunTrust investigators say her income at the family-owned business was $6,716 a month.

• Donald D. Busby Jr., 42, of Tampa, a mechanical engineer at Baxter Health Care in Largo, claimed a monthly income of $27,000 when it was actually $5,200 a month, according to SunTrust investigators. Busby previously told the St. Petersburg Times he bought four half-acre lots for $1.2-million without seeing the property. He declined to comment on the SunTrust accusations this week.

• Jeffrey A. Sykes, 37, of Dunedin listed his monthly income at $29,000 at Citco Technology Management. SunTrust investigators determined his income was actually $8,500 a month but said he has changed jobs and now says he makes about $5,750 a month.

• Kelly M. Baker, 40, and Michael T. Baker, 41, of Land O'Lakes claimed joint monthly income of $35,000 from jobs at James A. Haley VA Medical Center in Tampa. SunTrust investigators found that Mrs. Baker earns $4,484 a month as a nurse. Mr. Baker works as a physician's assistant at the same hospital.

• Deanna Davis, 40, of Tampa listed a monthly income of $30,325 as a self-employed dietitian at Bay Nutrition Counseling. SunTrust investigators found she earns $6,300 a month.

Two loans were made to men who said they worked for Tampa Bay area corporations owned by Ray Olivier, an engineer from Land O'Lakes who is directing construction work at the North Carolina development.

• Guy Barmoha, 36, of Plantation claimed monthly income of $24,000 as a supervisor for Calcour Development. SunTrust investigators determined he earns $2,931 a month as a schoolteacher. Calcour is an inactive Florida corporation formed by Olivier in 2005.

• Kennard M. Davis, 71, formerly of Tampa and now a resident of Aventura, claimed monthly income of $25,000 as director of sales, engineering and marketing for Avant Garde Engineering, another inactive corporation that lists Olivier as president. SunTrust investigators say Davis is a retired schoolteacher whose only income is $1,445 in Social Security benefits.

The Times placed calls to all 14 borrowers. Several of their telephones were disconnected.

Asked about the foreclosure actions last month, Rabuffo said SunTrust is just trying to get rid of loans where borrowers owe more than the property is worth in a depressed market.

Times researcher Caryn Baird contributed to this report. Lucy Morgan can be reached at lmorgan@sptimes.com.