CASHIERS, N.C. — Federal officials have taken over the prosecution of a Brevard County woman who was among the Floridians buying land in a controversial North Carolina real estate development.
Yolanda Serrano has been in jail since April on state theft charges, accused of stealing $12.5-million from the petroleum distribution company she worked for in Melbourne.
Last month Serrano agreed to waive indictment by a federal grand jury in Orlando and to be prosecuted by a direct information, a practice that generally means a defendant has agreed to cooperate with investigators.
Brevard County investigators say Serrano has agreed to plead guilty. But Assistant U.S. Attorney Vincent Citro said there is no agreement yet.
"We are still in preliminary negotiations,'' he said.
Federal authorities took the case out of state court because it involves action in North Carolina, Florida and other places.
Investigators say Serrano siphoned $12.5-million from Southeast Petro Distributors, where she was comptroller, to her personal accounts. They believe she used some of the money to buy eight lots in the mountains of western North Carolina in an area being developed by Domenic Rabuffo.
Rabuffo is a former New York electrical contractor whose business partner, Irwin "Fat Man" Schiff, was gunned down in a 1987 mob hit at Bravo Sergio, an Italian restaurant in Manhattan.
Rabuffo and Schiff were accused of masterminding a $49-million mortgage fraud. Rabuffo pleaded guilty, entered the witness protection program for a year and served a brief prison sentence.
In 2004, Rabuffo started buying land in North Carolina, putting almost all of it in his ex-wife's name. He says he is building a first-class development, but others question what he's doing to a bucolic mountain landscape and the prices he's paying and charging for land.
Deeds recorded in the county courthouse indicate he's paid substantially more than the value for land and has sold lots for $650,000 an acre, all in the midst of a nationwide real estate meltdown. Most of the property is heavily mortgaged.
Now SunTrust, one of the major mortgage holders, has filed foreclosure suits against 14 property owners, including Serrano. SunTrust has accused the property owners of falsifying their income when they applied for mortgages. The bank says several owners, including Serrano, had joint bank accounts with Rabuffo.
SunTrust became the apparent owner of two of Serrano's lots, sold at auction at the Jackson County Courthouse last week. SunTrust submitted a $200,000 bid on the property where it holds a $1.5-million mortgage. The sale of the other 13 properties was postponed because lawyers for the property owners and Rabuffo have appealed the foreclosure order.
On Sept. 2, just three days before the auction, Serrano deeded the two lots and the six others she owned in the development over to the employer she is accused of bilking. She did not satisfy the $4.1-million in mortgages on the lots before signing over the property. It will be up to SunTrust and the other banks holding mortgages to unscramble title to the property and decide what happens to the houses she was building.
Meanwhile, work at Rabuffo's Blue Ridge Mountain Estates appears to be at a virtual standstill. Sixteen permits have been issued for the construction of houses but little work has been done since spring. Jackson County building department records indicate some of the houses have had no work done since November.
An Ohio precast concrete company that makes wastewater treatment plants has filed liens totaling almost $325,000, saying Rabuffo has failed to pay for building materials and services delivered in July and August.
Some of the people who live near the development are citing Rabuffo's bizarre land transactions in appeals filed with North Carolina tax officials.
County tax officials have denied using the Rabuffo sales prices to establish the value of neighboring land, but property owners say there is no other explanation for doubling land values in an area where the market is stagnant.
Times researcher Caryn Baird contributed to this report. Lucy Morgan can be reached at firstname.lastname@example.org.