CHARLOTTE (AP) — A key figure in one of the largest fraud cases in North Carolina history has pleaded guilty in connection with the $100 million real estate scam.
Randy Carpenter pleaded guilty in U.S. District Court in Charlotte last week to two counts of making false statements on tax returns in 2005 and 2007.
The 55-year-old former appraiser and attorney from Spruce Pine faces a maximum of six years in prison and a $250,000 fine. A sentencing date is pending.
His attorney, Kevin Tate, declined to talk about the case
Carpenter is the sixth person to plead guilty in connection with the bogus development called the Village of Penland.
The scam came to light in 2007 when state Attorney General Roy Cooper shuttered the project, citing fraudulent business practices.
The project began in 2002 when developer Tony Porter recruited Frank Amelung and his brother, Richard, as partners in the project, envisioned as a sprawling complex with luxury homes and wide streets with shops and boutiques set in the Blue Ridge Mountains.
The Amelungs, who owned a Florida manufacturing business, wanted to get into real estate development. They set up a company and bought 1,200 acres in Mitchell County, which they subdivided into more than 2,000 lots to create Penland.
They also devised a complicated scheme to attract investors to raise money for the development, according to federal documents and interviews.
Investors were told that they could borrow money from banks for the lots and that the company created to oversee the project would repay their loans. Each lot cost about $125,000. Porter and the others said the money would be used to develop Penland. In return, investors would receive money — at least 10 percent of the loan — at closing, and more money was promised once the lots were sold.
But investigators say the scam was a classic Ponzi scheme — in which money from new investors is used to pay high returns to earlier investors. They say the lots were inflated and that the developers diverted the money to other projects, including a spa in Brazil.
Carpenter was the engineer and surveyor of the project. The indictment said he had closed over 300 residential real estate loans to individuals secured by Penland lots. Over the course of the scam, Carpenter received $2 million in fees related to Penland transactions, but he didn’t report all of the earnings on his tax returns.
Several of the people who pleaded guilty and were sentenced to prison, including Porter, were scheduled to testify against Carpenter.