“Village of Penland” real-estate scheme examined by Wall Street Journal

“Village of Penland” real-estate scheme examined by Wall Street Journal-attachment0

The Wall Street Journal has highlighted the ill fate of a plan by Spruce Pine real-estate developer Tony Porter and others at his company, Peerless Real Estate Services Inc., for a project near the Penland School of Crafts in Mitchell County. The Village of Penland development was supposed to provide housing and work spaces for artists, who could then cater to baby boomers and retirees flocking to the area. Porter, according to the Journal, promised to arrange loans of as much as $2 million to investors in his plan to take 1,200 acres of land and subdivide it into 2,000 lots. Now Porter, Peerless and a number of associates are under federal and state investigation, and investors who bought lots for as much as $125,000 have been told by appraisers their actual worth is no more than $20,000.

The complicated scheme, which allegedly involved a number of Spruce Pine development companies and several lenders in the Southeast, was halted in June by N.C. Attorney General Roy Cooper. Cooper, who won a court order to stop the venture, alleged there was a pattern of deceptive business practices, artificial inflation of land value, and submission of multiple applications for loans secured by the same property. Cooper charges that the developers received more than $100 million in loan proceeds by marketing to consumer investors.

“I feel like an idiot now,” says Cary resident Henry Gerrits, who reportedly worked with Porter to borrow $375,000 and, in turn, invest that sum in the purchase of four Penland lots. Porter, through his lawyer, Douglas Kingsbery, disputes the allegations in the suit.

Nelda Holder, news and opinion editor

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