SunTrust suing investors in 2007 construction loan

SunTrust has filed suit against investors from Florida and Pennsylvania claiming that the investors made fraudulent states in regard to their income in order to obtain substantial construction loans in 2007.

The Federal Bureau of Investigation is investigating if thirteen purchasers in a prominent Jackson Country development obtained those construction loans fraudulently according to a Civil Lawsuit that has been filed. The Hampton Springs development has been accused of obtaining over twenty million dollars in loans by fraudulent means.

The purchasers according to a motion filed on November 20th have requested that the judge delay any action involving the lawsuit filed by SunTrust until 2010 and allow the investors time to deal with the pending criminal case. Michael O’Day a defense attorney for one of the defendants stated that individuals involved understand that they are material witnesses in the government’s investigation and know that they have not been ruled out as suspects in the criminal investigation.

SunTrust’s civil complaint involves a case in which the borrower obtained a loan for over one million five hundred thousand dollars to develop two lots of land. The land was approximately an acre and a half. The mortgage application stated the borrower’s month wage was twenty seven thousand dollars when in actuality the borrower wage was five thousand two hundred dollars a month. The borrower never developed the land and defaulted on the loan made by SunTrust.

Domenic Rabuffo, who is a resident of Florida and was the developer of the mountainside development in 2007 in Big Ridge, North Carolina, has sold over one hundred lots in the development. The development has seen little construction completed according to the local newspaper.

Mr. Rabuffo’s criminal background leaves little comfort for those involved in his dealings. He was arrested in 1987 on mortgage fraud charges. His business partner at the time was also suspected in the mortgage fraud scheme however authorities involved in the case believe the partner was the victim of a mob hit. The partner was shot twice in the head at an Italian restaurant located in New York City while dining. Mr. Rabuffo, at the time according to Federal authorities a government informant and was later placed into witness protection. Mr. Rabuffo was convict of the mortgage fraud and served a short prison sentence for that crime.

Mr. Rabuffo according to a Florida newspaper has denied any and all involvement in the mob and denies having any criminal record.

Defense Attorney Michael O’Day according to his motion stated in regard to the case involving the development in Hampton Springs that federal prosecutors in Florida and Pennsylvania are investigating certain individuals.

The United States Attorney in Charlotte, North Carolina would not confirm if a criminal case was under investigation involving Mr. Rabuffo or the thirteen other defendants involved.

John Pavey, the attorney who handled the investors at the time of purchase of the subdivision and who also borrowed funds for the construction stated in court documents that SunTrust in 2007 had no issues with the loans in spite of all the internal reviews processed back in 2007 and is currently requesting via subpoena his records in regard to the development.

The case is ongoing.

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