Thirteen property owners accused of falsifying their incomes to obtain home construction loans in the controversial Big Ridge development outside Cashiers lost an appeal in Jackson County Superior Court on Friday.

Each of the property owners lied about their income to get a $1.5 million construction loan from SunTrust bank, according to court records. By inflating their incomes on their loan applications, it constituted a default on their mortgages, entitling SunTrust to proceed with foreclosures, Superior Court Judge James Downs ruled.

The bank was also concerned that progress on the construction of the homes was not moving along adequately and even alluded that the property owners were using the money from their construction loans for other things. Some houses are not even underway yet.

While the property owners have kept up with the payments on their loans to date, the bank expressed concerned they could fall behind in the future. If so, the bank would have to foreclose on an incomplete house worth less than what it loaned out, prompting the bank to make its move now.

Jay Pavey, a Sylva attorney representing the 13 property owners, said he does not know if the case will be appealed again to the North Carolina Court of Appeals.

New York City attorney Gavin Scotti also represented the property owners. His argument hinged on the fact that the bank gave his clients non-income verification loans. Non-income verification loans allow someone to obtain a loan without having to show proof of income.

Scotti said it is “deceptive” for the bank to sell the borrowers’ non-income verification loans and then check their incomes.

Moreover, he said the bank was unable to prove that the borrowers did not make the money they said they made. He said the bank was simply unable to verify how much they made.

Scotti also said the borrowers may have other sources of income, such as assets, that they did not divulge. And the borrowers were making all the interest payments on the loans, he said.

The bank countered that even though the loans were non-income verification loans, it still had a right to verify the incomes.

“The borrower has to be truthful on the application, and they were not,” Cary Mudge, vice president of SunTrust’s Special Assets Division testified. “I believe they committed fraud.”

Several months after the loans were issued Mudge sent a letter to the 13 borrowers in November 2007 asking them to verify their incomes because the discrepancies were found, but none of them responded.

Attorney for SunTrust Robert Imperial of Raleigh told the court it is “ludicrous” for the bank to continue funding the loans when the property owners don’t make enough money to pay them off.

“I think it’s time for the court to end this charade,” Imperial said.

Mudge testified that the funds were to be used for construction purposes only, and attorney Imperial went as far as to say that some of the money from the loans went into the borrowers’ pockets.

Scotti said there is no proof of that.

In some cases the borrowers had a joint bank account with Rabuffo.

Imperial said that none of the homes have been completed and some not even started.

Who’s in charge?

Rabuffo appears to be distancing himself from the project, and some are saying he is no longer involved in the development at all.

According to Pavey, Rabuffo is the “project manager” for the development.

Ray Olivier, who says he is overseeing the project as president of D&R Mountain Contractors of Glenville, says Rabuffo is not the developer.

“He’s (Rabuffo) doing nothing on it anymore,” Olivier said.

“He used to be an advisor. He’s got nothing to do with the project at this point.”

Pavey said the developer is Rob Hampton and Rabuffo’s ex-wife Mae Rabuffo.

Olivier said the last he heard was that Hampton is a student at the University of Florida.

Rabuffo declined comment.

Another lawsuit

In another court case related to the development, Rabuffo is being sued by Mack Industries of Ohio for failing to pay for the construction of a wastewater treatment plant.

The lawsuit charges that Mack Industries entered a contract with Blue Ridge Properties and MOD Engineering “for the supply of building materials and services for the improvement of property.”

The lawsuit states that Rabuffo is the sole shareholder of Blue Ridge and MOD and that the contract was breached when payment wasn’t made.

The lawsuit states that the defendants owe the plaintiffs $308,827.

The borrowers

• Greg and Melissa Schuetz of Fort Lauderdale, Fla.:

They stated in their loan application that they had a monthly income of $25,000 a month with Greg Schuetz’s job as a civil engineer with Chapman Corp. Chapman wouldn’t identify how much Schuetz made, but a salary analysis on Salary.com indicated that civil engineers in the Fort Lauderdale area make between $51,000 and $77,000 a year. They owe SunTrust $593,953.

• Jeffrey Sykes of Dunedin, Fla.:

Sykes said he made $29,000 a month on his loan application, but the bank discovered that he made $8,500 a month. The bank contacted Sykes who said he left that job and was currently employed with Sterling Payment Technologies making $5,750 a month. He owes SunTrust $557,576.

• Dean and Christina Cummings of Jacksonville, Fla.:

Dean said he made $36,936 a month, but he actually made $6,216 a month. The Cummings also failed to insure their property or pay property taxes, each of which constitute a default on the mortgage. They owe SunTrust $708,969.

• Donald Busby Jr. of Tampa, Fla.:

Busby stated on his loan application that he made $27,000 a month when in fact he makes $5,200 a month. He owes SunTrust $557,209.

• Guy Barmoha of Plantation, Fla.

He stated he made $24,000 a month as a supervisor for general contractor Calcour Development. Barmoha actually made $2,931 as a schoolteacher. He owes SunTrust $593,445.

• Natalie Boutros of Lutz, Fla.:

She said she made $29,113 a month when in fact she made $6,716 as a general manager for Crenshaw Enterprises. In the loan application she also stated she was a licensed accountant, but the bank could not find any records that indicated she was a licensed accountant. She owes SunTrust $593,446.

• Robert and Leigh Cupelli of Sewickley, Pa.:

Robert Cupelli said he made $12,798 a month, and Leigh Cupelli said she made $20,000 a month. In fact, Mr. Cupelli made $7,095 and Mrs. Cupelli made $4,840. They owe SunTrust $603,377.

• Robert and Melissa Ronk of Pittsburgh, Pa.:

Robert Ronk said he made $30,000 a month and actually made $6,519 a month. He owes SunTrust $591,397.

• Lori Aside of Pittsburgh:

She said she made $23,66 as a senior sales manager for Century II Homes when in fact she was an office manager that made $2,396 a month. She owes SunTrust $592,033.

• Paul Mule of Pittsburgh:

He stated on his loan application that he made $27,875 as a sales team leader at The Tech when in fact he did not make that much and was an operations team leader. Mula’s employer refused to tell the bank how much he made but said it wasn’t as much as he put on his application. He owes SunTrust $592,033.

• Deanna and Curtis Davis of Tampa:

Deanna Curtis said she made $30,325 as a dietician when in fact she made $6,200. She owes SunTrust $780,141.

• Kennard Davis of Aventura, Fla.:

He said he made $125,000 a month as director of international sales/engineering/marketing for Avant Grading when he only actually made $1,445 a month from Social Security benefits. He owes SunTrust $592,524.

• Kelly and Michael Baker of Land-O-Lakes, Fla.:

Kelly Baker said she made $23,000 a month as the head Intensive Care Unit nurse for a Veterans Administration hospital, and Mr. Baker stated he made $12,000 a month at the same hospital. The bank couldn’t verify how much each one made, but a previous loan approved by the bank stated that Mrs. Baker made $9,209 a month and Mr. Baker made $6,922. They owe SunTrust $557,209.

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