Local lawyer accused in fraud
By Ty Johnson
Published in News on July 5, 2012 1:46 PM
The North Carolina State Bar has accused another local lawyer of engaging in a scheme to defraud banks by disguising purchase transactions as refinance transactions.
Greg Riley, formerly of Orander & Riley Attorneys and Counselors at Law, is implicated in a disciplinary complaint filed by the State Bar in May. The claim alleges he knowingly participated in two fraudulent transactions concerning properties located on Claridge Nursery Road in Goldsboro and Gurley Dairy Road in Pikeville.
A disciplinary hearing on the matter has been scheduled for Oct. 11 in Raleigh.
William Orander III, Riley's law partner from April 2004 until January 2009, pleaded guilty to one count of conspiracy to commit bank fraud in 2011 in connection to claims by the State Bar that he committed 56 similar transactions between January 2004 and December 2006.
The complaint alleges Riley was aware the transactions were being made to appear as refinance loans rather than purchase loans, even claiming he signed the HUD-1 Settlement Statements for the two properties and loan documents from Southern Bank and New Century Bank. The complaint states that the offenses constitute violations of federal laws.
Riley's attorney submitted a response to the allegations June 19, denying any misrepresentation to the banks.
"Riley denies knowing that any HUD-1 settlement statements prepared by Orander were false or fraudulent," the statement, filed by his attorney, reads.
The statement does admit that Riley signed the closing documents on the properties presented to him by Orander, adding that "Riley did not read them first and did not intend to disguise anything."
In the statement, Riley explains that he and his neighbor James Greene formed a company called 581 Properties to purchase, rehabilitate and sell the house at 1530 Claridge Nursery Road. The home was purchased in August 2005 with an interest-only loan from Southern Bank for $64,300.
Riley and Greene rehabilitated the house, sold it and repaid the loan.
In September 2006, the company purchased property at 886 Gurley Dairy Road with the intent of renovating and selling the home. The loan from New Century Bank was for $110,000 and was repaid, the statement claimed.
His response takes issue with the complaint's wording of federal law, which claims it is a violation for a person to make a false statement to an Federal Deposit Insurance Corp. institution for the purpose of influencing the institution's action.
The response calls the complaint an inaccurate statement of law due to the omission of the word "knowingly" from the accusation, although the following paragraph claims "Riley knowingly made false statements" to those institutions.
His response flatly denies that paragraph of accusations along with any other claims of wrongdoing.
It also notes that the statute of limitations has run out on the Claridge Nursery Road closing since the alleged misrepresentations are more than six years old.
The defense asks that the complaint be dismissed.
Riley's former law partner, Orander, pleaded guilty to conspiracy to commit bank fraud in June 2010 following the revocation of his law license and was sentenced in October 2011 to 42 months in prison and five years of supervised release.
He, Mark Webb, a former loan officer at Southern Bank and New Century Bank, and Harold Overby were ordered to make a combined payment of more than $1 million to Southern Bank, and he and Webb were ordered to pay an additional $709,990 in restitution to New Century Bank.
Orander is being held at the federal correctional institution in southern West Virginia.