A bank officer testified Wednesday that had she known Southern Group was funding down payments and monthly payments for land buyers, her bank never would have approved the loans.

Lynette Price is a 35-year banking industry veteran and now is a consumer loan review analyst with North Carolina-based RBC Centura Bank.

She said the alleged scheme devised by Southern Group head Josh Dobson, 35, and assistant Paul Gott III, 40, deceived her bank and others into believing buyers had down payments and were creditworthy risks for the "lot loans" provided to buy land at The Preserve near Rising Fawn, Ga.

A former employee of the local Cornerstone Bank testified Tuesday that the bank lost $2.6 million on 19 loans for the Dade County development run by Southern Group.

Price testified in the third day of Dobson's and Gott's federal fraud trial. They are charged in a 12-count indictment that includes allegations of conspiracy, wire fraud and money laundering.

Prosecutor Perry Piper questioned Price about the details of the alleged scheme and why Southern Group's methods would cause problems for a bank.

"Why is it not acceptable for the guy who's selling the property to pay the down payment for the buyer?" Piper asked.

"He's basically just shifting the money," Price said.

"Explain what you mean by that," Piper said.

"He's saying [the property] is not worth the money, he's just inflating the value," Price said.

Price did not personally approve the loan by RBC to Dennis Sanchez but another of the company's officers did.

Dobson's attorney, Chris Townley, and Gott's attorney, John McDougal, both asked Price if there were situations in which a bank would allow developers to have a buy-back option in land they were selling.

Price said that at the five banks she'd worked with in three and a half decades, it was never the policy to allow such an option.

Townley and McDougal have staked much of their clients' defense on claims that many of the buyers and the go-betweens knew how they were supposed to pay the loans back and yet didn't follow the rules.

Prosecutors Piper and John MacCoon allege that through Southern Group, Dobson promised buyers who signed mortgages he would do the deals with no money paid on their part, only using their good credit to obtain loans.

He then would send money to their accounts or through go-betweens to pay the down payment and then his company would pay the monthly mortgage. In exchange for their signatures the buyers would get up to $20,000 at the end of the three-year deal as a sort of commission.

But after about a year the payments stopped coming, multiple buyers have testified, and they were left responsible for mortgages they didn't have the money to pay.

The trial is scheduled to resume Monday in U.S. District Judge Curtis Collier's courtroom.

Contact staff writer Todd South at or 423-757-6347. Follow him on Twitter @tsouthCTFP.