People who purchased land more than a decade ago on a Monroe County mountaintop aren't surprised, their lawyer says, that the man who was supposed to develop that land pleaded guilty to a federal crime.
What is surprising, said Monroe County lawyer John Bryan, is that developer Daniel Berg hasn't been charged by federal prosecutors with lying to the people who bought the land. Many of those people claim in a lawsuit that Berg lured them to purchase overpriced property that he had promised to turn into a multi-million-dollar housing subdivision, but never did.
"My clients were surprised," Bryan said Friday. Surprised because they aren't considered the victims in the federal case against Berg, he said.
Bryan said he and his clients spent a lot of time working with federal authorities during their investigation into the mountaintop development.
"We were told there was going to be a prosecution and we spent years working with federal investigators, doing victim interviews and showing how they were financially impacted by the fraud," he said.
Bryan represents 33 plaintiffs in a lawsuit filed in 2009 in Monroe County Circuit Court who purchased property on the mountain and allege a former United Bank vice president worked to inflate appraisals of the property. The lawsuit also claims United Bank knew of the scheme. The bank has denied the allegations, according to court documents.
A Monroe County judge ruled that the statute of limitations had expired and threw out the case, but the West Virginia Supreme Court reinstated it last year. The case was sent back to Monroe County where litigation is ongoing.
Berg, 60, who now lives in San Francisco, was charged with and admitted earlier this month in federal court in Charleston to defrauding United Bank.
The charge was filed against Berg in 2014 in the form of an information, which can't be filed without a defendant's consent and usually signals a defendant has agreed to cooperate with prosecutors. Former assistant U.S. Attorney Thomas Ryan left the Department of Justice for private practice not long after filing the charge against Berg. Assistant U.S. Attorney Larry Ellis took over the prosecution of Berg.
Berg pleaded guilty July 14 to making a false statement to a financial institution. The charge carries a statutory maximum 30-year prison sentence and a $1 million fine.
Berg admitted that in April 2005 he submitted a construction loan application to United Bank in Fayetteville for the purpose of building a home on one of the lots on the mountain property.
Berg filed to be reimbursed for more than $68,000 in construction expenses, he admitted, and United Bank deposited the funds into his company's construction control checking account. Berg wrote a check in 2005 for about $38,000 of that money to "Known Person One," federal court documents state. Those funds were used for personal expenses, unrelated to the construction of the home on Walnut Ridge.
The lawsuit claims Berg's name is actually Daniel Schonberger, but that after a car accident he couldn't remember his real name and social security number.
Berg left Nevada after his contractor's license was revoked in that state and traveled the country allegedly looking for a piece of property to run a real estate or development scam, the lawsuit alleges.
He stopped in West Virginia in 2004, where he met Jonathan Halperin, a Washington D.C. trial lawyer. The two quickly became partners and formed Mountain America LLC, which was to be called "Walnut Springs Mountain Reserve." The company would become a high-end rural residential vacation home development, the complaint states.
Halperin agreed to allow Berg to use his house as collateral on a business loan, according to the lawsuit. But most banks and their loan officers declined to finance or be involved in their project - until they met Roy Leon Cooper, vice president of the Fayetteville branch of United Bank, according to the lawsuit.
Cooper, of Hico, is serving time in federal prison on charges in an unrelated matter. Cooper and Donald R. Carter II, of Poca, were sentenced in 2011 to spend 51 months in federal prison in connection to a bank fraud conspiracy.
Both men pleaded guilty to charges of bank fraud and tax evasion after an investigation revealed that in 2005, Carter purchased 23 undeveloped lots in a subdivision in Lewisburg.
Carter sought financing from United Bank to build several residential homes simultaneously, but couldn't obtain multiple construction loans in his own name. Instead, Carter enlisted friends and family to sign construction loan applications in their names to circumvent the bank's lending limits.
A legal battle erupted in 2005 between Berg and Halperin, which eventually ended the plans for the mountaintop development.
Halperin accused Berg of misdeeds ranging from wrecking a $2 million deal to buy a second mountaintop in Greenbrier County, to buying underwear and foot powder on Halperin's personal American Express card.
Berg, in return, accused Halperin of, among other things, plotting to shoot him, abusing drugs and defamation.
Berg will be sentenced Nov. 8 by Senior U.S. District Judge David Faber.
Reach Kate White at kate.white@wvgazettemail.com, 304-348-1723 or follow @KateLWhite on Twitter.