Asheville Airbnb fraudster sentenced to nearly 8 years for lying to banks, gun crime

ASHEVILLE - A local man who harnessed the red-hot local short-term rental market while defrauding banks and property owners to make what prosecutors said were millions in dollars in ill-gotten gains has been sentenced to nearly eight years in prison.

A federal judge handed down the sentence Dec. 14 to Shawn Thomas Johnson, 38, in U.S. District Court for the Western District of North Carolina. Johnson had pleaded guilty to the bank fraud and possession of a firearm by a felon. He is also facing a $2.8 million asset forfeiture as part of his penalty.

Judge Martin Reidinger said Johnson has the right to appeal. Johnson has already said he intends to appeal the forfeiture part of his sentence.

The harsh sentence was necessary despite Johnson having paid back the $3.5 million in fraudulent loans, Reidinger said. That is because Johnson's crimes undermined confidence in banks and the economic system, he said.

The judge also said the 92-month sentence was needed to deter Johnson and others from seeing such activity as a good way to make what prosecutors said were millions of dollars ― though Johnson said his expenses negated much of that.

"The defendant has manifested a substantial disrespect for the law," the judge said.

He noted Johnson's 2010 felony conviction for counterfeiting, a case over which Reidinger also presided and for which he said Johnson received a relatively light sentence of four months. In 2022, while out on bond awaiting the sentencing for the bank fraud and gun crime Johnson was found to have broken his release conditions by hiring a sex worker, engaging in bank fraud and selling property.

At the sentencing, Johnson said he was filled "with shame" and apologized to victims.

"I regret the methods I used to buy these properties," he said. "I'm sorry and know my best years are ahead of me."

The statutory maximum for his crimes is 40 years, though because of multiple factors Johnson was expected to be sentenced to much less time. Since his 2022 bond revocation, he has been jailed 13 months in the Transylvania County Detention Facility awaiting sentencing. He will be ordered to report to the federal Bureau of Prisons to begin serving his sentence upon designation of a federal facility.

West Asheville handyman turned felonious swindler

After his counterfeiting sentence in 2010, Johnson appeared to turn his life around, becoming known as a hard-working handyman and a celebrated entrepreneur, owning dozens of short-term vacation rentals.

But some doing business with him began to complain, saying he had bilked them out of money. In 2019, he had his real estate license permanently revoked after the N.C. Real Estate Commission determined he had kept money earned by Airbnb owners whose property he managed.

In February, Johnson lost a civil case in Buncombe County Superior Court to plaintiffs including an Olympic silver medalist over disputed land on Haywood Road in West Asheville. A judge issued a rare "gatekeeper" order preventing Johnson from filing motions, saying he had habitually abused the judicial system for years, using it to "harass" and "delay" those he opposed.

According to information contained in filed court documents and court proceedings, from 2012to 2019, Johnson executed the bank fraud scheme involving the purchase of properties to create short-term rentals in Buncombe County. Court records show that Johnson acquired the loans to buy the properties by submitting applications with false and fraudulent information, including falsely claiming the homes would be used as primary residences. He also provided false statements about his income and employment and omitted information about pending lawsuits and the source of funds used as down payments.

Contrary to claims Johnson made on the loan applications, once he purchased the properties, he used them as short-term rentals and listed them on online platforms such as Airbnb, Homeaway and VRBO.

He rented the properties knowing that local laws, ordinances and zoning regulations prohibited the use of many of these homes as short-term rentals, prosecutors said. Asheville banned "whole house" short-term rentals with few exceptions in 2018.

According to court documents, Johnson also recruited other individuals to obtain mortgage loans based on false and fraudulent information to purchase homes that he would then list as short-term rentals and share the proceeds. During the course of the scheme, Johnson and his co-conspirators closed on at least 16 loans from financial institutions totaling over $3.5 million to purchase real estate.

According to court records, in November 2021, Johnson traveled from Western North Carolina to Utah. While there, he visited a gun club where he rented a firearm and shot several boxes of ammunition he purchased from the club’s store. Because of his prior federal convictions for manufacturing and uttering counterfeit United States currency, he is prohibited from possessing a firearm or ammunition. In order to rent the gun, court documents show he lied on the gun club’s rental agreement, falsely certifying that he was not prohibited from possessing a firearm.

Pleas for lighter sentence rebuffed

At the sentencing hearing defense attorney Thomas Amburgey argued for a lighter sentence, saying despite bad decisions, including ones that "could be described as self-destructive," Johnson willingly sat down to speak with prosecutors.

"The fact that he gets his pre-trial release revoked doesn't undo all that," Amburgey said.

But Assistant U.S. Attorney Don Gast repeated the bond revocation details, saying Johnson bought a $4,000 Louis Vuitton purse as payment for a sex worker and "when the encounter did not go as he wanted," he tried to get his bookkeeper to tell the bank his credit card had been used without his permission in order to refund the money.

"Not even 24 hours had gone by since he pleaded guilty to bank fraud, and he was attempting to commit bank fraud," Gast said.

Amburgey multiple times noted that all the loans were repaid, saying the fraud did not bring financial ruin to individuals or banks.

"He didn't cause actual financial harm to these institutions," the defense attorney said.

Reidinger rebuffed that, saying banks spent a lot of resources dealing with the fraud and that they could have sought higher interest loans or given the loans to people who needed them for homes.

That sentiment was echoed by Jordan Harris, a real estate broker who worked for Johnson briefly years ago, quitting after she said she saw his "rampant fraud, bullying, abuse of the courts and blind greed."

"There are responsible short-term rental owners and then there are the 'Shawns' of the world," Harris said, "illegally obtaining loans meant for people to use to buy a primary residence. I believe this type of loan fraud is a bigger contributor to the housing issue than many realize."

Whit Riley, a local builder recognized for his historic preservation work who said he was bilked by Johnson, a former business partner, praised investigators and prosecutors involved with the case.

"While it might not bring justice for all the individuals hurt by Shawn's actions, hopefully, it will bring some closure," Riley said.

More: Asheville short-term rental use up 57% since 2019. What is city regulation process?

Buncombe may pay landlords to convert Airbnbs to affordable apartments

Joel Burgess has lived in WNC for more than 20 years, covering politics, government and other news. He's written award-winning stories on topics ranging from gerrymandering to police use of force. Got a tip? Contact Burgess at jburgess@citizentimes.com, 828-713-1095 or on Twitter @AVLreporter. Please help support this type of journalism with a subscription to the Citizen Times. 

This article originally appeared on Asheville Citizen Times: Asheville Airbnb fraudster gets 8 yrs. for lying to banks, gun crime