Southern Bank has sued several people, including former commission candidate Robert Demello, alleging the bank fell victim to a mortgage fraud scheme.

Southern Bank filed suit in Richmond County Superior Court against Mr. Demello, Raymond W. and Virginia Turner and their company, MAC of CSRA Inc., and William Brent Raulerson as the appraiser for three real estate transactions.

A phone number for the Turners could not be located, and Mr. Demello did not return a message left for him.

Mr. Raulerson spoke to The Chronicle and denied knowing of any wrongdoing in the real estate transactions. He was hired by the bank, and he prepared appraisals for Southern Bank, Mr. Raulerson said.

The lawsuit, filed March 24, accuses Mr. Turner and Mr. Demello of devising straw purchases of property. The bank alleges that they falsified the real purchase prices for three mortgage loans that went into default.

Southern Bank contends that Mr. Demello was the seller in these transactions in 2005 and that Mr. Turner was the facilitator of each.

The bank also seeks a judgment finding the defendants in violation of the state's Racketeer Influenced and Corrupt Organizations Act. Such a finding would entitle the bank to collect triple damages. The bank seeks punitive damages of at least $1 million.

Specifically, the bank outlines three real estate transactions:

- The February 2005 sale of 1211 Greene St. for $272,500

- The June 2005 sale of 644 Crawford Ave. for $245,000

- The August 2005 sale of 916 Greene St. for $350,000

When the mortgages fell into default and the bank foreclosed in 2007, Southern Bank claims its reappraisal of the properties found that the value of each had been falsely inflated before the purchases.

Southern Banks alleges it was cheated out of $388,615.

Mr. Raulerson said it was unfair to compare his appraisal to ones performed years later on property that was rented by owners who made no effort to keep up the property. Also, the downturn in the real estate market has had a significant detrimental effect on property values in general, he said.

One of the properties, 1211 Greene St., was reappraised for $76,000, half the value set by the city tax assessors, Mr. Raulerson said. City property records have the property assessed at $146,276.

According to city records, Mr. Demello bought that property in 2003 for $114,000. According to city property records, Mr. Demello paid $18,500 in 2005 for the Crawford Avenue property, which he sold for $245,000, and he paid $113,127 in 2001 for 916 Greene St. and sold it four years later for $350,000.