McMahan sentenced to 6 1/2 years

William T. McMahan, the instigator of a multi-million dollar mortgage fraud scheme in Bedford County, will serve six and a half years in federal prison, a judge in Chattanooga ruled on Monday.

McMahan was ordered to pay over $2.4 million dollars in restitution, will have to serve three years of supervised probation, and must participate in 500 hours of substance abuse treatment.

He is currently free on bond and will surrender himself on Wednesday, Jan. 6, 2010.

McMahan, along with Roger Ritch, Carrie Snow and Jonathan Henderson, was charged in May with bank fraud and money laundering in a scheme involving hundreds of homes in Shelbyville. Bradley Aydelott was indicted on the same charges in July.

All have pleaded guilty to counts one and four of the federal indictment, which states that they obtained financing under false pretenses and falsely represented the employment status and income of borrowers.

The Bedford County Sheriff's Department says the scheme involved the sale of houses by Ritch's company totalling approximately $30 million, and foreclosure on the fraudulent loans has resulted in a loss to lenders totaling approximately $2.4 million.

Restitution owed

United States District Court Judge Harry S. Mattice, Jr. sentenced McMahan to serve 78 months on both counts one and four, with the sentences to run concurrently. Mattice also ruled that the three years of supervised probation on counts one and four would run concurrently as well.

McMahan will also have to pay a total of $2,420,656 restitution to payees listed on his judgment, which was not available at press time. A special assessment of $200 was also ordered, but a fine was waived due to McMahan's inability to pay.

Assistant Federal Defender Anthony Martinez asked Judge Mattice last week for a lower sentence for McMahan than the effective guidelines range of 78 to 97 months of incarceration.

Martinez said that McMahan "provided agents with an exceptional amount of information" in the fraud case and "provided extensive information on how the scheme worked and who was involved in what aspects."

"As soon as Mr. McMahan was caught, he admitted his crime and cooperated with questions and requests for information," Martinez wrote. "It is respectfully suggested that this Court should consider the extent of the information Mr. McMahan supplied to the government when imposing a sentence."

However, on Monday, Judge Mattice denied the defense motion for a non-guideline sentence.

Prior conviction

U.S. Attorney James R. Dedrick told Judge Mattice in the government's response to the lower sentence request that McMahan "has a prior conviction for bank fraud."

According to FBI documents, McMahan told Ritch in late 2004 or early 2005 that he had served time in a federal prison camp in Marion, Ill., for submitting false invoices on HUD houses.

Dedrick stated that McMahan "has already been given a second chance," that he only received a sentence of five months in prison "and also was granted an early termination of supervised release."

"That fact alone takes him out of the heartland of white collar defendants," Dedrick wrote.

Also, Dedrick told the federal judge that McMahan was the instigator of the offense and "was clearly the driving force behind this scheme, its organizer and leader."

Dedrick also charged that McMahan instigated a "scheme within a scheme" when he suggested to codefendant Carrie Snow that they cause some of the home buyers to unknowingly borrow more money than the purchase price of the home in order to get more cash from the lender.

"This defrauded borrowers who could not afford the house in any event by causing them to borrow more money than they needed to buy the house," Dedrick explained. "Ultimately, these people lost their houses and the mortgage companies were stuck with losses."

The U.S. Attorney also told Judge Mattice that the Bedford County scheme McMahan was involved in "was one of many similar ones that have devastated our economy."

"This is a nationwide problem and Mr. McMahan is responsible for his share," Dedrick wrote. "Rome was not built in a day, but brick by brick. McMahan contributed more than a few bricks to this crisis."

Dedrick also said that the guideline sentence "should be the rule, not the exception," adding that "if defendants like McMahan do not get a guideline sentence, then no one should."

Also, while McMahan cooperated in the case, "he did not provide information that was not otherwise available," Dedrick wrote, saying that he should be given a sentence above the federal guidelines.

"A stiff sentence is necessary to punish this defendant and to deter others," Dedrick said. "The defendant's characteristics and the nature and circumstances of the offense likewise compel a harsh sentence."