Lawyer says Ritch was a victim

The attorney for a home builder who pleaded guilty to his role in a mortgage fraud scheme in Bedford County is asking a federal judge for a lower sentence, stating his client was a victim of his co-conspirators.

Roger Ritch is scheduled to be sentenced on Jan. 4 for his participation in a multi-million dollar mortgage fraud scheme which resulted in 61 Shelbyville residents losing through foreclosure and lenders suffering significant losses.

Ritch, along with Carrie Snow, William T. McMahan 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, stating that they obtained financing under false pretenses and falsely represented the employment status and income of borrowers.

McMahan was sentenced last month to six and a half years in prison and was ordered to pay over $2.4 million in restitution. Snow received a 27-month sentence, and must pay $911,478 in restitution and Henderson received a 20-month sentence last week and must pay $254,322 in restitution.

After serving their federal sentences, the three will be under three years of supervised probation.

Not his idea

In documents filed in federal court before Christmas, attorney John Norton argued that Ritch should receive a lower sentence that the federal guideline range of a minimum of 51 months.

In a one-paragraph response, Assistant United States Attorney Gary Humble opposed the motion, stating that Ritch "was the major beneficiary in the scheme."

"Unless the Court believes as a policy matter that the guidelines for white collar crime are too high, then a guideline sentence is appropriate," Humble wrote.

Norton wrote that the plan to sell houses that Ritch's business, American Value Homes, had in inventory to those who might otherwise be uncreditworthy purchasers, was the idea of McMahan, not Ritch.

Ritch's attorney points out that the government has conceded as much by describing McMahan as "the instigator of this offense."

"McMahan was clearly the driving force behind this scheme, its organizer and leader," federal prosecutors stated in documents filed in November.

Norton says that Ritch accepts his responsibility for his role, but says that Ritch "was not initially motivated by bad intentions, but, rather, saw ... McMahan's plan both as a method to sell his accumulated inventory and as an opportunity to help individuals, who might not be able to afford a home, to actually buy one."

"This belief, of course, was driven, in part, by real-estate market factors then prevalent in Bedford County, Tennessee, which gave, at the time, every indication that the homes that were being bought would appreciate, quickly and simply, thereby enabling buyers either to later refinance their homes or to sell their homes at a profit above the prices paid for the homes," Norton asserted.

However, Norton admits that Ritch "was paying concessions above the maximum allowed either by Tennessee real estate law or by the Real Estate Settlement Purchasers Act ("RESPA"), but ... Ritch genuinely believed, initially, that these concessions were for the good of the buyers in the long term to enable those buyers to become actual homeowners."

Ritch also "candidly acknowledged that he later knowingly became so deeply involved in ... McMahan's plan and that his housing inventory was turning over so rapidly that he willingly continued with the plan for the balance of the period of time ..." Norton stated.

Norton said that Ritch "became a willing participant" in the scheme and that he turned a blind eye "when it became grossly apparent that the actions and conduct of all defendants had progressed from that of a 'stratagem' to a full-blown 'scheme'".

Also a victim

Ritch's motion claims that market factors "increased the total amounts of the losses suffered by the mortgage companies involved" and instead of becoming more valuable, the homes "decreased in value, swiftly and significantly, making it impossible for the borrowers either to refinance their homes or to sell them."

But while Ritch admits being a co-conspirator with the others indicted in the scheme, "he also became a victim, himself, of additional criminal behavior by Defendants McMahan and Snow, with Defendant Aydelott's assistance," Norton wrote.

This refers to a "secondary conspiracy" devised "to borrow monies above and beyond the actual sales prices of homes contained within the inventory of American Value Homes and sold by Defendant Ritch."

According to government documents, McMahan instigated "the scheme within a scheme when he suggested to Snow that they cause some purchasers unknowingly to borrow more money than the purchase price in order to get more cash from the lender."

Ritch claims he had no knowledge of this conduct and did not participate in it. He also claims that prosecutors "has not established what portion of the total claimed loss of $2,420,656 was related to those additional sums that arose out of the independent fraudulent actions of ... McMahan and Snow.

Norton said that these sums "should not be attributed to Defendant Ritch."

Pointing out the behavior of McMahan and Snow, Norton asks for an appropriate sentence for his client, stating "that many of the losses that resulted from the actions and conduct of Defendant Ritch were beyond his control, and were not foreseeable at the time of his conduct."

Ritch has also recalculated the losses claimed by the government and suggests there is a disparity of around $100,000, adding there are at least eight properties "included in the Government's listings whose foreclosures were not completed and no figures were provided."

Wanted to help

Norton states that Ritch's participation in the scheme "was based on a genuine desire to help persons less fortunate than himself."

"However, once the merry-go-round of criminal behavior became so pervasive and, quite frankly, so lucrative, instead of ending the ride, he continued until the point where an investigation of his activities and those of others was commenced by law enforcement," Norton wrote.

Norton said that once Ritch became aware of the investigation, "he willingly stepped forward" and pled guilty.

The judge is also asked to consider "substantial numbers of citizens" who wrote letters of support for Ritch. Norton submitted a total of 104 letters last month that "spoke highly of him and his generosity."

"In fact, several of the supportive letters speak to his having made a mistake that was out of character for his regular behavior patterns," Norton wrote.

Norton also wrote that a review of Ritch's pre-sentence report "clearly shows that his life, even beginning as early as six years of age, has been replete with abuse, untimely death and gross hardship, from all of which he has, save for his instant conduct, lead an exemplary, community-minded and productive life."

"... (H)e stands ready to provide immediate restitution, to the extent of his present financial ability, in an effort to make right the wrongs he has caused. He also stands ready to accept whatever punishment this Court finds proper, after due consideration has been given to all of the circumstances attendant to this case," Norton wrote.