Lawyer: $1M too much blamed on Ritch

The attorney for a home builder who has pleaded guilty to participating in a multi-million dollar mortgage fraud scheme claims that losses attributed to his client have been miscalculated by over a million dollars.

Roger Ritch is scheduled to be sentenced on Feb. 8 at 1 p.m. in Chattanooga before U.S. District Judge Harry S. Mattice Jr. for his involvement in a scheme which resulted in 61 Shelbyville residents losing their homes through foreclosure and lenders suffering significant losses.

Last month Ritch's attorney, John Norton, submitted a motion requesting a lower sentence from Mattice, claiming that Ritch was a victim of his co-conspirators and that his participation in the scheme was a result of a desire to help people less fortunate than himself to own a home.

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

Norton claimed in documents filed in federal court last Friday that the calculation of losses by the government in the case "presented an overevaluation of the amount of loss" that should be attributed to Ritch.

Miscalculations

In court filings made before Christmas, Norton claimed that the loss had been miscalculated by $427,264, noting that the government's figures did not provide pre-foreclosure information "that may have also affected the actual losses suffered by the mortgage companies."

However, additional figures listed by Norton put these supposed miscalculations to a little over $1 million.

Norton points out that the indictment in the mortgage fraud case refers to a time frame from about January 2004, continuing until at least December 2006 -- the time period which Norton said that calculations of losses "should be confined."

A list provided in the documents submitted to the court Friday claims that seven properties and the associated losses totalling $143,459 occurred in 2003 and should not be considered in the calculation of the losses.

Norton also states that other calculations, which Norton describes as "related party sales," involve Henderson, Aydelott and two other individuals -- Molly Worrall, described as the girlfriend of McMahan, and William J. Dotson.

Ritch's lawyer claims that the four, "together with an individual named Mark Charlton," bought property from American Value Homes, Ritch's company, telling Ritch that "they were purchasing the properties to be placed in service by the purchasers as 'rental' units."

Ritch believed that each of them "had the financial strength to make such purchases and did not participate in any aspect of obtaining the financing for those purchases," Norton says.

However, unknown to Ritch, McMahan and Carrie Snow, identified by her middle name of Galvin in court documents, "had devised a scheme" whereby Snow "would be paid $2,000 per purchase in return for falsifying HUD filings showing that the properties were to be 'owner occupied.'"

"Thereafter, Henderson, Worrall, Dotson, Aydelott and Charlton entered into their own 'lease/purchase' arrangements with unsuspecting 'buyers', all the while failing or refusing to satisfy the mortgages relating to those properties," Norton wrote.

Afterward, the "buyers" were notified by the mortgage companies of the five that the homes were being foreclosed on, "ultimately resulting in those 'buyers' losing all of their investments," the documents said.

Norton claims that Ritch had no part in those activities and all were carried out in the names of the five individuals independently. The losses attributed to this scheme totals $323,383 for 10 homes and should not be attributed to Ritch, Norton said.

Other reasons for foreclosures

Ritch's attorney also lists a number of "other instances of miscalculation" totaling $352,896. Norton says one property appears as listed twice in the loss calculations, one person burned down their own residence and was jailed for it, and other persons went through divorces, passed away or lost their jobs, which resulted in foreclosures.

Another instance of miscalculation totalling $115,250 comes from a list of four people who Henderson unnecessarily falsified employment information for due to the buyers' "having either stable and gainful employment or excellent credit scores."

Norton also claims there were several other property owners with stable jobs who "unexplainably went into foreclosure or had some situation in

their lives that produced an inability to service the mortgage," which Norton says should not be attributed to Ritch, with those losses totalling $96,204.

Ritch's attorney says his client has no ability to place a precise figure on the total losses generated by the conduct of McMahan and Snow in the secondary conspiracy, but that these figures "should be strongly considered in the final differential loss calculation determined by the Court."

McMahan was sentenced last November 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 month and must pay $254,322 in restitution.

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