Federal prosecutors have blasted a recent defense motion on behalf of Roger Ritch, asking for a harsh sentence for the home builder and calling Ritch's stated motives for his involvement in the multi-million dollar mortgage fraud scheme "ludicrous" and "laughable."
Ritch is scheduled to be sentenced next Monday 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.
Ritch, along with Carrie Snow, William T. McMahan and Jonathan Henderson, was charged last May with bank fraud and money laundering in the 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.
John Norton, Ritch's attorney, had 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.
In his most recent filing, Norton claimed 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, asking for a sentence of no more that 51 months for Ritch.
In a response by United States Attorney James R. Dedrick and Assistant United States Attorney Gary S. Humble, the pair "vehemently objects to Ritch's attack on the loss calculation in this case."
Federal prosecutors state that Ritch admitted when he entered his guilty plea that the loss was $2.4 million and, therefore, he is "estopped by this judicial admission to challenge the loss figure."
"This matter was settled at that point and it has been a waste of the Court's and government's resources to conduct a further review of all of these transactions," the motion reads, adding that the attack on the loss figure raises the issue of whether Ritch "has accepted responsibility for his offense and his role in it."
"This is especially true in light of his ludicrous, if not laughable, statement that 'his initial involvement in the plan was based on a genuine desire to help persons less fortunate than himself,'" the government's attorneys say.
Prosecutors then took Ritch to task for his involvement in the scheme, saying that the obvious reason he participated "in this elaborate scheme was that he had a large inventory of houses that he could not legitimately sell at a profit."
"He personally benefitted from the sale of each and every house," the motion reads. "He preyed upon people desperate to own their own home, many of whom could not speak English fluently."
Federal prosecutors also claim that Ritch frequently sold houses with poor quality building materials at inflated prices and that many of those who bought the homes ultimately lost them because they could not afford them.
"Of course, it is very telling that 95% of the 95 homes, that is almost 90 homes, went into foreclosure," the motion states.
However, the government rechecked their figures and concluded that the loss figure is $2,258,066, adding that the houses sold by Ritch and financed through McMahan were fraudulently obtained through false statements relating to the creditworthiness of the purchasers.
This includes loans obtained in 2003, before the date charged in the indictment, which prosecutors state are "properly included" in the case "as relevant conduct."
"Ritch had personal knowledge that there was fraud in the applications of each of the 95 houses, even those where McMahan borrowed more than the actual sales price to split the overage with Snow," prosecutors state.
Ritch may have not known about the overage, prosecutors say, but he knew there was fraud in the application.
"It is no defense to claim that the related party sales and the loans subject to the secondary conspiracy were not part of the scheme just because the co-defendants were also cheating Ritch. He benefitted."
Dedrick and Humble state that Ritch's claim he had nothing to do with some of the foreclosures "misses the mark. All of the loans were fraudulently obtained."
The prosecutors also state that Ritch's remaining arguments "regarding double counting or miscalculation have been checked and found to be inaccurate," adding that "the loss is $2.4 million as agreed to by the defendant at his rearraignment."
"With respect to defendant's relative culpability, he is only slightly less culpable than McMahan. Without Ritch, there would have been no conspiracy. He was also the main beneficiary."
Dedrick and Humble urged the court to impose a harsh sentence, saying the punishment should reflect Ritch's "substantial culpability in this case and the fact that he was the conspiracy's primary beneficiary."
The sentence against Ritch "should take into account the harm caused to individuals who were induced to buy houses they could not afford and ultimately lost."
"It should further take into account the adverse affect on the real estate market in Bedford County caused by this defendant," Dedrick and Humble said.
Prosecutors also stated that Judge Mattice should consider denying Ritch's acceptance of responsibility in the case "based upon his assertion that his motivation for committing the offense was to help others.
"That sort of delusion clearly suggests the defendant is not fully and completely admitting his guilt," prosecutors say.
"If the defendant were to lose his 3 points for acceptance, then his guideline range would be 70-87 (months). A sentence in that range would be appropriate under all of the circumstances of this case."
They conclude by saying that such a harsh sentence would "send a message of general deterrence" and reflect Ritch's contribution to the national mortgage fraud crisis.
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.
Aydelott's sentencing has been reset for March 8.