Ritch sentenced to 39 months

CHATTANOOGA -- Saying he would spend the rest of his life paying back those he harmed, home developer Roger Ritch was sentenced to 39 months in federal prison on Monday.

U.S. District Judge Harry S. Mattice Jr. sentenced a tearful Ritch to the three-year, three-month term for his involvement in a scheme which resulted in 61 Shelbyville families losing their homes through foreclosure and lenders suffering significant losses.

Ritch will be required to pay $2,258,066 in restitution and, after he serves his sentence, will serve three years of supervised probation.

A total of 500 hours of drug and alcohol rehabilitation will also be required and a special assessment of $200 must be paid. Ritch will pay no fine, however, the restitution is due immediately.

Ritch is to turn himself in to federal marshals by March 10.

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.

Defense motions

During Ritch's sentencing hearing, his attorney, John Norton, raised the issue of how the losses to lenders were calculated by federal prosecutors, and was asking for a sentence less than 51 months.

Norton said there was no doubt that Ritch was part of the conspiracy, but the issue was over what losses he was directly responsible for, explaining that some of the factors, like economic conditions, were out of his control.

The attorney also said that Ritch was the only one of the five defendants who would be able to pay back the money owed to lenders and that "he wants to do it."

Norton also took issue with Ritch being responsible for money lost due to the actions of McMahan and Snow, who took part in a "secondary conspiracy" involving homes owned by Ritch, according to court documents.

Under that scheme, four individuals, including McMahan's girlfriend Molly Worrell, each allegedly bought multiple houses from Ritch, and even though they were listed as "owner occupied" on the title documents, the buyers had bought the homes as rental property.

According to court documents, McMahan and Snow came up with the scheme where Snow would be paid $2,000 per purchase in return for falsifying HUD filings showing that the properties were to be owner occupied.

Afterwards, the four individuals, John Henderson, Jeff Dotson, Mark Charlton and Worrell, entered into their own 'lease/purchase' arrangements with the unsuspecting 'buyers', while failing or refusing to satisfy the mortgages relating to those properties, resulting the buyers losing their investment in the homes.

Norton said that Ritch had no knowledge of what transpired with McMahan and Snow.

However, Judge Mattice denied Norton's motion to limit the amount of restitution owed, agreeing with Assistant United States Attorney Gary S. Humble that since the conspiracy exclusively involved Ritch's homes, that he should be responsible for all the losses.

Norton also told Mattice that Ritch was not the ringleader, had no criminal record and had 102 letters of support from members of the community, asking for a sentence lower than the federal guidelines.

"No good reason"

But Humble said that the entire reason there was a conspiracy in the first place was that Roger Ritch was desperate to get rid of his homes. Ritch knew the scheme was illegal and he was the primary beneficiary, collecting 95 percent of the profits, Humble said.

While Ritch had claimed that he would pay all the money back, Humble said that the government had not seen any of it and said that Ritch "is not going to buy his way out of this."

Humble urged Mattice not to impose a lower sentence, saying that many around the country have lost their homes through fraud of this type and added that it has led to the country's economic downturn.

However, Mattice then stated that the sentencing for Ritch would be below the federal guideline.

Humble responded that there is "no good reason to give him a break," stating that he set 90 families up for failure through the conspiracy.

The prosecutor told the judge that they see 18-year-olds that get much tougher sentencing in the federal courtroom and that white collar criminals don't get the same treatment, adding that Ritch "knew what he was doing."

Lost everything

When asked by Mattice if he wanted to say anything before passing sentencing, a weeping Ritch said that "the truth is the truth...I hurt a lot of people."

Ritch told Mattice that he had lost everything and was currently going through a divorce due to the federal charges, swearing that he would spend the rest of his life paying everyone back.

"I will make this right, this is not just talk," Ritch said. "I've done wrong and I'm sorry."

Mattice then told Ritch he would give him "a little bit of a break" by taking a year off his sentence, remarking that he is remorseful and intends to pay all of the restitution.

While the restitution will go toward the lenders that were defrauded, those who lost their investments in the homes will have to file civil suits to recover any damages, Humble said.