Federal prosecutors have filed motions to enforce subpoenas against a Shelbyville business and the ex-wife of a man convicted of a massive mortgage fraud scheme here three years ago.
In an attempt to collect restitution, motions were filed late Thursday against Patricia Ritch and 1st Money Source, LLC of Shelbyville to force them to produce documents.
In 2009, Patricia's ex-husband, Roger Ritch, was sentenced to 39 months in federal prison for his involvement in a mortgage fraud scheme which resulted in 61 Shelbyville families losing their homes through foreclosure and lenders suffering significant losses.
According to documents filed in U.S. District Court in Chattanooga, Ritch was ordered to pay $2,258,066 in restitution, but only $78,026.89 has been paid through garnishment and voluntary payments - just a little over three percent of what is owed.
As part of efforts to collect the judgment debt, two subpoenas were filed against Patricia Ritch and 1st Money Source beginning in November 2011 by Assistant U.S. Attorney Suzanne H. Bauknight, with little response since, according to court filings.
"This office has no comment about this matter," Bauknight told the T-G on Friday.
Court documents state that the United States "is entitled to discover Defendant's assets and any fraudulent transfers which may be set aside for execution to satisfy the judgment."
While Bauknight wrote that she could ask a judge to hold Ms. Ritch or 1st Money Source in contempt until she complies with the subpoenas, the prosecutors ask only to enter an order requiring Ms. Ritch to respond "by a date certain," after which she could be held in contempt.
A similar motion to enforce a subpoena was also filed against Roger Ritch, requiring 1st Money Source to respond to a subpoena to produce documents served on the company "through its manager Fernando Morales."
A subpoena against the Shelbyville firm was filed on April 26, and the U.S. Marshals Service successfully served it on a second attempt by leaving it with Morales.
Morales confirmed to the T-G Friday that he gave the subpoena to Ms. Ritch, but claimed he knew nothing else about the case or documents in question.
According to records on the federal court website PACER, over the last two years a number of subpoenas have been served on a wide variety of local banks and financial institutions in relation to the case.
In May 2009, Ritch, along with Carrie Snow, William T. McMahan and Jonathan Henderson, were charged 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 2010.
All 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.
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.
Snow, Henderson and Aydelott have all served their sentences and are on probation. Ritch is incarcerated at the U.S. Penitentiary in McCreary, Ky. while McMahan is at the Federal Prison Camp in Montgomery, Ala., located on the grounds of Maxwell Air Force Base.