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Tuesday, Oct. 21, 2014

McMahan sentenced, Ritch set for Jan. 4 in mortgage fraud scheme

Wednesday, December 2, 2009

The instigator of a multi-million dollar fraud - conducted with a man who's owned a building supply store in Lewisburg - will serve 6-1/2 years in prison, a federal judge ruled last week.

William T. McMahan must also pay $2.4 million in restitution, serve three years on probation, and participate in 500 hours of substance abuse treatment, the federal judge ordered on Nov. 23. McMahan enters prison Jan. 6.

Another defendant in the case is to be sentenced next week. The home mortgage fraud was conducted in Shelbyville.

McMahan, Roger Ritch, Carrie Snow and Jonathan Henderson were charged several months ago with bank fraud and money laundering in a scheme involving hundreds of homes. Bradley Aydelott was indicted on the same charges in July. All admit they got financing under false pretenses and falsely stated employment and income of borrowers.

Ritch, founder of Ritch Building Supply, Rogers Road at South Ellington Parkway, is to be sentenced Jan. 4 in Chattanooga. He pleaded guilty Sept. 21 in federal court.

Sentencing for Snow is set for Monday. Federal officials say she faces "substantial jail time."

Bedford County's Sheriff says Ritch sold houses valued at nearly $30 million, and foreclosure on the fraudulent loans cost lenders nearly $2.4 million.

Federal court records in Ritch's case say the scheme to defraud homebuyers began as early as January 2004 and ended in December 2006. Ritch and McMahan agreed to qualify un-creditworthy homebuyers to get loans to sell Ritch's houses.

Sixty-one people lost their homes through foreclosure as a result of the scheme, a federal prosecutor said.

McMahan obtained mortgages for a fee and operated in the name of Mortgage Processing Services, court records say. Meanwhile, Ritch operated American Value Homes and Value Title. The title search business helped with the exchange of money and title between buyers and sellers.

Value Title previously operated as Cameron Escrow when owned by Snow, who became Ritch's employee at Value Title. McMahan employed Aydelott from January 2004 until January 2007. Henderson was employed by Focus Research Group and processed loan applications for Mortgage Processing Services.

The conspiracy was to sell houses Ritch developed which were not selling fast enough for a positive cash flow. Prosecutors said the defendants misrepresented sales prices to borrow more money than needed for the purchase. McMahan ran a credit history on the buyer and determined how large a cash payment would be necessary to boost the buyer's creditworthiness. He then had Ritch to put the money in the buyer's account and take it back out after closing.

Prosecutors say such transactions went through federally insured financial institutions in Shelbyville and elsewhere.