Government drops criminal case against
Mike Ross
Josh Flory knoxnews.com
A federal judge on Thursday dismissed a criminal case against the Maryville developer, who in November had been indicted on charges of mail fraud, wire fraud and money laundering.
Earlier in the day, Assistant U.S. Attorney John MacCoon had filed a brief motion in U.S. District Court in Chattanooga, on behalf of U.S. Attorney William Killian.
The motion said “new exculpatory evidence has been developed and provided by the defense that undermines the accuracy of the current indictment in this case.”
It did not give further details, but said defense counsel had indicated agreement with the motion.
An order from U.S. District Judge Harry Mattice Jr. granted the motion, and the case was dismissed.
Chattanooga attorney Lee Davis, who represents Ross, said they appreciated the willingness of the U.S. attorney’s office to “go through what are complicated financial transactions, and their willingness to consider this case from all sides before proceeding with what would have been an extremely long, difficult and expensive trial.”
Davis cited the real estate collapse of 2008, adding that “many of the problems that are complained about in the initial indictment are the result of those difficult economic times, and not ... any criminal intent of Mr. Ross.”
The Nov. 27 indictment had alleged that Ross collected money from property buyers who were told it would be used to construct a clubhouse, golf course and other amenities to be used by property owners at Rarity Club, a waterfront community in Marion County.
It had further alleged that buyers were told the money would be deposited into a segregated account. Instead, authorities alleged, Ross removed those funds from the initial account “for use in other real estate ventures,” contrary to what buyers were promised.
The dismissal marks a huge victory for a developer who has been besieged by legal and financial woes in recent years.
During the 2000s, Ross built a reputation as one of East Tennessee’s most successful developers, as his Rarity brand launched luxury residential communities from Marion County to Campbell County.
His portfolio was battered by the real estate downturn, though, and since then he has faced a wave of lawsuits and foreclosures.
GreenBank eventually took back most of Rarity Club after foreclosing on the property.
The same bank acquired Rarity Mountain — an unfinished golf community near Jellico, Tenn., where the state had built a $12.4 million Interstate 75 interchange — at a separate foreclosure auction.
In 2009, former business partner Robert Stooksbury sued Ross and several other defendants in connection with Rarity Pointe, a waterfront golf community in Loudon County.
Among other things, that suit alleged that the defendants diverted large portions of the capital from Rarity Pointe and other projects for their personal use and that Ross and other principals repeatedly made false statements about the defendants’ intentions to spend money on amenities at various Rarity developments.
Ross and other defendants denied the allegations, but in 2012 a default judgment was entered in the case after they failed to adequately respond to discovery requests.
A jury subsequently awarded Stooksbury $14.8 million in compensatory damages and $15 million in punitive damages.