A man who at one time promised to bring a high-end luxury resort to Campbell County has been indicted on 28 federal counts.
Mike Ross, who was a driving force behind the Rarity properties group, is now proclaiming his innocence. The federal indictment accuses him of wire fraud and money laundering among other things.
On Nov. 27, a Chattanooga federal grand jury handed down the indictment that alleges Ross developed a scheme in order to swindle people who bought property from the Rarity group.
As the monies were collected the buyers were told the funds would be used to build clubhouses, golf courses and other amenities they could use once the items were completed. The fees Ross charged ranged from $25,000 to $75,000, according to federal court records. They also came with the promise the funds would be placed in account earmarked specifically for those facilities. However, Ross instead diverted the money into other accounts to fund more of his property ventures, court records said.
Authorities are alleging the mail fraud came into play because Ross mailed the letters to buyers promising them the money would be properly used.
Counts two through 13 allege Ross committed wire fraud. Authorities claim he diverted $375,000 from an account allocated for specific amenities into a sweep account. Sweep accounts areinterest-bearing accounts for any uninvested cash that flows into a brokerage account from various sources. Cash is automatically swept daily into the sweep account, earning interest. When people are ready to use this cash for trading or for cash management activities, the necessary cash is automatically pulled from the sweep account. In these instances, the money was moved from Tennessee to North Carolina back to Tennessee, according to the indictment.
Ross is also accused of criminally diverting monetary transactions or money laundering.
Federal prosecutors claim on at least 11 occasions, Ross moved money from the sweep account to various other bank accounts. These transactions, totaling $831,987.95, also translated into 11 counts of alleged money laundering, court records indicate.
Prosecutors have asked for Ross to forfeit more than $1.8 million if convicted. The indictment does stipulate a substitution of property could be used in lieu of the money.
Under federal sentencing guidelines, the mail fraud count carries up to 30 years in prison. The wire fraud and mail fraud each carry a 20-year prison term, if convicted. Each charge also has hefty monetary penalties.
Prior to the property management group filing for bankruptcy in 2010, Ross had sold lots in the Rarity Mountain Community near Jellico. Along with a view Ross, told buyers the finished community would have 800 custom- built homes and 45 condominium units, according to prior new stories. He also promised them a shopping complex and a Pete Dye designed golf course. While the 18- hole course was partially constructed, that was the only segment of the community to come to fruition.
At the time the lots were sold, some were purchased for over $450,000 only to be foreclosed on in 18 months, according to the Tennessee property assessment website.
Lee Davis, Ross’s attorney did not return calls for comments.