Two Marion County, Tenn., men face charges in $45 million fraud scheme

Two Marion County, Tenn., men face charges in $45 million fraud scheme

May 11th, 2012 by Todd South in News

Two Marion County, Tenn., men have been charged in a mortgage fraud scheme that prosecutors say ran for at least two years, totaled $45 million in losses and involved victims in five states.

Joshua Dobson, 34, of Kimball, Tenn., and Paul Gott III, 39, of Jasper, Tenn., were arraigned before U.S. Magistrate Judge Susan K. Lee on Thursday. Both men pleaded not guilty and were released without bond before their scheduled trial on July 9.

Gott's court-appointed attorney, John McDougal, declined to comment.

Dobson's hired counsel, Chris Townley, said his client entered a not guilty plea as "a formality" and "he expects to go to trial and plans to fight the charges against him."

"A lot of times people want to look for a scapegoat when they lose money, but the reality is lots of people lost money in this financial collapse, so did Josh, and he's adamant that he is not guilty," Townley said.

Both men are indicted on 12 counts, including conspiracy to commit wire fraud and money laundering and fraud against a financial institution. Court documents allege that fraudulent transactions took place in Tennessee, Georgia, Florida, Virginia and California.

The conspiracy charge carries a five-year maximum sentence. The money laundering charges carry a 10-year maximum sentence and the fraud charges range from 20 to 30 years, depending on proof of harm, Assistant U.S. Attorney John MacCoon said in the hearing.

Dobson and Gott offered properties for sale but promised buyers to pay the down payment at closing and assured they would provide monthly mortgage payments for a period of three years, according to court documents.

In some cases, the pair "did deceive the mortgage lenders by creating the appearance through false closing documents, and in some cases false 'gift letters,' that the down-payment was being provided by the buyer, when it fact it was being provided by the seller," according to court documents.

Between June 24, 2008, and Feb. 19, 2010, the men transferred an estimated $865,000 between buyers and property owners to further the alleged conspiracy, according to court documents.