A developer convicted of fraud in a Rising Fawn land scam will be back in federal court in Chattanooga Thursday morning, testifying that if he’d known what kind of jail time he’d be facing, he’d have agreed to testify against others involved in the scheme--including Dade County Magistrate Judge Joel McCormick (left, in his official website photo).
Josh Dobson was indicted in 2012, along with associate Paul Gott, for a laundry list of money laundering and wire fraud charges in connection with failed development The Preserve at Rising Fawn. Dobson and Gott were found guilty on many of the charges, lost a subsequent appeal, and went to federal prison in 2014, Gott sentenced to six years and Dobson 10 and a half.
Now Dobson has filed a motion saying his attorney at the trial, Chris Townley, failed to apprise him of just how long a sentence he was in for if he chose to stand trial and lost, as opposed to accepting a plea bargain offered to him by prosecutors John McCoon and Perry Piper.
“Mr. Townley told me he had talked with the government attorneys and advised me that the government wanted information about others involved with my business, and also wanted me to testify against three (3) people involved with my business, Joel McCormick, Kenneth Chadwell and Travis Shields,” Dobson wrote in an affidavit he filed with the court. “Mr. Townley also told us both [Dobson and his then-wife, Cristy] at this meeting that the government would agree to a sentence of around one (1) year if I would cooperate, plead guilty, and testify against the others. Mr. Townley did not advise me as to what type of actual sentence or time I could be facing if I went to trial and lost.”
Which is why, writes Dobson, he turned the deal down, uninterested in “testifying against business associates that I did not believe had done anything wrong.”
During the months leading up to the trial, writes the developer, both attorney and defendant were focused on the charges against him, Townley appearing to share Dobson’s confidence that he would be acquitted. But two weeks before the trial, says Dobson, his then-wife read an article online that said 98 percent of people indicted in federal court are found guilty if they go to trial. Alarmed at the statistic, Dobson asked Townley to call McCoon and inquire again about a plea bargain, says the affidavit.
This time, the affidavit goes on, McCoon offered him a deal whereby Dobson would plead guilty and serve two to four years. “Mr. Townley then asked me if I thought I had done anything wrong,” writes Dobson, “and when I told him ‘No’, Mr. Townley told me that he agreed with me, and that he felt we should go to trial...”
Even after the guilty verdict came in, writes Dobson, Townley told him the sentence would probably only be two to five years. But Dobson and his then-wife again did online research and found a federal sentencing table. “This was the first time I had ever seen the sentencing guidelines,” writes Dobson.
In the end, the sentencing took into account the amount of financial loss from the Preserve scheme--$26 million, according to the affidavit, though previously it had been estimated at more like $40 million--and Dobson was sent to federal prison for 126 months. “Had Mr. Townley ever advised me I could be facing prison time in excess of 10 years,” Dobson writes, “I would have accepted the plea offer ...”
Now Dobson has hired a new attorney, Michael Richardson, is requesting a new trial, and is asking that his current sentence be set aside. Thursday’s court date is an evidentiary hearing in the matter before Judge Curtis Collier, who was the judge who presided over Dobson and Gotts original trial in 2013.
Dobson was partners in development firm The Southern Group with his father, Tommy Dobson, and brother-in-law, Travis Shields. The Southern Group appeared to be selling building lots in Johnson’s Crook in Rising Fawn for unthinkable prices -- as much as $275,000 for two- or three-acre lots on the side of Lookout Mountain without roads, electricity or water.
But a subsequent investigation by the Federal Bureau of Investigation and the Internal Revenue Service found that the buyers of these lots were in-name only; they had been paid or promised rich returns to sign loans from banks on the land, proceeds of which went to the developer. The developer slipped buyers the down payments up front and promised to make all monthly payments on the loans.
Such a scheme could only continue as long as fresh buyers bought fresh lots and supplied the developer fresh loan proceeds to pay the mortgages. When the housing market went south in 2008-9, sales stalled, credit tightened, and the scheme collapsed. The developer stopped paying the loans, the fake or “straw” buyers were left on the hook, and foreclosure after foreclosure ensued.
Gott and Josh Dobson were the only ones indicted in the scheme, but Dobson’s affidavit would indicate the feds were also interested in prosecuting his brother-in-law, Travis Shields, the aforementioned Chadwell--and Dade’s popular bluegrass-pickin’ magistrate judge, Joel McCormick.
McCormick was named on the witness list at the 2013 federal trial but was never called. But his name came up again during the sentencing phase in 2014, when FBI agent Stan Ruffin said McCormick, then a business partner of Dobson’s, had improperly appraised lots at The Preserve.
Appraisers estimate the value of property for lenders. Exaggerated land values were at the heart of the Preserve case.
File shot: Very few lots were ever actually built on at The Preserve at Rising Fawn, and some houses that were started were abandoned to the elements, like this one.
Ruffin testified that McCormick had had no business appraising Preserve lots in the first place. "Absolutely,” he testified, questioned as to whether appraisals were supposed to be at “arm’s length” from the interested parties. “He was a business partner and he was doing appraisals on the early lots."
Many foreclosed Preserve lots were bought up by the Georgia/Alabama Land Trust. Others remain in private hands, and a small, rustic community inhabits what The Southern Group once billed as a luxury housing development with horseback trails, a spa and access to golf.
After leaving his employment at The Preserve, Joel McCormick sought and won election as chief magistrate in 2008 and has held onto the job easily in subsequent elections. In last year's election, he was unopposed.