UNITED STATES DISTRICT COURT 1 EASTERN DISTRICT OF TENNESSEE AT CHATTANOOGA I312 rev 2'1 2 '1 UNITED STATES OF AMERICA us. met soc I EASTERN DIST. 1:12-cr- 3 I . vs. MICHAEL ROSS db 3 1 RARITY CLUB, Judge RARITY CLUB CORPORATION, RARITY MOUNTAIN, RARITY COMMUNITIES, INC. NICKAJACK SHORES PROPERTIES, LLC NICKAJACK SHORES HOLDINGS, LLC ASSURANCE TITLE CORPORATION, LLC INDIQTMENT 13 U.S.C. 1341 Mail Fraud The Grand Jury charges that: The Scheme to Defraud Beginning as early as December 2006, to on or about December 2009, in the Eastern District of Tennessee and elsewlIere, the defendant, Michael 1.. Ross, doing business as Rarity Club, Rarity Club Corporation, Rarity Mountain, Rarity Communities, Ine., Nickajaek Shores Properties, LLC, Nickajack Shores Holdings, LLC, and Assurance Title Corporation, LLC (herein referred to as Michael L. Ross or Ross) devised and intended to devise a scheme and anifiee to defraud those who bought real estate from his business. I 1. It was part of the scheme to defraud that the defendant, Michael L. Ross, a real estate developer, would and did collect monies from buyers of Said real estate that buyers were told would be used to construct a clubhouse, golf course, and other amenities to be used by owners of Case 1:12-or-00139 Document 1 Filed 11/27/12 Page 1 of 7 PagelD 1 property at Rarity Club. These fees were generally $25,000, $50,000 or $75,000 per lot. 2. It was further part of the scheme to defraud that the defendant, Michael L. Ross, doing business as Rarity Club, would and did assure the buyers of the property at Rarity Club that the membership fee would be deposited into a segregated account and used only for constructing the club house, golf course, and other promised amenities. Those assurances were made to the buyers by the salespeople at the direction of the defendant, Michael L. Ross, and by letter from Michael L. Ross. 3. It was further part of the scheme to defraud that the defendant, Michael L. Ross, doing business as Rarity Club, would, and did remove the monies paid by the buyers for the amenities from the account into which it was initially deposited for use in other real estate ventures of the defendant, Michael L. Ross, contrary to what buyers were promised when the money was solicited and collected. The Executlonef the Scheme to Defrautl On or about March 23, 2009, in the Eastern District of Tennessee, for the purpose of executing and attempting to execute the above--described scheme and artifice to defraud, the defendant, Michael L. Ross, knowingly caused to be delivered by mail according to the direction thereon a letter to Rarity Club lot buyers, signed by Michael L. Ross, assuring them that their membership fees were being segregated for use at Rarity Club at Lake Nickajaek, as they had been previously promised, all in violation of Title 18, United States Code, Section 1341. Case 1:12-cr-00139 Document 1 Filed 11/27/12 Page 2 of 7 PageID 2 COUNTS 2 THROUGH 13 18 U.S.C. 1343 Wire Fraud The Grand ury further charges that: The Scheme to Defraud The scheme to defraud alleged in Count 1, above, is hereby realleged and incorporated herein by reference. The Executior_1__of the Scheme to Defraud For the purpose of executing the scheme to defraud described above, the defendant, Michael L. Ross, on the dates listed below, caused to be transmitted by means of wire communication in interstate commerce the signals described below, wire transfers of funds as listed below at the Citizens Bank of Blount County (herein referred to as CBBC) from the account number listed below (68004) to a sweep account number (62243), also known as Michael L. Ross, between the dates of December 6, 2007, and December 05, 2008, each such wire transfer being routed from Tennessee to North Carolina and back to Tennessee, and constituting a separate count of' this indictment: Count From CBBC Date Wire Transfer Transferred To CBBC Account Number Amount Account Number 2 68004 i2f06/2007 $25,000.00 62243 3 68004 12107/2007 $25,000.00 62243 4 68004 01/18/2008 $25,000.00 62243 5 68004 01/24/2008 $25,000.00 62243 6 68004 0122912008 $75,000.00 62243 7 68004 02/07/2008 $25,000.00 62243 8 68004 04/23/2008 $25,000.00 62243 9 68004 04/3 0!2008 $25,000.00 62243 10 68004 05/16/2008 $25,000.00 62243 1 68004 05!22f2008 $50,000.00 62243 12 68004 072'] 5/2008 85 0,000.00 62243 13 68004 l2/0512008 $50,000.00 62243 Each in violation of Title 18, United States Code, Section 1343. Case 1:12-or-00139 Document 1 Figed 11l2'//12 Page 3 of 7 Page|D 3 FORFEITURE ALLEGATIONS 1. The allegations contained in Counts One through Thirteen of this Indictment are hereby realleged and incorporated by reference for the purpose of alleging forfeitures pursuant to 18 U.S.C. 981(a)(l)(C) and 28 U.S.C. ?246l(c). 2. Upon conviction of any of the offenses in violation of 18 U.S.C. 1341 and 1343 set forth in Counts One through Thirteen of this Indictment, the defendant, Michael L. Ross, shall forfeit to the United States of America, pursuant to 18 U.S.C. 98l(a)(l)(C) and 28 U.S.C. 2461(c), any property, real or personal, which constitutes or is derived from proceeds traceable to the offenses. The property to be forfeited includes, but is not limited to, the following: MONEY JUDGMENT A money judgment in the amount of $1 ,850,000.00 in US. currency, representing the sum of money involved in the defendant's violation of 8 U.S.C. 134] and 1343. If any of the property described above, as a result of any act or omission of the defendants: a. cannot be located upon the exercise of due diligence; b. has been transferred or sold to, or deposited with, a third party; c. has been placed beyond the jurisdiction of the court; d. has been substantially diminished in value; or e. has been commingled with other property which cannot be divided without clifficulty, the United States of America shall be entitled to forfeiture of substitute property pursuant to 21 U.S.C. 853(p), as incorporated by 28 U.S.C. 2461(0). All pursuant to 18 U.S.C. 931(a)(1)(C) and 28 U.S.C. ?2461(c). Case 1:12-cr-00139 Document 1 Filed 11127/12 Page 4 of 7 PageID #2 4 4 COUNTS 14 THROUGH 28 18 U.S.C. 1957(a) (Criminally Derived Monetary Transactions) A. The Grand Jury re-alleges and incorporates by reference the allegations set forth in Counts 1 through 13 above. B. THE MONEY LAUNDERING The Grand ury further charges that on or about the below-listed dates, in the Eastern District of Tennessee and elsewhere, the defendant, Michael 1.. Ross, knowingly did engage and attempt to engage, in monetary transactions as set out below, that is, depositing funds into multiple bank accounts, at the federally insured CBBC, by wire transfer, in dollar amounts greater than $10,000, which in fact were derived from specified unlawful activity, that is, wire fraud, in violation of Title 18, United States Code, Section 1343 and mail fraud, in violation of Title 18, United States Code, Section 1341, each such wire transfer constituting a separate count ofthis indictment: Count Transferred from Date Transferred to Amount CBBC Account CBBC Account Number Number 14 62243 12/06/2007 501497 $24,475.90 15 62243 12/07/2007 501497 $61,132.93 16 62243 0111812008 52248 $30,9 1 3 .09 17 62243 01118/2008 501497 $1 46,7'3 0.1 1 18 62243 0lr'24/2008 501497 $121,605.82 19 62243 01/29/2008 1544063 $14,639.08 20 62243 0] /2912008 52256 $80,128.06 21 62243 02/07/2008 501497 $79,089.82 22 62243 04/23/2008 61387 $29,054.96 23 62243 04123/2008 501497 $71,121.74 24 62243 05!] 612008 501497 $37,609.30 25 62243 501497 $221,096.00 5 Case 1:12-or-00139 Document 1 Filed 11/27/12 Page 5 of 7 Page|D #2 5 Count Transferred from Date Transferred to Amount CBBC Account CBBC Account Number Number 26 62243 07/ 1 5/2008 501497 $85,053.81 27 62243 12/05/2008 61581 $17,497.02 28 62243 12/05/2008 50149? $196,296.95 Each such transaction in violation of Title 18, United States Code, Section 1957(a). MONEY LAUNDERING ORFEITURE ALLEGATIONS 1. The allegations contained in Counts Fourteen through Twenty-Eight of this Indictment are hereby repeated, realleged and incorporated by reference for the purpose of alleging forfeitures pursuant to 18 U.S.C. 982(a)(1). 2. Pursuant to 18 U.S.C. 982(a)(l), upon conviction of an offense in violation of 18 U.S.C. l9S7(a), the defendant, Michael L. Ross, shall forfeit to the United States of America any property, real or personal, involved in such offense, and any property traceable to such property. The property to be forfeited includes, but is not limited to, the following: MONEY JUDGMENT A moneyjudgment in the amount of $1,850,000.00 in US. currency, representing the sum of money involved in the defendant's violation of 18 U.S.C. l957(a). If any of the property described above, as a result of any act or omission of the defendants, 21. cannot be located upon the exercise of due diligence; b. has been transferred or sold to or deposited with a third party; c. has been placed beyond the jurisdiction of the Court; d. has been substantially diminished in value; or Case 1:12-cr-00139 Document 1 Filed 11/27/12 Page 6 of 7 Page|D 6 c. has been commingled with other property which cannot be divided without difficulty, the United States shall be entitled to forfeiture of substitute property pursuant to 21 U.S.C. 853 A TRUE BILL: GRA JURY F0 REPERSO WILLIAM C. KILLIAN UNITED STATES ATTORNEY By: - {flat lm P. MacCoon Assistant United States Attorney 7 Case 1:12--cr-00139 Document 1 Filed 11/27/12 Page 7 of 7 Page|D 7