12/20/10

DA: No charges after Rarity probe

Former Loudon mayor won't be prosecuted, DA says after probe

By Hugh Willett knoxnews.com
 
Former Loudon County Mayor Doyle Arp may have violated state law when he reduced tax assessments on properties owned by developer Mike Ross and then destroyed the records, but he won't face prosecution, according to a special investigator assigned to the case.

In a letter to Tennessee Bureau of Investigation Agent Jason Legg, West Tennessee District Attorney Mike Dunavant said he has made a decision not to prosecute the subjects of the investigation for reasons including lack of evidence and the statute of limitations.

Arp, who declined to run for a second term as county mayor in 2010, served as property assessor for several terms before being elected county mayor in 2006.

In October 2008, 9th Judicial District Attorney General Russell Johnson asked TBI to investigate whether Arp improperly reduced tax assessments on Ross-owned properties. Dunavant, who represents the 25th Judicial District counties of Fayette, Hardeman, Lauderdale, McNairy and Tipton counties, was asked to investigate the case in February.

Arp, Ross, Johnson and Dunavant could not be reached for comment.

Although prosecution will not be forthcoming, Dunavant's letter did not exonerate Arp for reducing the assessed value of hundreds of lots owned by Mike Ross at Rarity Bay and Rarity Pointe by as much as $11 million or for the destruction of public records associated with the reductions.

Although the tax assessor is authorized to use his judgment and sole discretion in arriving at property values, "it would appear that Arp engaged in a once common and accepted practice of 'developer discounting' for the benefit of Ross," Dunavant said.

"The practice is strongly discouraged by state officials as discriminatory," he wrote.

According to Bobby Lee, an attorney with the state comptroller's office, a series of judicial rulings in the 1980s determined that the practice of assessing the property of a developer at a lower rate than that of a private property owner is illegal.

Ross formed his Rarity Communities development company in the early 1990s, which spawned a series of Rarity developments in East Tennessee.

"It is unclear from the investigation the exact reason or justification for Arp's downward valuation of Ross' Rarity Bay parcels during that time," the letter said.

Dunavant said he tried to interview Arp for the investigation but was unable to do so.

The only possible offense would be "official misconduct," a Class E felony, and prosecution of the offense would require proof of how Arp benefitted from the improper actions, Dunavant said.

"The only possible circumstantial evidence of personal benefit to Mr. Arp is the employment of his son Rick by Ross in early 2005," Dunavant said.

"But, there is no evidence that Rick Arp was hired based upon any actions taken by his father in his official capacity as Loudon County Property Assessor," the letter continues.

The statute of limitations on official misconduct is two years, making Dunavant "time barred" from seeking prosecution because the alleged activity occurred in May 2005. "Also, the applicable statute of limitations may be tolled due to the active concealment of the crime by the defendant, until its discovery," he said.

The investigation uncovered that Arp ordered the destruction of the modified tax records, an act described by Dunavant as "contrary to office procedure and state law." Such an offense has a one year statute of limitations, he said.

Dunavant also said he does not plan to prosecute either Ross or his associate at Assurance Title, Tracy Riedl, for altering closing documents. The investigation uncovered a number of closing documents where the value of the price paid for the land was "xx'd" out and a much higher value was substituted, he said.

"While it is unusual for these corrections to occur with such frequency as to related properties and developers, it is unclear whether the correction of the affidavit of value constituted a false statement," Dunavant said.

Loudon County Commissioner Bob Franke, whose district includes Rarity Pointe, said he was disappointed the investigation took so long.

"After all this time, this is what they come up with? Then they say the statute has run out. I'm disappointed," Franke said.

Jack McElroy: Not-so-special prosecutor delivered a whitewashing

By Jack McElroy Knoxville News Sentinel
 
Michael Dunavant is supposed to be a tough prosecutor. He'll chair the Public Safety Coalition next year. That's the group of DAs, sheriffs and police chiefs who lobby the legislature for stricter laws, tougher sentences and more crime-fighting resources.

Dunavant's pet peeve is pretrial diversion, which lets first-time law-breakers avoid trial and have their records expunged if they stay out of trouble. He wants such leniency abolished.

"The thugs aren't afraid of us anymore, and that is one of the reasons why," he told the Chattanooga Times-Free Press.

But now it seems that politicians who break the law don't have to be afraid of Dunavant, either, and pretrial diversion has nothing to do with it.

The district attorney general from West Tennessee was the special prosecutor investigating the faking of valuations of Rarity properties in Loudon County.

Doyle Arp, assessor and later county mayor, had quietly slashed about $11 million off the appraised values of some 200 parcels owned or controlled by Rarity developer Mike Ross, cutting his tax bill by about $150,000. At the same time, Ross employee Traci Riedl changed numbers on deeds to make it look like lots were selling for more than they actually were.

Dunavant was called in because the DA for Loudon County had a conflict of interest. Too bad a more vigorous prosecutor could not have been found.

In a letter last week to the TBI agent in charge of the investigation, Dunavant told why he had decided to let the matter slide.

First he made a point of saying how much he liked the upscale Rarity development, "a stunningly beautiful and impressive community which is a true asset to Loudon County."

Then he offered excuses for Riedl's jiggering of the deed affidavits: "It appears that Riedl's corrected amounts more accurately reflected the higher market value than actual consideration paid for the property." He left hanging, though, why property would be worth more than what willing buyers and sellers had agreed upon.

Finally, he evaluated the charges against Arp, finding, "There is no evidence to suggest that Arp in any way benefitted financially from such alleged favoritism."

Although - oops - Ross did hire Arp's son to work for him while dad was shaving Rarity's taxes. This, said Dunavant, was "perhaps coincidental."

Besides, he said, the statute of limitation on Arp had already run out … unless he had tried to conceal his misdeeds.

But wait - Arp did have all the appraisal cards destroyed after the valuations on them were changed. Still, Dunavant decided that since the phonied values were put in the county computer, Arp had not tried to hide what he had done.

And what did Arp have to say for himself? Dunavant doesn't know. When he traveled to Loudon County to interview officials, the mayor was "unavailable," so the prosecutor never questioned the suspect.

To be fair, Dunavant probably did have concerns about his ability to successfully prosecute Arp, Ross and Riedl. But in a public corruption case such as this - much more so than in any minor pretrial diversion case - a prosecutor should err on the side of taking the issue to trial.

Let a jury of Loudon County citizens decide if such shenanigans were innocent or not.

After all, they're the ones who lost $150,000.

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