You’ve probably heard the saying, “You have to spend money to make money,” but in the case of Timothy Ritchie, it’s more like you have to fake spending money to make money. Ritchie recently pled guilty to making false statements arising from a real estate closing, and those statements had to do with an alleged $1 million he brought to a closing. As a result of those statements, Ritchie was able to borrow nearly twice the amount he claimed to have spent at the closing, even though he never received any money at all.

According to Ritchie’s plea agreement, he and a real estate agent from Maryland conducted a closing on three lots in Maryland. The HUD statement from that closing indicated that Ritchie brought about $1.1 million to the table in cash. In reality, Ritchie brought nothing at all. However, thanks to his fake spending, Ritchie was able to obtain about $2.4 million from a mortgage lender via wire transfer in order to fund the deal. The agent involved has already pled guilty as well.

This is not the first time that Ritchie and his company, Richland Homes, Inc., have been in the headlines for shady dealings. He made headlines in 2008 when he defaulted on an $8.5-million loan from Bradford Bank[2]. Richland Homes took out the loan just before the crash, and Ritchie justifiably blamed “the stagnant economy and sluggish housing market” for the default. He did manage to keep Richland afloat in the wake of that crisis.

by Carole Ellis