Two federal prosecutors said they were emailed confidential information between one of two Marion County men facing mortgage fraud charges and his attorney.
Prosecutor Perry Pipe said the information in one email by Paul Gott III, 40, "on its face at least to us appears to be incriminating."
Prosecutors Piper and John McCoon asked Federal Judge Curtis Collier how the information should be handled, and the judge on Monday said none of it should be used by prosecutors. But he declined to order the prosecutors off the case.
Gott, 40, said even if the information is shreded that it is "already in their heads."
Judge Collier said the trial of Gott and Joshua Dobson, 35, will proceed as planned on April 8. They were indicted by a federal grand jury in Chattanooga last year for a mortgage fraud that investigators said involved some $45 million in transactions. "Buyers" from several states were involved. The property is in Dade County, Ga., at Johnson's Crook. The development was known as The Preserve.
Gott's attorney, John McDougal, said the emails apparently got to the government because Gott has a number of others on his correspondence list. He said the government already had a lot of the same information from its investigation.
But prosecutor Piper acknowledged that the government did pick up some facts by reading the emails.
He said, looking back, he wishes he had not looked at the documents when his fellow prosecutor brought them to him and said, "Hey, did you see this?"
Prosecutor Piper said he wishes now he had said, "No, and don't show it to me."
He said he and prosecutor McCoon conferred with Justice Department professional responsibility officers in Greeneville, Tn., and in Washington, D.C., and quickly alerted the court to the development.
The 12-count indictment also names the Southern Group, Southern Mountain Resorts, Southern Property Management Group and Southern Real Estate of Tennessee.
It says the defendants offered property for sale and told prospective buyers they would furnish the down payment to the buyer at closing. They said they would cover the mortgage payments for three years. And they said they would purchase an option to buy back the property at a profit to the "buyers" at the end of the three-year period.
The investigation was handled by the FBI and the Internal Revenue Service.
Gott is a UTC finance graduate who worked 10 years as a lender officer.