Federal authorities have dismissed an indictment against Mike Ross, the developer of a floundering Rarity Club project at Nickajack Lake in Marion County.
The Maryville developer was charged last November with mail fraud, wire fraud and money laundering.
However, in a document filed today, prosecutor John MacCoon said, "The United States hereby moves the Court pursuant to Rule 48(a) Federal Rules of Criminal Procedure to dismiss the above-captioned case without prejudice.
"As grounds therefor the United States would advise the Court that new exculpatory evidence has been developed and provided by the defense that undermines the accuracy of the current indictment in this case.
"Accordingly, the United States moves pursuant to Rule 48(a) to dismiss the indictment without prejudice.
Defense counsel has indicated agreement with this motion."
The developer was represented by the Chattanooga law firm of Davis and Hoss.
Attorney Lee Davis said, "We appreciate the willingness of the U.S. Attorney's office to go through what are complicated financial transactions, and their willingness to consider this case from all sides before proceeding with what would have been an extremely long, difficult and expensive trial.
"The real estate downturn of 2008 was a main factor, and many of the problems that are complained about in the initial indictment are the result of those difficult economic times, and not any criminal intent of Mr. Ross."
The government had asked that the developer forfeit $1,850,000, saying that represents "the amount of the defendant's violation" of federal law.
It was charged that he accepted money from buyers of lots at the development with promises that a clubhouse and other amenities would be provided and that the money would be held in a separate account.
Instead, the indictment says, the money was used to try to prop up other Ross developments.
An order was put down to handle the case in Chattanooga.
The indictment said sales in the development occurred from December 2006 to December 2009.
Prices paid for the lots ranged from $25,000 to $75,000.
It says in a letter of March 23, 2009, owners of Rarity Club lots were assured that their money was still segregated and available.