An FBI agent testifying Wednesday at a sentencing in the Southern Group fraud case said current Dade County Chief Magistrate Joel E. McCormick was tied in with the firm.
Agt. Stan Ruffin said McCormick was instrumental in selling Lookout Mountain property near Rising Fawn, Ga., from Eugene Johnson to the Dobson family, which began to develop it under the name The Preserve.
He said McCormick was also listed among the officers of the Southern Group in connection with a $1.25 million loan the group took out. He said McCormick made some payments toward repaying that loan.
Under questioning about alleged "conflicts of interest" the current magistrate had at Southern Group, the agent said McCormick appraised some of the lots at The Preserve.
Prosecutor Perry Piper asked, "Aren't such appraisals suppose to be at arm's length?"
Agt. Ruffin replied, "Absolutely. He was a business partner and he was doing appraisals on the early lots."
The testimony was during the continuation of a lengthy sentencing hearing conducted by Judge Curtis Collier for Josh Dobson and Paul Gott.
Prosecutors said the total amount of the loss in the land fraud was $40 million.
The loss amount in the case for sentencing consideration has been limited to 108 cases in which the government said the Southern Group made down payments for buyers. That amount is around $13 million.
The government has reduced the loss amount for sentencing to $11.8 million after the defense raised certain objections, including the fact that much of the land has been transferred to the Georgia Land Trust.
Agt. Ruffin said the Southern Group not only made down payments for "buyers," but also paid some of their mortgage payments. He said, "The fraud began to unravel when they stopped making some of the mortgage payments."
He said that caused officials of Cornerstone Bank to begin asking questions about how the deals were structured.
Agt. Ruffin was the final witness for the government at the sentencing, then arguments began before the judge.
Prosecutor Piper said the sentencing range for Gott, who was involved in setting up financing for the deals, should be 78-97 months.
Attorney John McDougal sought a lesser sentence, saying Gott was not part of Southern Group. He said the "plan was devised by Josh and Tommy Dobson, Travis Shields and their attorney." Tommy Dobson and Shields have not been charged.
A sentencing range for Dobson will be taken up when the case reconvenes.
Prosecutor Piper said, "This was a scam from the start. They were bilking the banks out of tens of millions of dollars. All that money was going into Southern's pockets."
He said the deal that Southern had with Eugene Johnson was that they would purchase the land piece by piece as they made sales. He said, "Their risk was truly minimal. The only risk they had was were they are sitting today - before someone wearing a black robe."