The claims administrator of a defunct real estate trade association that defrauded agents and others in a multimillion-dollar insurance scam entered into a plea agreement yesterday in U.S. District Court.
Douglas Ritson, 46, pleaded guilty to a bill of information charging him with conspiracy to commit wire and mail fraud during his employment at the Springfield Township businesses of Mark Haukedahl.
An affidavit filed in federal court said Mr. Haukedahl conspired with Ritson and others in a scheme to defraud about 3,000 real estate agents, appraisers, and home inspectors throughout the country out of nearly $3.7 million from 1997 to 2001.
Mr. Haukedahl operated the for-profit organizations American Real Estate Association and the Noble Group, from offices in the township before being shut down in 2004 by a U.S. judge in a civil lawsuit in New York.
The groups were part of a scheme that took fees and premiums from members who believed they were buying discounted malpractice insurance through Midwest Insurance Co., an off-shore shell company that was established in 1993 by a law firm in the Bahamas.
Ritson, who is a licensed attorney, oversaw that claims made on the policies were deducted from funds paid into the operation by members in fees and dues - a policy that Mr. Haukedahl approved, the affidavit said.
Seth Uram, an assistant U.S. attorney, said in court that Ritson was aware as early as 1997 that AREA was misrepresenting to members that they had insurance, but he continued to solicit agents into joining the group to obtain nonexistent coverage.
In return for the plea deal, Ritson must cooperate truthfully and completely in the government's investigation, including testifying before a grand jury or against any others charged.
Mr. Uram asked Judge Jack Zouhary to delay imposition of the sentence until after completion of the investigation.
The maximum sentence for the conspiracy charge is five years in prison and a $250,000 fine. However, Mr. Uram said calculations for the plea agreement under federal sentencing guidelines will result in a shorter sentence of 10 to 16 months, and that punishment could be divided equally into prison incarceration and home detention.
Mr. Haukedahl moved to the Dominican Republic in 2004 after owning a home along the golf course of Brandywine Country Club in Monclova Township. He couldn't be reached for comment.
Jon Richardson, an attorney representing Ritson, said his client was cooperating fully with the investigation.
"While acknowledging his role in the conspiracy, it ought not be construed, in any way, that he was a prime mover in the operation. He was a relatively insignificant cog in the wheel of this operation. His mistake was not leaving sooner than he did," Mr. Richardson told The Blade in an interview.
In compiling its investigation, the FBI investigation looked at documents in a civil lawsuit filed by the U.S. Small Business Association that eventually forced the closure of Mr. Haukedahl's operations in May, 2004.
Agents interviewed former employees involved in the fraud scheme and real estate agents who paid premiums.
They also reviewed financial records and bank statements of the organization and computer records and documents obtained in a search 18 months ago at the southwest Toledo office of Darrell Crosgrove, who succeeded Ritson as claims administrator.
The affidavit said Ritson trained his replacement and continued to assist with the processing of at least one claim until at least December, 2001.
Also an attorney, Mr. Crosgrove has not been charged. He referred questions to his attorney, Alan Konop, who declined to comment.
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