RICHARD POTTS returned to his rowhouse on Lancaster Avenue near 56th early in the morning of April 5 to find his Overbrook neighborhood on virtual lockdown.

A cop had been shot; a manhunt was on. The block was cordoned off with yellow tape. Cops and SWAT teams fanned the streets. K-9 units scoured through brush. Some businesses were forced to close for five hours.

"The cops were questioning everybody," Potts, 57, recalled.

Sgt. Robert Ralston, a 21-year veteran and father of five, said he'd been shot on patrol by a black man with "cornrows" and a "mark or tattoo under his left eye."

Yesterday, the Overbrook neighbors were outraged to learn that it was all a lie.

Ralston, 46, had intentionally shot himself in the left shoulder.

"I felt bad. We thought he'd been shot protecting us," said Marilyn Hicks, who lives on Lancaster across the street from the steep incline that leads to the railroad tracks where Ralston said a man had put a gun to his head.

His motive remained unclear yesterday, but many officers speculated that Ralston was unhappy after he was recently transferred from the 3rd District in South Philadelphia to the more crime-ridden 19th District in West Philadelphia.

He apparently wanted out so badly that he had considered shooting himself in the chest, but feared that his bulletproof vest couldn't guard against a slug fired at such close range, Police Commissioner Charles Ramsey said.

"There is no excuse for what he did, period. So I don't really give a damn what his motive was. It makes no sense," said Ramsey, who suspended Ralston for 30 days with an intent to dismiss.

Ralston, who will not be criminally charged, could not be reached for comment yesterday and did not respond to a note left by the Daily News at his home in the Northeast.

Ramsey said the city intends to make Ralston pay for the city resources used in the 36-day investigation into the April 5 shooting. Ramsey said he hasn't tallied the cost.

But the real price cannot be measured. The Overbrook residents say they were betrayed.

"They're supposed to serve and protect us, not blame us. He blamed us for something he did," Potts said. "That's just wrong."

"I think it's despicable," said Tanya Ennis, 50. "Black people are targeted. All black people are not bad. I'm not on welfare. I don't take handouts. I work as a compliance specialist for a mortgage insurance company. I own my own home. I own my own car . . . The cops were stopping every man with dreadlocks. Every black man was harassed."

Ralston's story was remarkably detailed: He said he spotted two black men walking on train tracks about 4 a.m. Concerned about area burglaries, he went to investigate. As he approached, one man ran. The other began to walk away. When Ralston grabbed his shoulder, the man spun around with a silver revolver in his hand. He pointed the gun at Ralston's head. Ralston smacked the gun away. The man got off one shot, striking Ralston's shoulder. Ralston returned fire and believed he struck the man in the torso.

Ralston apparently devised the detailed description of the phantom shooter after a cop showed him a photo of a man who was wanted for allegedly assaulting a police officer, said Deputy Commissioner Richard Ross.

"He looked at the photo and said the [shooter] looked like that person," Ross said.

Almost immediately, Ramsey said, investigators doubted Ralston's tale:

The gunpowder residue found on Ralston's shirt matched his police-issued weapon. No shell casings were found. There was no blood evidence showing that anyone besides Ralston had been shot. Ralston's shirt wasn't dirt-streaked and didn't mesh with a struggle on a steep incline.

Just after midnight yesterday, homicide detectives brought Ralston in to clear up inconsistencies in his initial statement.

By 4 a.m., he admitted the fraud, Ramsey said.

The District Attorney's Office granted him immunity from criminal charges for admitting his guilt.

"Ultimately, our goal was to get to the truth. We have done just that," District Attorney Seth Williams said. "Unfortunately, we could only arrive at the truth through his statement given to the police, and that statement cannot be used against him."

This further inflamed neighbors.

"I'd never be offered immunity," Ennis said. "I'd get locked up and they'd throw away the key."

Barry Morrison, regional director of the Anti-Defamation League, lamented that "this is not the first time that we've heard of someone claiming that it was a black assailant that caused them harm when there was no such harm.

"We have to be careful not to prey on people's fears and not lead them to believe that every African-American male is a criminal," he said.

Ramsey said Ralston described his imaginary assailants as black because the 19th District is predominantly African-American and he wanted the story to fit.

Still, Ramsey said he was troubled because Ralston's fable stirred racial tensions that already exist between police and residents in some communities.

Ralston's confession comes in the wake of a string of blows to the department. The most recent scandal unfolded last week when prosecutors charged Officer Rudolph Gary Jr. with murdering his estranged wife's brother over a dispute that stemmed from a neighborhood water-gun fight.

"It's not a good time for us," Ramsey said yesterday. "It's embarrassing."

Ralston's actions also came as a punch in the gut to fellow officers, who've buried six cops who have been killed in the line of duty since November 2007.

"It's a slap in the face to the men and women who wear the badge, and to those who have laid down their lives for this city," Ross said.

Yesterday morning, officers held a ceremony to commemorate National Police Week and to honor Sgt. Patrick McDonald, who was fatally shot in September 2008.

"At a time when we are honoring people . . . something like this comes out, and it's just a disgrace," said John McNesby, president of the Fraternal Order of Police, Lodge No. 5.

Last month, McNesby stood shoulder-to-shoulder with Ramsey and Mayor Nutter at a news conference in which the FOP offered a $10,000 reward for information leading to the arrest of the "thug" who shot Ralston.

"The city of Philadelphia stands behind this [manhunt] effort," a stern-faced Nutter said at the time.

Yesterday, Nutter was livid: "I find the actions of this former officer disgusting, despicable and a disgrace."

At least six citizen complaints have been filed against Ralston over 21 years. Most involve allegations of verbal abuse and physical assault. Ralston had been disciplined four times, including two reprimands, one one-day suspension and a five-day suspension - all for relatively minor infractions, Ramsey said.

But all agree that Ralston's lie is unforgivable.

"It makes the whole department look bad," said neighbor Marilyn Hicks. "You don't trust 'em no more. You don't know who's bad and who's good.

"There's something seriously wrong with him."

Staff writer David Gambacorta contributed to this report.