Details of alleged Evans brothers’ fraud revealed

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Published: November 13,2009

Tags: banking and finance, fraud, real estate

Two months after a Madison title insurance company sued two brothers for committing commercial mortgage fraud, banks are scrambling to obtain titles to properties on which they have made loans, and parties are wondering how much the title company may have to pay out.

In a Sept. 18 lawsuit in Madison Chancery Court, Mississippi Valley Title Insurance Co. (MVT) alleged that brothers Charles H. Evans Jr. and Jon C. (Chris) Evans, The Evans Firm and 28 companies Chris Evans owned or controlled had committed mortgage fraud on banks and induced MVT to issue fraudulent title insurance policies.

On Nov. 6, MVT amended the complaint to include a total of 35 companies and “John and Jane Does 1-10,” described as additional unknown individuals or entities who participated in fraud.

Chris Evans and entities under his control owned properties in the Mississippi counties of Madison, DeSoto and Harrison as well as in the State of Texas. Charles Evans Jr. and Chris Evans are both Mississippi residents. Estimates of the amount of fraud range from $15 million to $100 million.

According to public records, the Evans’ alleged fraudulent activities began as early as 2003. A federal investigation is underway although details are not known.

More than 20 Mississippi banks have filed lawsuits against various Evans’ entities as well as other banks in attempts to get in first lien position on properties.

MVT’s amended complaint alleges that Charles Evans Jr. was an approved attorney for MVT who issued fraudulent certificates of title for the benefit of Chris Evans and his entities. The Evans repeatedly defrauded MVT and banks by using entities they controlled to borrow funds from lenders using various parcels of land as collateral, when the title to the collateral was not owned by the entity obtaining the loan, the lawsuit states.

Public records show that Chris Evans’ company Old Agency Business Park Inc. purchased a 24-acre property on Highland Colony Parkway in Madison in 2003. Chris Evans had a local surveyor write legal descriptions dividing the 24-acre parcel into 11 separate tracts. Through various limited liability companies he owned, Chris Evans obtained commercial loans from Mississippi banks on each of the 11 smaller parcels. The title for the land, however, remained vested in Old Agency and was never conveyed to any of the other entities through which loans were obtained. This particular property has more than 30 mortgages recorded against it, the majority of which are held by entities that do not own title to the land. Many banks have filed lawsuits asking the court to transfer title to the Evans’ entities that borrowed money from them.

Developers customarily file a plat in the Chancery Clerk’s Office. A plat is a map dividing a larger tract of land into smaller, numbered lots so the lots may be easily identified for future reference in loan transactions.

Plats were not filed for the Evans’ Highland Colony Parkway property, and legal descriptions for the parcels were lengthy and convoluted, making title examination and the alleged fraud difficult to detect.

The parcels were described utilizing the metes and bounds system, which uses physical features of geography, along with directions and distances, to define boundaries. The boundaries are described in a running prose style, working around the parcel of the land in sequence, starting at and returning to the point of origin.

All MVT title insurance policies are jointly issued with its parent company Old Republic National Title Insurance Co., according to its web site. MVT has $35 million in claims reserves, which are funds reserved for paying claims on policies, and Old Republic National Insurance Co. has $370 million in claims reserves, according to June numbers. The companies are part of a larger entity, Old Republic International Corporation, which has $8.8 billion in claims reserves. The company as a whole currently has a negative outlook rating with Fitch Ratings because its general insurance and mortgage divisions have not performed well.

Insurance Commissioner Mike Chaney has said publicly that MVT and its parent “are a very solid outfit” capable of paying claims.

Banking Commissioner John Allison said that banks victimized by the alleged scam have “more than adequate reserves” and are not in danger of becoming weakened by any bad loans issued to Evans’ entities.

Chris Evans filed for bankruptcy Oct. 26. A lawsuit states he is refusing to provide his current whereabouts.

Charles Evans Jr.’s wife, Gail Summers Evans, filed for divorce Nov. 4. Her lawsuit states that Charles vacated their Madison County residence Sept. 19, one day after MVT sued him. The divorce suit also states Evans Jr. may be served at his Ridgeland residence or “wherever he may be found.”

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2 Responses to “Details of alleged Evans brothers’ fraud revealed”

  1. alan Says:

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