Two Jackson metro area brothers were sued by a Madison title insurance company in Chancery Court in September for allegedly perpetrating $41 million worth of commercial real estate and title insurance fraud in Mississippi. Proceedings to deal with the aftermath of the alleged mortgage-stacking scheme are being handled in U.S. bankruptcy court. A federal investigation is underway.
Mississippi Valley Title Insurance Company (MVT) filed its first lawsuit against Jon Christopher Evans, Charles Evans Jr. and more than 30 of their companies in Madison County Chancery Court. MVT alleges the brothers committed mortgage fraud on banks and induced MVT to issue fraudulent title insurance policies. Charles Evans Jr. was an approved attorney for MVT who issued title insurance policies for commercial property loans obtained by Chris Evans.
MVT alleges that the Evans brothers repeatedly defrauded the title company and banks by borrowing funds using property that the Evans’ companies did not own as collateral.
Allegedly, the Evans brothers used the phony titles to get commercial property loans in the names of the various companies they established.
MVT has received 65 claims from banks, according to the company’s bankruptcy court filing. MVT has approximately $35 million in claims reserves, which are funds reserved for paying claims on policies. Its parent company, Old Republic National Insurance Company, jointly issued MVT policies.
Chris Evans filed for bankruptcy in October, which stayed civil proceedings. A federal judge ruled in November that creditors will sort out the details of Evans’ brothers alleged fraud in federal bankruptcy court and not in state court, as requested by a MVT.
According to his bankruptcy filing, Chris Evans has less than $50,000 in assets and between $1 million and $10 million in debt. He listed 60 creditors, a number of which are Texas banks.
A number of banks have also filed lawsuits against the Evans brothers and against other banks for first lien position on properties.
The alleged fraud
Public records show that the Evans brothers stacked mortgages on numerous parcels of land, using convoluted legal descriptions of the parcels to help cover their tracks.
In one example, documents show that Chris Evans’ company Old Agency Business Park Inc. purchased a property of approximately 38 acres on Highland Colony Parkway in Madison in 2003. Chris Evans had a local surveyor write legal descriptions dividing the 38 acres into 10 separate tracts. Through various business entities he owned, Chris Evans obtained commercial loans from Mississippi banks on each of the 10 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 25 mortgages recorded against it, which are held by entities not owning title to the land.
Dusty Desper of Trinity Title Abstract, LLC, helped several banks who made loans to the Evans brothers and are trying to determine their lien positions. Desper constructed a map of the Highland Colony property as well as other tracts.
“I have personally checked the titles to many of these tracts … and the complexity of some of the legal descriptions, along with there being so many mortgages executed by parties not vested with title, create quite a mess. It would have been nearly impossible to produce an accurate title report on these tracts without having been given an overview of the situation beforehand,” Desper said.
Phone book angle
The Evans brothers alleged fraud may have extended beyond commercial mortgages and into the phone book business.
Phone books from the Gulf States Directory Company, which operates in a building owned by Charles Evans Jr., were due out in June but have not been delivered to the public due to nonpayment to the printer. In November ad sales representatives for the company were still selling ads for more books that the company may not have the money to publish. Representatives said the new books would be available in early 2010.
Gulf States operates at 4560 Office Park. The company is not registered with the Secretary of State’s Office and is therefore not a legal business entity, according to Pamela Weaver, spokesperson for the Secretary of State. A Utah printer said the bill for more than 45,000 Rankin County phone books that was due in April still has not been paid.
Printer Liberty Press, LLC, printed Rankin County directories for Gulf States in April, said Dennis Stone, general counsel for the Utah publishing company, in an e-mail reply to the Mississippi Business Journal.
“We printed approximately 47,500 directories, but shipped only about 1,700. We have not shipped the balance due to non-payment. Payment was due in April. I have left messages for Chris and Charles Evans, however, they have not returned my calls,” Stone said. Gulf States paid for the 1,700 books that were shipped, Stone said.
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