Jackson Jambalaya

Updated post: http://kingfish1935.blogspot.com/2009/04/update-to-colson-fraud-case.html



Expect to see more of these cases as the housing industry continues to implode. Title insurance company Lawyers Title is suing prominent coast lawyer Steve Colson in the U.S. District Court for the Southern District of Mississippi, alleging he and various companies he owned misappropriated funds intended for Lawyers Title and others. The plaintiff seeks $10 million in damages. Colson's assets were frozen as it was alleged he kept money that should have been disbursed from his escrow account to Lawyers Title, sellers, and other parties to the tune of several million dollars

Copy of lawsuit

Mr. Colson has owned over the years, several mortgage companies and title insurance companies. Typically a lawyer such as Mr. Colson will act as an agent for the title insurance company and keep a "split" of the title insurance premium while closing loans for lenders and consumers. Lawyer's Title claims:

1. Colson lied to Lawyer's Title by hiding the fact he his relationship with another title insurance company had been terminated.
2. Misrepresented his financial statements to Lawyer's Title (Such companies generally require a specified amount of reserves in the escrow accounts.
3. Delayed paying mortgage payoffs, creating an inflated float in his accounts.
4. Funding accounts had a shortfall of $4.8 million dollars in October

Lawyers Title seeks to terminate the relationship while asking for $10 million in damages, punitive damages as determined by the Court, and attorney's fees. The plaintiff also asked the Court to freeze all accounts of the defendants as it claimed they would try to move, conceal, and dispose of funds that Lawyers Title claims belongs to them.

Such claims are usually easy to prove as there is a paper trail for everything involved in such a case. Mortgage fraud and similar crimes rarely go to court because they are so hard to defend. Bank statements don't lie when compared to each other. The Sun-Herald reported some homebuyers were hurt by Mr. Colson's conduct. One home even has two mortgages on it as the Mr. Colson allegedly did not pay off the seller's mortgage when he received the funds to do so at closing:

"Monica Harris and Philip Kreiser didn’t make money when they sold their Ocean Springs home last month, but at least they were rid of it. Or so they thought.
Now, after a real estate closing was held, money changed hands, and they have already bought another home in Texas, the married Air Force couple has discovered that a check from a title company intended to pay off their $140,000-plus mortgage did not clear.
For them, however, the bottom line is clear enough. Their mortgage company, Wells Fargo, tells the couple they still owe on the house they already vacated and sold on Old Walnut Road in Gulf Park Estates.
Now they are turning to a lawyer after dealing with the bureaucracy of mortgage and title companies.
Harris and Kreiser, both career non-commissioned officers, are not wealthy. But they owe $180,000 on their new Texas home and another $140,000-plus for the Mississippi home they thought was sold.
“There’s no way we can do that,” Harris said. “This has been so stressful on us.”

One hopes such victims can obtain relief without any damage to their credit. Mr. Colson is involved with many companies. A listing compiled from several websites reveals:
STEPHEN R. COLSON, Registered Agent, PRESTIGE TITLE, INC.
STEPHEN R. COLSON, Director, PRESTIGE TITLE, INC.
STEPHEN R. COLSON, Manager, MERCURY TITLE SERVICES, LLC
STEPHEN R. COLSON, Member, STANDBY POWER SUPPLY, L.L.C.
STEPHEN R. COLSON, Member or Manager, GULFLAND DEVELOPMENT, LLC
STEPHEN R. COLSON, Member or Manager, ROSEWOOD DEVELOPMENT, LLC
STEPHEN COLSON, Member, VIC'S CHOPHOUSE OF MISSISSIPPI, LLC
STEVE COLSON, Vice President, SDSS, INC.
STEVE COLSON, Registered Agent, HOME MORTGAGE INC. OF MISSISSIPPI
STEVE COLSON, Registered Agent, S. H. ANTHONY, INC.

The case grows more complex as more parties intervene in the case. Mississippi Litigation Review reports Adams Homes was allowed by the Court to intervene in the case as Adams claimed the defendants owed them over $600,000. Order Philip Thomas provides further details of his website on the legal wrangling involved between Lawyers Title, Wachovia, and Mr. Colson.

On a further note, this is unfortunate for some of my LSU Tigers as Mr. Colson also represented some former players such as Andrew Whitworth and was partners with Stephen Peterman in El Tigre. He was also prominent in the LSU Alumni Association.

My prediction is the plaintiffs will obtain a judgement against Colson and divide up what little monies were obtained by the Court. Considering real estate fraud is increasing as the housing crisis worsens, there will probably be more of these cases reported in the next few years in Mississippi.