Update: Copy of Preliminary Injunction
The courtroom heated up today in Yazoo City as a hearing on several motions filed in the Evans case was held this morning. Several revelations were made during testimony provided under oath by employees of Mississippi Valley Title Insurance Company.
The first bombshell to drop was a revelation by Charles Evans, Jr.'s, lawyer, Terry Levy, that Jon Chris Evans filed a Chapter 7 bankruptcy petition in U.S. Bankruptcy Court yesterday at 5:30 PM. Bankruptcy petition. Bill Brabec, MVT's attorney confirmed the entry of the petition. Thus the Chancellor did not consider any legal action taken against Chris Evans as the entry of the bankruptcy petition halted all civil proceedings at the state court level against him. Jon Chris Evans Amended Creditor List (Notice all of the banks in Texas. There are rumors and allegations the same scheme was perpetuated in Dallas.).
The Chancellor then denied a Motion to Quash a Subpoena filed by the defense. However, she approved several motions for protective orders submitted by MVT and several banks as they were concerned about providing confidential and personal financial information in a public record. The judge agreed with their concerns and granted their requests.
How Mississippi Valley Title suspected fraud
The main event at today's hearing ,however, was the consideration of a Motion for a Preliminary Injunction filed by Mississippi Valley Title and Old Republic, its parent. Copy of Motion . Brad Jones, a lawyer, CPA, and Certified Fraud Examiner for MVT, testified the fraud was discovered when MVT received a phone call from a policyholder at Holmes County Bank. Bank examiners were apparently at the bank and asked for copies of deeds related to two mortgages (deeds showing ownership by borrower, NOT deeds of trust issued to lien holders). Holmes County Bank issued two mortgages worth $1,580,479 in 2008 and 2009. The bank didn't have the deeds and called MVT to obtain a copy of them. MVT did not have any copies of the deeds. Holmes County Bank and MVT became very suspicious when the Courthouse did not have any deeds on file either. Thus the scheme (alleged, I do have to write that) began to unravel as MVT began to investigate.
Mississippi Valley Title then called Charles Evans, Jr. since he was the attorney who provided the title work for the two loans. Mr. Evans was an "approved attorney" for MVT. "Approved attorneys" are a list of lawyers from whom MVT will accept title work it then uses to issue title insurance policies to lenders and borrowers. Mr. Jones stated these attorneys are not employees nor agents of MVT. No testimony was provided on whether MVT audited these lawyers or had procedures in place to protect against fraud.
The Damage and the FBI appear
Charles Evans, Jr. disappeared and did not return any phone calls. Mr. Jones stated his office seemed to be deserted and had no employees. MVT finally sent a fax to Evans' office asking him to call the insurance company. The next day an Matt Balderidge of John Colette's law firm (Mr. Colette is one of the top criminal defense lawyers in Mississippi) called Mississippi Valley Title and said he was representing Charles Evans, Jr. Mr. Jones said this the first red flag about Mr. Evans. Mr. Jones testified he discovered the following facts:
- Over 100 policies were issued to Charles Evans, Jr.
- All borrowers were companies controlled or owned by Charles or Chris Evans
- Over $70 million in policies were issued by MVT
- There were 43 mortgages ($29 million) where the mortgage-holder was not vested with title
- 40 mortgage (more than $26 million) where the bank had a junior lien when it was supposed to have first lien.
Mr. Brabec angrily said in his closing argument the Evans case was the "biggest fraud to hit Mississippi since Worldcomm" and that (the Evans brothers) "have stolen tens of millions of dollars, $50 to $100 million through a fraudulent scheme. It was also clear from courtroom testimony and statements no one has been able to locate Charles or Chris Evans.
If the allegations are true, and there is a strong probability they are, the Evans case is the largest real estate and mortgage fraud case in Mississippi history. 32 banks issued loans to companies owned or controlled by Charles or Chris Evans. Estimates on the amount of damage range from $50 to $100 million.
One abstractor familiar with the case (but has no involvement) told JJ "All the overlapping layers created by their various deeds of trust are like a cross between 3-dimensional chess and a jigsaw puzzle. And it really made swiss cheese of the bank's lien positions. Part of a tract might have first position while other parts of the same tract might be preceded by other liens. Then again, from a certain standpoint all the lenders are in the same position -- zero. It's going to be interesting to see how the courts sort out the title mess."
One must also wonder what Mississippi Valley Title's liability is in this case if it is has to cover the most of the losses the banks suffered. It should also be pointed out that while the amount of money involved in fraudulent loans is smaller than the $52 million JJ reported yesterday as the estimate for the banks exposure, those loans can be considered no good as the assets of the Evans brothers have been frozen or placed into bankruptcy. The potential losses facing either Mississippi banks or Mississippi Valley Title Insurance very well might be close to $100 million as claimed in court today.
Nearly $42 million in loans issued to Evans' brothers in Madison County
Tempest in a teapot or record-breaking fraud?
Banks issued nearly $10 million to Evans brothers in Desoto County
Evans case update on court filings
Note: Here are the results of an examination in 2006 ordered by the Missississippi Insurance Commissioner. It includes financial statement. Examination Results