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.
Bankruptcy
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
61 comments:
Wow.......just wow.
So, has this made the local fish wrappers?!?
JB
Of course not.
I'm curious who the original deepthroat on this one was...I remember someone dropping the bomb of the "Evan's Brothers" during another discussion. Or at a minimum, you still here???
Kingfish,
FINE WORK!
Great work Kingfish. I wonder how long it will take for any of this to make the local MSM outlets?
National & out of state reporters are now all over this story. Several banks could go belly up over this and reports are the FDIC is scrambling to send to personnel to see how much damage some of the banks have (worries over some bank collapses).
lose the hysteria. all these loans had title insurance. MVT has some issues but that's what insurance is for. no banks are going under
MVT IS the insurance, and the $$ isn't there. Without the required reserves, they will be shut down.
MVT may not have the reserves which is why many think MVT will file bankruptcy first which in turnn will fold some of the banks.
If I'm reading their financials right, MVT's reserves are between $30 and $40 million. Of course, Old Republic has substantially more reserves.
Where do you see the national media covering this? I haven't seen any evidence that suggests they are.
Kingfish, something rather odd. On Ms Bar Association website, when you look up Jon C Evans, his "status" is "inactive". Curious minds want to know why....
And, by the way, tremendous job on covering this story.
All right, knock it off. Its funny but knock it off. Sufficeth to say, the banks and interested parties are all reading this site right now.
As for Chris Evans' status with the bar, I would say he never paid his bar dues and thus didn't renew his license.
Damn, our poor state can get out of its own way. More major corruption for the national media to report.
Are Texas banks exposed?
These guys were good. I mean allegedly good. We haven't gotten around to the plat maps and surveys used. That is where you are going to see the real chicanery. Alleged chicanery.
The rumor is something similar happened in Texas involving the same defendants.
Looked at M&F's last earnings statement the other night. If we are reading it correctly, loan loss provisions were only $32 million. As I've calculated their exposure in loans to the Evans' brothes at 10 million, this could take a huge chunk of that reserve. That is assuming there are no unfiled releases or modifications in existence.
Lots of nationwide CRE firms are interested in this story.
The interest out of Texas and Florida is notable. Heard of any exposures in the Sunshine State KF?
Nope. Keep in mind alot of regional or corporate offices are there, usually in Tampa or Jacksonville.
The go-go mentality of the cheap money bubble sucked every part of America into the consuming vortex. Nobody, no firm and no business in the financial sector wanted to get left behind even if it meant looking the other way, cutting corners or suspending due diligence. Wait till the shit of tax increment financing abuses hits the fan.
Are there exposures in Tennessee?
Desoto. The hearing yesterday was really about the Madison County stuff but there were a few in Desoto. See earlier post about that.
Mr. Fish, did MVT say yesterday at the hearing whether they were going satisfy all the banks involved in that $55million in claims they reported to the court?
I find it simply amazing that the news media has not picked up on this! When did the parties involved first get wind of this fraud? Keeping it quiet only protects the guilty.....it lets them continue their scheme on unaware lenders.
Think about it 10:02 AM. Do you think the C-L really wants to report on this story? Banks are big advertisers with them and the light of incompetence this would shine in public would create mucho problems with their depositors.
10:00AM:
What do you think?
What did they do with all that money? Really, where is it? That's alot to blow or hide without drawing attention before now.
I find it interesting that Mr. Jones in his testimony said that Charles Evans was an "approved attorney" and that these attorneys are not "employees or agents" for MVT. Sounds like they are trying to position themselves as not liable for the fraud.
That is what he said. I heard it and wrote it down as stated. I can see exactly why you said that.
The local media just doesn't do much if it requires investigation, or so it seems to me. If it's not about a street needing pothole repair or the basic facts of your standard murder here in Jtown, then forget it. Even big stories, like the Irby situation, seem reported secondhand.
There was another story never reported to my knowledge in the local media about that lawyer (Colson?) on the coast mis-using escrow funds. His offices closed refi's and never paid off the loan being refi'd, and such. He had offices in AL, LA, MS, etc. and media there picked it up, but noooooo, not here that I could tell. Wished they had because I've wondered what happened with it. People need to know!
So have these Evans brothers blown the country?
11:01 - The C-L is a very unfunny joke of a "news"-paper.
I guess its not just lawyers...
http://www2.wjtv.com/jtv/ap_exchange/mississippi_news/article/7ChargedInMedicareFraudFedsSeizeMillionsMs/48793/
When exactly did MVT begin to investigate? I saw Charles Evans entering the Madison Chancery Courthouse as I was leaving in early September.
From what I understand one of the banks used Interthinx mortgage fraud detection software on one of their loans and irregularities popped up. The bank & interthinx fraud department then contacted Old Republic. This led to ORI sending in their skeleton crew fraud department into MVT which then jumped on their approved attorney agent.
Interesting. Not what I heard in court yesterday but interesting.
I thought an "approved attorney" had to clear a title through an "agent"?
Kingfish,
You have done an excellent job in reporting this case. We appreciate your efforts !!Where is the C-L and WLBT with their "Top Story" and all of these other wonderful news outlets that we have ??
What also needs to be reported about Charles is that he has left numerous local people "holding the bag" on commitments that he made. He has left numerous suppliers and coaches associated with the MRA softball program that he committed to paying their bills without any hope of ever getting paid. These people don't have insurance like MVT and these banks that he frauded.
He and his brother made commitments to numerous organizations in the area that will never be realized. What ashame for these people that were counting on them to honor them !!
Anyway good work !!! I am sure that they will eventually be located and hopefully extradited !!
Also, Maybe the local news media will report on this before Christmas !!
If you know of any such organizations or charities, send me an email.
Here's a potential conflict.
Burwell represents Community Bank against two Evans' companies yet in this case represents MVT. Hmmm....what is he going to do if Community has to file claims against MVT?
Too bad modern southener's are cowards because the Evan's brothers would be hanging from a tree by morning.
KF, no conflict really - MVT has a duty to defend, cure or pay the claim. Burwell is probably MVT's lawyer suing in the name of the bank to attempt a "cure"
One big question in this case is going to be the measure of MVT's liability under the loan policies that it issued. My understanding has always been that the measure of damages under a loan policy is limited to the actual value of the property. The values of most of these properties have declined since the policies were issued. That would leave the lenders uninsured for the difference between the principal balance and the value of their property. Others have challenged this measure of damages. Would the banks have any basis for asserting negligence against MVT, based on the extraordinary volume of policies that they were issuing to this approved attorney for the same property? Eventually the FDIC will take over one of the victimized bank and will be a plaintiff. MVT and Old Republic are going to be in litigation over this for many years.
6:37 a.m., I think that the first analysis that MVT would make would be whether their policy even covered fraudulent acts of the "approved attorney" under MVT's closing protection letter.
As everybody who has read one knows, the most recent version of what is euphemistically called a "closing protection letter" says that "furthermore, and notwithstanding any other limitations set forth in this paragraph, in no instance shall the Company be liable hereunder unless notice of claim in writing is received by the Company at its principal office one (1) year from the date of closing." That begs the question of exactly "WHO" the "closing protection letter" is actually "protecting"!
Regarding closing protection letters...you have to read the agreement/contract signed with MVT and the attorneys which are, by the way, called "issuing agents"...not approved attorneys.
11:14a.m., the closing protection letter purports to extend its "protection" to to its "Issuing Agent or Approved Attorney". Mr. Evans was an "approved attorney" which means he was approved to examine and certify titles to MVT and close transactions for them.
I believe you are referring to the "Agency Agreement" under which the "agent" lawyer also prepares commitments and issues policies. Not sure that applies in this case. Please correct me where I've got it wrong.
Bottom line is Evans acted as an approved attorney/issuing agent for MVT. Granted yes, he secured title search and issued title certificate, and chances are about 99.9% his office issued the policies and reported same to MVT w/payment for premium and copy of the policy. I cannot fathom those polices being issued by MVT Corporate office. Agency Agreements prohibit the attorney from issuing any commitments or policies in which "Agent, his employees or agents, or his relatives have any interest."
Something I also thought was interesting that it appears from DeSoto County land records that most of the banks closed the transactions in-house. My curiosity has got me in that wondering if those banks relied on the Evans title certificate but issued the title policy through their own title company...owned by the bank. Think about that one.
good points. Pretty much everything in this action is related to the Madison County transactions. I suspect the Desoto area banks are about to start winding up their lawsuits. If not, they better.
12:49pm, the 6 title policies that I have seen were all signed by officers of MVT, as were the commitments. MY understanding is that ALL commitments and policies were signed by officers of MVT.
I agre - there are many imponderable unfathomable notions in this tar-baby....for example, how do you take ONE 24.2 acre parcel and put 30 deeds of trusts on it with 10 separate smaller legal descriptions by multiple borrowers and nobody gets wise to it in 5 years? One banker told me that all their loans had independent appraisers involved and how they could miss that is beyond me - there is ONE parcel number for this parcel described above and the taxes are only $133.
There has just gotta be some collusion somewhere in this thing somewhere or else it was the grossest example of lack of due diligence I've ever heard of!
Most banks close their own small commercial loans, particularly where there is no sale involved.
It's great you are looking at all parties invovled. Thank you for being fair not letting any company names or the fact they are all attorneys stop you from following this story.
What is really sad, is that the employees of Gulf States Directory ( a company owned by Charles & Chris) were told at 9 in the morning they had 5 minutes to leave the building and the company was closed. That was it. NO warning, nothing.
The employees of this company have a wealth of information on where their documents are kept and what they have been up to. Chris is hiding at a secret office at 4450 Old Canton Rd in the Highland Bluff North office building on the 2nd floor , hallway to the left and 1st unmarked office door to the right.
There were over a 1000 customers that purchased ads in the phone book sitting in a warehouse up north at a company called Liberty Press. They still have the 50,000 books ordered, never paid for. There are hundreds of customers in the Metro Jackson that paid for the Jackson phone book and hundreds in Madison County that paid for ads they will never see.
is this yellow pages or yellow book?
Neither one. Its "Gulf States Directory" started by their dad and has been in business around 30 years. It is my understanding employees were given the run around about when the books were coming out . Customers began to call and employees began to quit . As told to me by one of their sales reps who sent out several e-mails including ones to the Attorney Generals office as well as customers . Jim Lee , their long standing sales manager quit as well a few weeks later when there were no clear answers as to what was going on and why books were not being distributed. Apparently those 2 brothers had bigger fish to fry than a yellow page company.
Found out a new piece of sad news last night and I'm being serious. Apparently Charles left the family destitute when he took off. Cleaned out everything, including the kids accounts. Not sensationalizing but posting this because if some of the readers know them, you might want to look out for or help the family. There are alot of victims here and in fraud cases, too often it is the family that suffers. I knew one lady who was married to someone who committed fraud, had no clue at all what he was doing, suddenly everything was frozen, seized, you name it, she and kids were out on the street while he got three square meals, free government healthcare, and a roof and bed every night.
Sad, truly sad.
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