Jackson Jambalaya

See bottom of the post for a synopsis of the Evans case and right side of page for a collection of all posts on the Evan's case.

Highlights:
-G&B Investments sues Mississippi Valley Title in Evans Case
-The Evans brothers borrowed over $5 million from banks on land owned by G&B. Charles issued phony title certificates showing an Evans-LLC owned land in question.
-G&B sold land to Evans brothers for $16 million
-G&B charges MVT & Old Republic with failure to audit and supervise Charles Evans as an "approve attorney" and seeks economic as well as punitive damages from the title insurance companies.


G&B Investments opened another front in the war known as the Evans case. It filed an amended complaint in U.S. Bankruptcy Court Friday against Mississippi Valley Title Insurance Company, its parent Old Republic, Trustee Derek Henderson, Bankfirst, Merchants & Farmers, Bank of Forest, Heritage Banking Group, and several companies owned by Chris or Charles Evans (Copy of second amended complaint G&B filed a complaint on July 26 and and an amended one on September 1.).

G&B Investments sold a 105-acre tract of land on Hwy 463 to Chris and Charles Evans of Hanover Group on July 23, 2008 for $16 million. Hanover is an LLC based in Mississippi. The Secretary of State's website states Lynne Knight is the registered agent and managing member. SOS website However, the signature of Lynne Knight is misspelled and the signature bears a very strong resemblance to that of Charles Evans. The signature is also different from the one appearing in a letter she sent to the SOS stating she was resigning from the company and to remove her name from all corporate documents. Hanover even submitted to G&B a Copy of a corporate resolution stating Charles and Chris Evans were members of the LLC. Earlier post on signatures

Hanover paid $5 million cash for the property and executed a deed of trust to G&B for $11 million (translation for those of you at the JFP: owner-financing). Hanover pledged 77 acres as collateral. G&B alleges at the time of closing, the land was worth at least $16 million. Hanover defaulted on the loan. G&B purchased the property for $7 million at a foreclosure sale (p.14 in above link). Original complaint

The closing itself was rather interesting. G&B paid Mississippi Valley Title $27,000 for its policy. William Smith, III of Watkins & Eager handled the closing and charged G&B $80,000 in fees (Yes, the same Smith involved in Lost Rabbit.). Closing statement Mr. Smith also prepared the warranty deed showing the conveyance from G&B to Hanover. Copy of deed. While it is curious Mr.Smith's office was used to handle the closing, there is no evidence Mr. Smith conducted anything but a straightforward commercial real estate transaction.

There was just one little angle unknown to G&B at the time: The Evans brothers went to several banks and borrowed money on the land prior to buying it from G&B. The banks fell for it because Charles and Chris used phony title certificates stating the brothers did indeed own the land even though G&B actually owned the land. The Evans brothers borrowed $5,078,840 from M&F, Heritage, and Bank of Forest on nearly thirty acres of someone else's property.

G&B alleges Mississippi Valley Title issued title insurance policies on every single one of these transactions even though the title certificates were phony. G&B argues Mississippi Valley Title sold so many title insurance polices in such a short amount of time Mississippi Valley Title should have known something was amiss when it issued policies on what amounted to 200% of the property involved. G&B also claims the $5 million cash paid by Hanover was gained through fraudulent means from the banks mentioned earlier in this post. G&B posits "the lynchpin of the scheme was the use by Charles H. Evans, Jr., of his role as Approved Attorney/Agent of the Title Companies to cause the Title Companies to issue title insurance binders to insure the fraudulent titles, which binders were relied upon by the banks to issue the fraudulent loans." See pages 8-12 of the second amended complaint for further details of these phony transactions. Once G&B sold the land to the Evans brothers, they obtained more phony loans through Charles's patented method of issuing phony title certificates as an "approved attorney" for Mississippi Valley Title.

G&B argues (p.15) it would not have closed the sale if it had known fraudulent loans were used as down payment or Mississippi Valley Title issued title insurance binders to Evans-owned companies.

The plaintiff asked the Court to provide several forms of relief. It requests the court determine the validity of the liens. In the other Evans transactions, the Evans brothers usually owned the parent tract through one LLC and would obtain loans on smaller portions of that tract using other LLC's. However, the Evans brothers never owned the land in question when the three loans were obtained. Its hard to see how a court could determine they have valid liens when the Evans brothers didn't even own the land when the loans were made.

The suit charges Hanover, Charles Evans, and Chris Evans with fraudulent misrepresentation. G&B then aims its fire at MVT and Old Republic (p.20). It accuses MVT of a "negligent failure to monitor/supervise/audit their approved attorney Charles Evans." G&B argues MVT had a "duty" to audit and inspect the files of its approved attorneys and agents.

G&B's position is since the issue of valid title is so crucial to a successful real estate transaction, Mississippi Valley Title has a duty to properly supervise its "approved attorneys" if its going to provide title insurance binders to lenders stating title is clean and vested in the borrower. The complaint also states Mississippi Valley Title had a responsibility to inform G&B there were "conflicting" title insurance policies within a week prior to the closing. G&B argues such actions are "gross negligence and negligent misrepresentation" and it suffered damages due to its failure to disclose the conflicting title insurance policies. The suit further charges Mississippi Valley Title with acting in bad faith and thus breaching its title insurance policy. G&B stated various economic damages (p.28) and asked the court to levy punitive damages specifically against Old Republic and Mississippi Valley Title as well as the Evans brothers in an amount to be determined at trial.

Mississippi Valley Title filed a motion to dismiss on August 10. A hearing was held last week in Judge Olack's courtroom. Judge Olack gave G&B until September 10 to file an amended complaint, which G&B did (It is referred to in this post as the second amended complaint.). Mississippi Valley's main argument is G&B never filed a claim on its title policy. What is interesting is G&B is apparently claiming the policy was void when Mississippi Valley Title sold it a policy allegedly in direct conflict with three other policies. Stay tuned. The Evans Case will keep going and going and going....

*G&B purchased an owners policy for $27,000 a few days after MVT issued policies to the banks. Note- Lender's policy covers lender's exposure. Owner's policy covers the owner's equity.

Synopsis of Evans case:
Charles Evans, Jr. was an attorney approved by Mississippi Valley Title Insurance Company to provide title certificates to MVT and lenders showing a borrower had clear title to property. MVT filed a lawsuit in September accusing his brother of using over 30 LLC's to obtain fraudulent loans from over 30 banks in Mississippi. Chris Evans would allegedly use one company to purchase a large tract of prime commercial real estate in Madison and Desoto Counties. Another company owned by Evans would obtain a commercial real estate mortgage on a smaller section of the tract yet that borrowing company never obtained a deed showing ownership of the land from the other company. Thus the smaller tract was actually non-existed as the larger tract was never actually subdivided. Charles would allegedly provide a title certificate however showing the borrowing company owned the land even though it didn't.

Over 80 loans for nearly $50 million were issued by Mississippi banks to companies owned by Chris Evans for lands those companies either did not own. MVT has testified federal authorities are currently investigating the case. Chris Evans filed Chapter 7 bankruptcy on October 26, which stopped the Mississippi Valley Title's lawsuit against him as federal bankruptcy law stays most state civil court proceedings once a bankruptcy petition is filed. Mississippi Valley Title testified 65 title insurance claims for approximately $41 million have been filed by banks affected by the Evans case.