Wednesday, April 1, 2009

Navigating the swamp that is the Colson fraud case

Updated post:

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:
STEVE COLSON, Vice President, SDSS, INC.
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.

1 comment:

Anonymous said...

thank you for posting about this guy. He is going to get his, I just hope that these poor guys get what is owed to them plus more.

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Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

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