Wednesday, April 1, 2009

Navigating the swamp that is the Colson fraud case

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.

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 '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.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).


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In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

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This is definitely a Beaver production.


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Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

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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