Jackson Jambalaya

Collection of all posts on the Evans case.

A federal court sentenced the Evans brothers to jail yesterday in the largest mortgage cause ever in Mississippi. U.S. District Judge Dan Jordan, III sentenced Chris Evans to 168 months and Charles Evans, Jr. to 240 months in prison for bank fraud and money laundering. The two brothers created over thirty companies to defraud over fifty banks to obtain approximately $80 million in mortgage loans. Assistant U.S. Attorney Mike Hurst said "It was a fair sentence for the Bernie Madoffs". Judge Jordan also imposed a three-year term of supervised release after imprisonment and forbade either man from obtaining a line of credit without approval.

The two brothers sat passively through the hearing- sullen and resigned to their fates. Chris Evans looked older, more gaunt, than he did when first seen a year ago. He had been free on bond. Charles Evans looked the same as he did then- shackled in orange, looking ahead into space while the proceedings whirled around him.

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. Chris used over 30 LLC's to obtain fraudulent loans from over 30 banks in Mississippi. Chris Evans would 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 did not exist as the larger tract was never subdivided. Charles provided a title certificate however showing the borrowing company owned the land even though it didn't. The brothers used other LLC's to borrow $27 million from Texas banks to purchase properties in the Dallas area. Note to Clarion-Ledger: Mr. Evans did not work for Mississippi Valley Title (I imagine Scott had a conniption when he saw that one. ;-) ).

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. Both Charles and Chris Evans filed Chapter 7 bankruptcy petitions. Mississippi Valley Title testified 65 title insurance claims for approximately $41 million have been filed by banks affected by the Evans case.


The court said the amount stolen was $27 million. This amount is not the same as the amount obtained through fraud by the Evans brothers. The Fifth Circuit ruled in U.S. v. Goss the damages for mortgage fraud cases had to be calculated after the property was returned to the lender and the value of the property was deducted from the amount gained through fraud (Example: Banks loans $100,000 to purchase a property. Borrower uses fraud to get loan. Bank gets land back but it is worth $80,000. Banks loss is only $20,000). The Evans brothers obtained $27 million in loans from Texas banks for properties in Texas. However, the Texas banks were able to foreclose on their collateral, thus mitigating the losses in Texas. Jackson Jambalaya reviewed the loans in an earlier post and exposed the fact the brothers had obtained over $80 million in mortgages.

Evans attorney John Collette made several objections to the loss amount, enhancement for using sophisticated means to commit fraud, and enhanced penalties for fraud. Judge Jordan overruled the objections as he said the brothers used over 30 companies to hide assets and agreed with the prosecution the fraud was a Ponzi scheme using banks and as an investment fraud it qualified for enhanced penalties.

An emotional Chris Evans told the court:

"When I first stepped across the line, I had good intentions. I never intended to hurt anyone, I got deeper and deeper. I was wrong, there is no excuse for it. I've disappointed society, my family and friends. What I did was wrong. Whatever is left of my life, if I can do anything constructive I will."

Charles Evans was more sullen and tight-lipped as he said "I accept full responsibility for what I have done. I was wrong."

That was his whole statement. No victims spoke but in a move that surprised everyone in the courtroom, bankruptcy trustee Derek Henderson addressed the court before sentencing. Mr. Henderson very forcefully told the court

"What offends me is these two are attorneys. They used their licenses as a member of the bar to do what they did. They want you to believe they did not line their pockets (Collette's argument)." Mr. Henderson said they abused the escrow account and lived off of it. He said although Chris Evans was compliant "they knew what they were doing, they were members of the bar, and that should offend this court" (Made me wish the bar would replace Kilgore and Waddell with this guy.).

Chris Evans will report to prison on February 21, 2012 at 12:00 PM. Charles Evans will remain in custody. Mr. Evans was arrested Memorial Day weekend in 2010 after he tried to reach for a gun in a gun bag when two marshals tried to apprehend him for for a bench warrant issued by the bankruptcy Court. Mr. Collette argued with a straight face if anything Mr. Evans "would have never pulled a gun on anyone" and if anything, "Mr. Evans was at risk." Several people in the audience fought to keep from laughing when hearing this statement. Judge Jordan said Mr. Evans actions during the arrest could be used to enhance the penalty. Judge Jordan also imposed an $18.5 million judgment against each brother

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For a collection of all posts on Evans case, see sidebar on right. Synopsis at bottom of post.


Mississippi Valley Title Insurance Company and its parent company, Old Republic, filed a motion to hold Charles Evans in contempt of court on April 6 in U.S. Bankruptcy Court. Judge Neal Olack had ordered Mr. Evans to submit to a Rule 2004 exam by Mississippi Valley Title before April 1. Apparently Mr. Evans' attorney even went so far as to claim he had tried to make his client appear for the exam but was unsuccessful in his efforts. The motion also accuses Mr. Evans of withholding documents and failing to provide an accounting of his lawyers trust account. Mississippi Valley Title asked the Court to issue civil and criminal sanctions against Mr. Evans. Indeed, MVT asked for "severe" sanctions. Copy of motion

Mississippi Valley Title Insurance also filed an answer in the suit filed by Westport Insurance Company, the malpractice insurance carrier for Charles Evans. Westport filed suit seeking to withdraw its coverage of Charles Evans in January. Copy of motion, Copy of answer Mississippi Valley Title opposes Westport's withdrawal from the case. MVT demanded a jury trial. The suit mentions MVT and Old Republic because they are plaintiff's in a lawsuit against Charles Evans and Bank of Forest because it is involved in litigation against Charles Evans as well.

Another development that is interesting is Mississippi Valley Title filing a claim on April 9 against Chris Evans in Bankruptcy Court. Despite representing to the Court in November that 65 claims for $41 million had been filed against the insurance company by banks victimized by the Evans brothers, Mississippi Valley Title stated its claim against the estate at $13,119,842, a difference of nearly $28 million. MVT's claims registration, November affidavit, Itemized list of loans

The proof of claim filed by Mississippi Valley Title states it has only paid four claims for $1,975,000 in the Evans case despite the fact it filed suit against the Evans brothers in September. Mississippi Valley Title paid Metropolitan Bank $500,000, Holmes County Bank $525,000, M&F Bank $450,000, and Commercial Bank & Trust $500,000. Eight months since the fraud was discovered by Mississippi Valley Title yet only four claims have been paid.

Meanwhile, Mississippi Valley Title released its 2009 annual statement and an accompanying actuarial opinion, and statement of investments. The claims reserves are approximately $34 million and relatively unchanged from the previous year.

Synopsis of Evans case (This feature will be included with future posts on 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.

For a collection of all Evans posts, see sidebar on right side of page.

Bank of Forest, First State Bank, Holmes County Bank, State Bank, First Security Bank, M&F, and Omnibank served James Lee III with a notice of deposition yesterday. JJ has learned Mr. Lee was the former sales manager at Gulf States Directory. Chris and Charles Evans operated the company after inheriting it from their father upon his death. The Evans brothers operated the law practice, directory business, and the LLC's that are the subject of the Evans fraud case out of the same small office on Office Park Drive in Jackson. It will be interesting to see if Mr. Lee takes the fifth amendment during deposition or if any other party moves to stop the deposition. Copy of notice

Synopsis of Evans case (This feature will be included with future posts on 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.

JJ conducted a review of the loans issued to Evans-controlled companies in Texas. JJ calculated approximately $27 million in commercial real estate loans were issued by Texas banks and two Mississippi banks after reviewing deeds of trust. 19 loans were issued, 11 are now in foreclosure. The loans now in foreclosure proceedings are calculated to be $16,488,370 as more notes go unpaid. When the original post was made about the loans in Texas, only $12 million were in foreclosure.

See sidebar for a collection of all posts on the Evans case.

This post will be short and I'll write more later.

There was a hearing in Bankruptcy Court today as a sea of gray suits flooded the courtroom. Here are some quick notes taken during the proceedings:
*The judge stated he will probably order all of the "parent" tracts of land sold and then work out how to split the proceeds of each sale among the banks claiming liens on portions of each tract.
*MVT caved against most motions or responses filed against it by the trustee, Derek Henderson, Cadence Bank, and the Kristi Johnson Group: State Bank, First Bank, Bank of Forest County, & Holmes County Bank
*Judge Olak and Mr. Henderson stated that the entire action in Madison County Chancery Court will be removed to the Bankruptcy Court in the next few days
*Neither Evans brother appeared in the courtroom.
*Mr. Renfroe of Merchants & Planters Bank provided the comedic moment of the day when he attempted to foreclose on a property even though 1. His bank had second lien on the property, 2. the value of the property was less than the amount of either lien, 3. The property was cut in two by a gas line and had no access, and 4. He had no clue what the value of the parent tract was or who the other banks involved were. In effect, the property was almost worthless without any access.
*MVT dropped its "emergency" attempt to conduct its own examination of Mr. Evans finances and the assets and liabilities involved. Instead two examinations will be held that are open to all of the creditors.
*No title insurance claims were addressed.

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. 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.


Apparently Mississippi Valley Title Insurance Company is now fighting a three-front war in the bankruptcy case of Chris Evans. Mississippi Valley Title filed an Emergency Motion for a Rule 2004 Examination of Debtor on November 16 seeking an examination on November 20, 2009. Under Rule 2004, the Court may order an examination of "the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor's estate, or to the debtor's right to a discharge." Federal rules of bankruptcy

Mississippi Valley Title claims in its motion that Chris Evans filed bankruptcy as a delaying tactic against the lawsuit alleging fraud Mississippi Valley Title filed against him in Madison County Chancery Court. MVT argues "Debtor is also the subject of a criminal investigation by the FBI and other investigative government bodies for Debtor's fraudulent conduct. Based upon this criminal investigation, Movant expects that Debtor will likely exercise his Fifth Amendment rights and refuse to answer any questions in the Rule 2004 Examination. It is imperative that Movant determine if that is the Debtor’s position because it will be necessary for the Debtor to be granted immunity under Section 344 of the Bankruptcy Code prior to the first meeting of creditors now scheduled for December 9, 2009. Otherwise, the Debtor will have succeeded in further delay of investigation into his fraudulent content."
Copy of motion

Derek Henderson, the trustee appointed for the case, stated he had no objection to an examination and that "such an examination will ultimately be required". Unfortunately for MVT, Henderson states he "fails to see the emergency nature of the motion" and provides several reasons to support his position. Copy of Trustee's response

The trustee also attempts to stop Mississippi Valley Title apparent attempt to use the 2004 motion to settle the title issue for the properties allegedly used by the Evans brothers to perpetuate their fraud. This is crucial because many loans were issued by 32 banks in Mississippi on properties in Madison and Desoto Counties owned by the Evans brothers. In most cases the certificate of titles issued to Mississippi Valley Title and the lenders by Charles Evans, Jr., were said to be fraudulent, thus leaving the banks with no collateral and MVT at risk of paying millions in dollars in claims to the lenders. In many cases, the same tract of land had multiple loans issued on it by several banks that had no knowledge of the other loans. Thus, the title issue is very important to everyone involved in this case. The banks thus have a strong interest in an examination or court determining who has title to these properties and aren't going to be too crazy about an sudden examination held in their absence.

Mississippi Valley also asked the Court to to meet with MVT in the Examination and fix the title problems on the properties at issue in this case. MVT stated it "has also requested Debtor, both individually and in his capacity as an officer, manager, or member of various entities, to execute curative real property deeds in an effort to merge equitable and legal title."

The Trustee said he would oppose any such action by Evans and that it would "only cause possible adversary proceedings in the bankruptcy case as to preferences and/or fraudulent transfers.' (Translation: Some banks are going to see this as a power play to screw them and we aren't going to go there.) The Trustee asserts that it is better to leave the property issues at status quo until a complete investigation can be done..." Mr. Henderson warned MVT he would take this position in a letter dated November 9, 2009. Copy of letter It should be noted Cadence Bank filed a joinder petition with the Court supporting the Trustee's action.

Several banks filed objections to some of the motions filed by Mississippi Valley Title and other banks. Mississippi Valley filed a motion on November 6 asking for permission to pursue its fraud lawsuit against Chris Evans in Madison County Chancery Court. Copy of motion. First State Bank, Bank of Forest, Holmes County Bank, and State Bank & Trust objected to this motion on November 17, Copy of objection, and argued the bankruptcy court should decide this matter, not the state court.

Its not hard to see why the banks are objecting to Mississippi Valley Title's request that it be allowed to pursue the fraud case against Chris Evans. MVT requested the Chancellor appoint a Special Master to preside over the case which would in effect replace the Trustee in all but name only. The banks as creditors have more rights in the bankruptcy court and are able to file their own claims and motions. If the Court grants permission to MVT to proceed with its case against Chris Evans, the banks are reduced to the role of cheerleaders hoping Mississippi Valley Title is looking out for their interests in state court unless they intervene. It should also be pointed out that in bankruptcy court the Trustee has powers not available to the Special Master and can also prosecute bankruptcy fraud if discovered. It is pretty clear to see why some of the banks are not to comfortable with MVT's attempt to have the case removed back to state court.

These banks also objected to Mississippi Valley Title's emergency request for a Rule 2004 examination. They argue an examination should be held but it should be at a time and place where all of the banks have an opportunity to participate if they so desire. Copy of objection to 2004 motion

Cadence Bank also jumped into the fray, filing its own motion opposing Mississippi Valley Title. Cadence claimed it had $4.6 million at stake and that it couldn't understand exactly why Mississippi Valley Title was trying to force an examination so quickly and without the other banks present. Cadence agreed with State, First State, Holmes, and Forest and asked the Court to order an examination "far enough in the future" so all interested parties could participate. Copy of Cadence's objection to 2004 motion

There is one further issue that should be considered. Has Mississippi Valley Title actually paid any claims? The insurance company stated 65 claims worth over $41 million were filed against it by policyholders affected by the Evans case. In his motion to dismiss, the lawyer for Charles Evans, Jr., argues Mississippi Valley Title has suffered no harm and can't sue for suspected "future" injury. A fundamental rule is that before a party can recover for damages, it must first show injury to the court. MVT has not stated how much money it has paid in claims, if any. So the question must be asked if Mississippi Valley Title has actually paid any claims so far in the Evans case.

The Evans-izer Bunny, it just keeps going....and going.... and going....

See sidebar on right side of page for a collection of all posts on Evans case

Copy of affidavit
Exhibit A: Itemized list of loans issued to Evans brothers filed by MVT
Exhibit D: copy of title certificate issued to MVT
Exhibit E: Copy of title certificate issued to MVT

Mississippi Valley Title Insurance Company filed the affidavit of Brad Jones in the bankruptcy case of Chris Evans on November 17. The affidavit provides the testimony of Brad Jones, an employee of MVT who provides specific details on how Charles Evans, Jr. and Chris Evans allegedly perpetuated a fraud upon Mississippi Valley Title and many banks. Mississippi Valley also reveals that claims in excess of $41 million have been filed against it by affected lenders.

Mr. Jones is a lawyer, CPA, and certified fraud examiner. Mr. Jones states Charles Evans, Jr. was "an approved attorney for Mississippi Valley Title, although not retained, hired, or employed by Mississippi Valley Title." MVT and its lawyers have consistently pointed out this fact at every step of this case. Evans was authorized to "provide title certificates to MVT".

A title certificate is important when obtaining a loan on a property. The certificate allows the borrower to show the bank he is indeed the true owner of the property and also tells the bank there are no other liens on the property. If liens are missed, either the title insurance company has to pay them (the lienholders had a valid claim on the property when it was sold, and thus the proceeds of the sale) or the bank finds out it doesn't have the first lien on the property (thus it may be unable to recover the loan if the borrower defaults). This is important as banks will not provide a loan on property unless there are no other liens, or the other lienholders have agreed in writing to subordinate their claim to that of the bank.

The most crucial part of the affidavit states Chris Evans, Charles Evans, Jr., "and others entered in concert in a fraudulent and/or criminal scheme to defraud MVT and Lenders by borrowing funds from Lenders using certain land as collateral when title to the collateral was not of record in the landowner."

"As a part of the fraudulent scheme.. (the Evans brothers) would misrepresent to the Lenders and MVT that the land was owned by an entity controlled by Jon Christopher Evans and/or Charles H. Evans, Jr."

Crucial because without the issuing of phony title certificates, such a scheme would not work as banks would not lend money and MVT would not issue insurance policies. Jones testifies "based upon the false title certificates... and title insurance commitments issued by Mississippi Valley Title, Lenders would advance funds to Jon Christopher Evans, Charles H. Evans, Jr., and/or others."

The other crucial point about this case is that "contrary to representations made by Charles H. Evans, Jr., in title certificates, record title to the subject property was never transferred into the entity that actually borrowed the funds and whose title was insured."

In plain English, Mr. Jones is stating that one Evans company would buy a tract of land, another Evans company would borrow money on it, but the company that bought the land never transferred the land to the company that borrowed the money. However, the title certificate issued to the bank and MVT said it did own the land even though in reality the other company did.

A simple analogy would be suppose I took your car and got a loan on it from a pawn shop. The pawn shop asks me for a copy of the title so I give them one I forged. Unfortunately for them, the title is still in your name but they don't know that little fact. I get money on the car, don't pay back the loan, then the pawn shop finds out its not my car and can't repossess it.

Mississippi Valley stated in Exhibit A (listed above, compare it to this earlier post) that as of November 17, 2009, lenders have filed 65 title insurance claims with Mississippi Valley on loans granted because Charles Evans, Jr. issued (allegedly) phony title certificates. Mississippi Valley states the total amount of the claims is $41,415,242 (JJ estimated the banks exposure in Mississippi at $47 million. Not bad.) Paying these claims will wipe out much of Mississippi Valley's claims reserves. However, Old Republic, its parent company, has reserves of several hundred million dollars and is able to cover any claims Mississippi Valley must pay. Old Republic Q3 earnings statement

The affidavit also lists several large tracts purchased by an Evans company in Madison County: 38 acres on Highland Colony Parkway and 84 acres on Park Place Boulevard. It is also important to note that not all loans were gained through fraudulent title certificates and that the banks losses are probably larger than the amount stated by Mississippi Valley, as the assets of Charles H. Evans, Jr. are frozen and Chris Evans is in bankruptcy, thus the remaining loans will probably enter into default. It is also worth remembering Texas banks issued approximately $27 million in loans as well and that nearly half of these loans are now in foreclosure. The Evans case is like the Energizer Bunny.... it just keeps going...and going.... and going.