By ROBIN FORD WALLACE
The Georgia Land Trust’s $1.2 million purchase of land in Johnson Crook, 1243 acres of what was formerly known as the Preserve at Rising Fawn, is scheduled to close today, ending a troubled chapter in the Crook’s long and colorful history, announced the trust’s Bobby Davenport by telephone last week.
The Preserve, originally billed as a luxury second-home development, latterly as a weekend rental resort getaway, was the subject of a $45 million interstate bank fraud exposed by the Federal Bureau of Investigation after its years-long examination in conjunction with the Internal Revenue System.
Two defendants associated with Southern Group, the developer that marketed Preserve lots with a Ponzi-like investment scheme, await sentencing after conviction in an April trial.
And much of the land itself has remained embroiled since late 2011 in the bankruptcy proceedings of Southern Group’s sister corporation, TAS Properties, tying up not just the acreage but upwards of a half million dollars in back real estate taxes owed to Dade County.
Now that tax money – more than half what the conservancy will pay the bankruptcy trustee for the Preserve land – will at last be disbursed to Dade, with about 70 percent going to the school system and the balance to the county government, and Bobby Davenport says he’s proud to play Santa in that regard.
“This is a very cool thing to be able to do,” said Davenport. “It is our great pleasure to deliver this Christmas present to Dade County.”
Meanwhile, the Georgia Land Trust has received some Christmas presents of its own – yet more Preserve land donated by private owners. Davenport said one family has donated three lots, a Georgia attorney representing 100 or so owners has donated multiple parcels, and banks that had foreclosed on the lots have also added to the pot.
The trust had already accepted 400-odd acres in bank foreclosures in February of this year, and Davenport said he has no idea what the new acquisitions bring the total to.
“We don’t have a final tally yet,” said Davenport. “That’s what I’m doing now.”
He said obtaining the blessing of the trust’s board of directors for acceptance of the new donations might feasibly delay the Dec. 11 closing. Davenport said such closings are in fact always prone to paperwork delays, which is why they tend to be set in the middle of the week. But if some last-minute something does delay today’s proceedings, he assured, the deal should anyway be cinched by week’s end.
Davenport added that the yuletide is always hectic for the Georgia and Alabama Land Trusts – the two conservancies are operated jointly under the aegis of founding organization the Chattowah Open Land Trust – as companies scramble to close out their books and donors to make their gifts by the end of the tax year. “No one around here has a sense of humor in December,” he said.
But though this eleventh-hour burst of activity might detract from holiday cheer around the office, said Davenport, it is ultimately a good thing for the trusts, which are currently in the process of closing 80 to 90 deals.
Most of these are conservancy easements, he specified, rather than outright purchases such as the one about to close at the Preserve.
Davenport said the trust would divulge a final Preserve acreage count, together with whatever plans have been formulated for the Crook land, after the beginning of the year, as they become available.
Trust Director Katherine Eddins had earlier said the organization had only embryonic ideas about how the land will be used but that the conservancy would protect rare plants as well as the caves that riddle the area; consider building a public trail to connect with Cloudland Canyon State Park, subject to funding availability and consent by contiguous landowners; and possibly sell “eco-easements” to some private owners for environment-friendly getaways or mini-farms.
Davenport, then acting for the Georgia and Lula Lake land trusts, first bid on the Preserve acreage at a special tax auction Dade County held in January 2012 specifically for parcels owned by the Southern Group, on which multiple years’ back taxes were owed.
But the week after the sale, Dade was forced to rescind many of the purchases and return many of the checks – including Davenport’s – when county officials confirmed a claim by TAS Properties’ Travis Shields that Southern Group had deeded the acreage to TAS, which had declared Chapter 11 bankruptcy in the dwindling days of 2011.
Shields was partners with his father- and brother-in-law, Tommy and Josh Dobson, in Southern Group. The same three also operated TAS.
But Shields contended that the Preserve acres had been transferred from one entity to the other in recompense for a bad debt between the two.
In the ensuing months, a succession of attorneys and trustees debated in U.S. bankruptcy court in Chattanooga whether the transfer – or for that matter a much earlier one, this in the other direction, from TAS to Southern Group – was fraudulent.
Meanwhile, in May of 2012, Josh Dobson was indicted on 12 federal counts of wire fraud and money laundering in connection with the Preserve’s 100-percent financing scheme, which used development lots to secure millions of dollars in bank loans that borrowers had never even planned to repay.
The Preserve developers used real estate agents nationally, but notably in Florida, to recruit “straw buyers” who might never have seen the Preserve but who allowed their good credit to be used to secure loans on lots there, in exchange for assurance they could later sell them back at exponential profits.
Proceeds were turned over to Southern Group, which promised to make monthly mortgage payments on the loans, and which had supplied buyers their down payments so that they had none of their own money in the deal.
This latter detail, a violation of accepted bank practice, is what federal prosecutors used to make their case against the two Southern Group defendants, Josh Dobson and his friend Paul Gott III, a former banker who massaged loan applications to make them acceptable to the lenders.
A jury of 12 acquitted the two in April on five fraud counts connected to their bypassing of the down payment requirement via a confusing set of second mortgages on the lots taken out by the developer, of which in some cases the granting lenders seemed in fact to be aware.
But the jury convicted on seven more counts associated with a more blatant violation, false gift letters, in which third parties were paid to attest they were relatives of the borrowers and were giving them the down payments, which were in fact supplied by the developer.
This fall, after considering for some months motions filed by defense attorneys during the trial, Judge Curtis Collier dismissed one more of the counts on a legal technicality, agreeing with the defense that the indictment had been poorly drafted as to establishing venue.
But though six guilty counts still stand, and though they carry substantial jail time, both defendants remain at liberty this Christmas after once more filing for a continuance of sentencing.
Josh Dobson hired new attorneys after the trial to represent him during the sentencing phase. These requested multiple postponements while they obtained and reviewed the transcript of the trial, which in the end amounted to 1,371 pages. Meanwhile, one of the federal prosecutors who tried the case, John MacCoon, has retired.
Sentencing was earlier scheduled for August, then October, then December. It is currently booked for Jan. 23 at 2 p.m. in federal district court in Chattanooga.
Back on the civil side, bankruptcy trustee Richard Jahn will retain control of several Preserve properties even after Davenport and the conservancy pay him for the 1,200-plus acres due to be closed on today. Jahn will list for sale to private buyers Preserve lots containing houses, and others excepted for various reasons from the land trust purchase.
Davenport said the closing would be a quiet one at the title company; the land trust is too busy this month for parties.
But Dade County Executive Ted Rumley said he would attend along with the county attorney whether there were champagne and speeches or not. “There will be checks,” he pointed out.
For Dade, which has gone without the money year after year as the bankruptcy dragged on, those checks are a consummation devoutly to be wished; though if county officials do raise glasses or anyway voices in toast after the closing, the Sentinel has no way to predict or ascertain.