Assurance Title Co. focus of several lawsuits, TBI probe

Ross: No idea why deeds have different values

By Hugh Willett knoxnews.com

A title company owned by Mike Ross and used to prepare deeds at some Rarity developments is at the center of several lawsuits and a Tennessee Bureau of Investigation probe that has been referred to a special prosecutor.

Assurance Title Co. of Vonore was formed in 2001 as a partnership between Mike Ross, Tracy Riedl and Terry Vann, then a Lenoir City attorney and now the municipal judge.

Assurance was the title company of choice for most real estate transactions involving Rarity communities, Ross said. Buyers were encouraged to use Assurance, he noted.

"If the buyers did not have a preference, we preferred that they did," Ross said.

Ross also said he didn't see any conflict of interest in owning the title company that was preparing the closing documents for property he was selling.

"I had learned that working with an efficient title company is a key ingredient in the facilitation of the closing of sales contracts," the developer said.

A Blount County Chancery Court lawsuit filed by Robert Stooksbury, an original partner in the Rarity Pointe development, alleges Ross used his control of Assurance Title to manipulate information about the actual prices lots were selling for.

According to the suit, "Assurance Title routinely prepared two sets of settlement statements with differing entries under heading 'Summary of Seller's Transaction,' one set which showed actual true figures to be given to the seller and one with false and misleading figures to be given to the purchasers."

Creating multiple sets of closing documents with different figures is not a standard practice in the title business, according to Nolan Sharbel, title attorney and owner of Allied Title in Knoxville.

"There should only be one set of documents, and all documents should match and be consistent throughout," Sharbel said.

The issue of multiple sets of closing documents also arose in an investigation begun by Loudon County Assessor Chuck Jenkins into reduced property assessments given to Ross-owned lots at Rarity Bay.

Jenkins noticed that closing documents prepared by Assurance Title for properties where assessed value was in dispute showed changes in the amount paid for the lot.

In most cases, the changes, evident in copies obtained by the News Sentinel, were made by crossing out the original figure and writing a new figure next to the original.

In some cases the value of the property on the copy of the deeds filed with the register of deeds was increased by up to twice that which was on the original paperwork.

Ross said he had no idea why the deeds were filed showing different values. Riedl, an independent title agent, was responsible for handling most of the day-to-day operations of Assurance, he said.

Through her attorney, Riedl declined to an interview because of pending litigation.

Ross said that to his knowledge the amount on the deed was supposed to reflect the price paid or the value of the property, whichever is greater.

He acknowledged that prices on deeds are commonly used by prospective buyers and appraisers to determine property values of comparable lots.

There are other ways of determining value, Ross said. Lots that seem comparable on paper might have different values, he said.

Jenkins thought the reduced assessments and the changes on the documents were suspicious. He brought his information to 9th Judicial District Attorney General Russell Johnson. In October 2008, Johnson asked TBI to investigate the reduced assessments and altered documents.

Following completion of the TBI investigation in December 2009, Johnson decided to turn the case over to a prosecutor from another district. Mike Dunavant, a prosecutor from McNairy County, was assigned the case in February.

Dunavant said he has been reviewing "voluminous" files from the TBI investigation. He said he will travel to the 9th District to interview witnesses this month.

Another set of lawsuits involving Assurance Title were filed in U.S. District Court in February 2009.

In one suit, Assurance Title is listed as the plaintiff and Ross, Riedl and Vann are listed as defendants. The suit seeks to determine the ownership of assets of the firm.

The partnership with Vann dissolved by 2004. Ross and Riedl then formed Assurance Escrow Co.

Vann would later file suit claiming that Ross allocated income to him that he never received. Vann incurred federal income tax liability of about $170,000 for money he said he never received. The IRS filed a lien against Vann in 2008 for payment of the back taxes from 2002 to 2004.

Vann declined to discuss circumstances surrounding his involvement with Assurance. He filed for bankruptcy protection in December, citing the dispute with Ross as a contributing factor.

Ross said he could not discuss Vann's involvement in Assurance Title or the allegation of the withheld payments because of pending litigation.