Branson Hills developers file suit after deal sours

by Paul Flemming

SBJ Staff

The former developers of Branson Hills have filed a $400 million lawsuit against a title insurance company over a sale that went sour.

Branson Hills Associates LP filed the suit Jan. 15 in Greene County Circuit Court against First American Title Insurance Co., Hogan Land and Title Company Inc. and Cliff Politte.

"Four hundred million dollars is astronomical, but that's what it's really worth," said Rabon Martin, a Tulsa attorney representing Branson Hills Associates. "That's what Lee Iacocca's due diligence team said. I didn't just pull that out of my (hat)."

In January 1996, Branson Hills Associates was less than a month away from foreclosure proceedings on the portion of Branson Hills it controlled because it was in default on loans from William P. McComas and Lee Iacocca.

The suit said Branson Hills Associates had gone ahead with the $16.4 million sale of its portion of the land because of written assurances from Politte that the money was on hand.

Politte "represented to (Branson Hills Associates) that the unnamed buyer had deposited approximately $26.5 million in certified funds with defendant Hogan, which it held in escrow for delivery to (Branson Hills Associates) and others upon closing the transaction," the suit said. "At the request of (Branson Hills Associates), this representation was reduced to writing, in the form of a letter signed by Politte."

The suit said the letter was attached as an exhibit in the case, but it was not included in the suit's file.

The $26.5 million sale of about 1,400 acres north of Branson was set to close Jan. 31, 1996, when agents of the Federal Bureau of Investigation burst in and scotched the deal. A check held in escrow by Hogan Land Title was bogus, and officials of Commerce Bank called in the FBI when it was presented to them for deposit.

Tom Den Ouden, head of the FBI office in Springfield, said the case was still under investigation.

"We're still actively investigating," Den Ouden said. "It was delayed because the United States Attorney General did not want an investigation (while other prosecutions and investigations were ongoing). I feel confident we'll have an indictment in this case."

In 1996 Den Ouden said the check was similar to other checks presented by the Freemen, a Montana group that does not accept the authority of the government.

"I call them comic book checks," Martin said. "The first thing you notice is there's no bank on it."

The lawyer said the check had a number of characteristics common to other fraudulent instruments used by the group.

"This was known from the outset by Mr. Politte," Martin said. The check, held by Hogan but not deposited in a bank escrow account until days before the closing, "was to be replaced by financing from another source."

The suit said the purchase offer was made by John Swanson through agent Jim Flake. The suit said Flake approached principals of Branson Hills Associates with a proposal to buy the property by an unnamed person.

In testimony in another case in June 1996, Martin said William Stoner, an officer of Branson Hills Associates, told Flake that under those circumstances Stoner wanted "to see a briefcase full of money." In Martin's June testimony in U.S. Bankruptcy Court, he said Flake told Stoner the money was on deposit at Hogan Land Title and Politte wrote a letter to that effect.

Martin said Swanson had previously tried to buy land in the Branson Hills development, but had been unable to raise the money. If Stoner had known Swanson was the potential buyer, he would not have signed the contract to sell, Martin said.

Subsequent to signing the contract, Martin said an investor came forward interested in putting $30 million into the project, a deal Branson Hills Associates could not pursue because of the sale contract.

But for the deal that would eventually be aborted, the group could have pursued "an offer to provide adequate interim financing to enable (Branson Hills Associates) to continue its successful development of the project to its ultimate conclusion, and sale thereof for its fair market value of ($200 million)," the suit said.

Instead, the sale failed and the opportunity for funding was missed. The property was foreclosed on by McComas and Iacocca.

That led to a $70 million suit filed in Taney County by Branson Hills Associates against McComas and Iacocca, among others, claiming a conspiracy to wrest the property away, among other charges. Branson Hills Associates dismissed that suit in 1997 as part of a settlement in the bankruptcy case of Everlast Branson Development Corp., a California company that had about a one-third ownership in Branson Hills Associates.

As part of that deal, the estate of Everlast Branson is entitled to half of whatever damages may be gained from the suit against First American Title and Hogan, up to $750,000.

In Martin's June testimony in the Everlast Branson case, he said First American Title was named as a defendant because of its deep pockets.

"The real issue is if Hogan acted as an agent of First American," Martin testified. "Hogan has no errors and omissions insurance and very little financial depth."

Another suit has been filed in state circuit court in St. Louis by others involved in the Branson Hills property, and also against Hogan and First American, Martin said.

Officials at Hogan did not return phone calls.

INSET CAPTION:

'I feel confident

we'll have an indictment in

this case.'

Tom Den Ouden

FBI[[In-content Ad]]