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By: Robin Ford Wallace, Reporter

 

Conservation activist Bobby Davenport confirmed last week that the Georgia Land Trust had accepted 435 acres of land at the Preserve at Rising Fawn, the failed development in Johnson Crook, from two banks that had acquired the property through foreclosure.

“That makes us the largest landowner at the Preserve besides the bankruptcy trustee,” he said by telephone on Friday.

Davenport referred to the bankruptcy of TAS Properties, a company owned by Travis Shields, co-owner with his father- and brother-in-law, Thomas and Joshua Dobson, of Southern Group, developer of the Preserve. 

Early last year, Davenport had attended a special auction Dade County held to recoup back real estate taxes on Preserve lots. There he was by far the biggest bidder, acquiring 266 acres on the slopes of Lookout Mountain for the Georgia Land Trust as well as the Lula Lake Land Trust. 

But that sale was rescinded – and Davenport’s check returned – the next week amid news that TAS had filed for Chapter 11 protection a few days before the scheduled sale. Much of the Preserve acreage had been transferred from Southern Group to TAS in months previous, affording it protection from the county’s attempts to auction it off for Southern Group’s unpaid taxes.

At the 2012 auction, Davenport paid, or tried to, $146,000 for the 266 acres. For the 435 acres he acquired this year for the Georgia Land Trust, the cost was: zilch. The land was donated free of charge by Farm Credit Services and BB&T (Branch Banking and Trust), two lenders that had foreclosed on it after the collapse of the no-money-down, no-monthly-payment financing scheme used to market Preserve lots. 

As charged by several civil lawsuit and now by a federal indictment, during the heyday of Preserve sales, Southern Group recruited “straw buyers,” or buyers in name only, to procure bank loans on the lots they bought on paper, with the developer supplying the down payment and promising to make the monthly mortgage payments.

These buyers hoped to turn a profit on their lots by selling them back to the developer or to bona fide buyers once the development was built out. But that never happened. Instead, the recession hit, sales stalled, and in the summer of 2009, Southern Group defaulted on its agreement to make lot buyers’ loan payments. Foreclosure after foreclosure resulted.

Though typically Preserve lots were two to three-acre plots on the side of Lookout Mountain without access to roads, water or electricity, the bank loans against them were $150,000, $175,000, even $250,000.

But after the collapse, banks have failed to resell the lots for even a fraction of such prices. At more than one auction, in fact, some have gone begging at $1,000 an acre or have fetched no bids at all.

Bobby Davenport denied any interest in bidding for the Preserve lots Dade had listed for sale in its regular 2013 tax auction on Tuesday. “The four lots included in the auction are scattered around the valley floor and have been (unsuccessfully) put up for auction before by the county,” he wrote in a Jan. 28 email in response to the Sentinel’s inquiries. “Don’t think we will go and pay for lots when others donate. That is the unfortunate reality of market value of this morass of bankruptcy, foreclosure, delinquent taxes, and RICO investigations.”

The RICO (Racketeer Influenced and Corrupt Organizations) investigation Davenport referred to is a joint Federal Bureau of Investigation/Internal Revenue Service probe into Preserve doings that resulted last May in federal indictments against Joshua Dobson and Paul Gott III, another alleged participant in what an FBI release called a $45 million interstate wire fraud and money laundering operation.

Dobson and Gott were to have stood trial this week in federal district court in Chattanooga, but proceedings were delayed a second time at the request of Dobson’s attorney. The trial was originally scheduled for October.

Last spring, the prosecuting assistant U.S. District Attorney acknowledged that the Preserve investigation was ongoing, meaning there might be more arrests. Meanwhile, the TAS bankruptcy drags on as Dade and several banks await repayment from the proceeds. 

Davenport says the legal quagmire will get worse before it gets better. “Nothing good will happen until the knot is untangled,” he said.  With so many unknowns, he said, he can only be grateful the Georgia Land Trust’s board of directors voted to accept the gift of Farmers’ and BB&T’s acres.

But despite all negatives, says Davenport, he will press forward and ask other lenders to donate their own Preserve foreclosures for conservation. “I love recording deeds,” he said. 

At the abortive 2012 tax auction, Davenport bid on lots on the slopes of Lookout Mountain with a view toward water and cave conservation. With these current acquisitions, he says, it is more difficult to assemble packets of land that make sense. “We have to take what people will donate” said Davenport.

Of the 2,150 original Johnson Crook acres sold to TAS and then transferred to Southern Group in the 2006–7 time frame, the biggest contiguous hunk is now in the hands of the TAS bankruptcy trustee, Jerrold Farinash, with whom Davenport does not deny the land trust has been in contact. “He’s willing to accept all offers,” said Davenport.

But he added that the feasibility of outbidding all comers for the land depends on who else is interested. “We’re not in a position to compete against the private sector,” said Davenport. 

He said, though, his group may look around for funds to make such competition possible.    

Davenport says one way or another it will take time, but that the Georgia Land Trust is committed to the project for the long haul. What it will do with the land, and when, is another question, said Davenport, and not one he is empowered to discuss at the present.

Meanwhile, roads are crumbling at the Preserve and only a couple of people live there full-time, reported caver Chuck Henson. Henson is not one of those residents, but he has bought a couple of lots there and hopes to buy more, he said. 

Henson explained his interest: the Johnson Crook property is riddled with caves, and he and other cavers are working with Davenport’s group to identify and locate them for protection either by the Georgia Land Trust or by the SCCI (Southeastern Cave Conservancy, Inc.), a conservancy particularly for caves.

One Johnson Crook cave, Lost Canyon, has already been acquired by the SCCI, said Henson.     

Lot buyers filed a rash of civil suits against Southern Group and associated Preserve entities from the crash onward, with the latest ending only last November in a $10 million judgment against the developer in Dade Superior Court, which the plaintiffs’ attorney expressed little hope of collecting in the short term.

One remaining related lawsuit is being pressed by Dade Magistrate Judge Joel McCormick, who is suing Deborah Visco Johnson, widow of Eugene Johnson, the original seller of the Crook to TAS/Southern Group. In court papers for the suit, McCormick claims that the late Johnson promised him a $500,000 consulting fee in the sale but only paid him $275,000 in cash. 

That case, originally slated for an April trial, has been moved out of Dade Superior after the circuit judges agreed to recuse themselves from it, McCormick being their fellow judge in the local system.    


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