Dade County Executive Ted Rumley looks over the planned community center and swimming pool for The Preserve, a 2,100-acre land development near Rising Fawn, Ga., that went bankrupt. Two men connected to the project were found guilty of fraud and money laundering in federal court last month.
FAMILY LANDThomas and Louise Dobson, Josh Dobson's parents, own seven lots, each under two acres and valued at $20,000 apiece, according to property records. Louise Dobson also owns a 13-acre lot at The Preserve with a cabinlike building, all valued at $60,700.Shields' wife, Hasley Abbie Shields, owns 16 lots ranging from one to two acres, all valued at $20,000 each. Travis Shields said those lots were deeded to her after she spent much of her own money investing in the property's development.None of the lots owned by the family are under the bankruptcy filing, Travis Shields said.
RISING FAWN, Ga. - A pastoral slice of Dade County continues to offer the promise of rustic homes and beautiful views despite being mired in bankruptcy, fraud and delinquent taxes for the past three years.
The Preserve, also called Wild Moon Ranch, was a more-than-2,000-acre rural retreat for the late Dr. Joe W. Johnson Jr., of Chattanooga, until his death in 1986. The land was sold to another family but kept intact.
Then a real estate development company called Southern Group met with those owners and began marketing the property as a mini-Pigeon Forge in this corner of North Georgia.
Land sales were booming, and the promised amenities made the 3-acre lots all the more attractive in 2006.
A grand entryway complete with an office and guard shack was built. Rows of trees were planted along the paved roads. A couple of modern cabinlike homes were built, with wide decks overlooking fishing ponds and manmade, stepped waterfalls.
Tepees were installed for camping and an equestrian center for horseback trail riding.
And the lots sold.
Undeveloped 2- and 3-acre lots went for $175,000, some for as much as $250,000.
Most of the buyers were from out of state. Many had never seen the site but relied on sales pitches from Joshua Dobson, co-owner of Southern Group.
But Dobson, 35, and independent contractor Paul Gott III, 40, began offering deals that should have sounded too good to be true.
The terms? No money down, and the company would make the down payment and monthly mortgage payments.
People with a few thousand dollars in the bank were being fronted $60,000 or more. All they had to do was sign the mortgage, using their credit history so banks would issue the payments back to Southern Group.
Two hundred parcels of varying sizes sold, said Travis Shields, head of T.A.S. Properties, the company that controlled the property for Southern Group. Shields is Dobson's brother-in-law.
But the Great Recession hit. Southern Group ran out of money, and creditors flocked to the people whose names were on the mortgages. T.A.S. Properties went bankrupt.
On April 23 a jury found Dobson and Gott guilty of money laundering and wire fraud for their role in the now-bankrupt $45 million development.
The pair face up to 20 years in prison on each charge. Their sentencing hearing is scheduled for Aug. 8.
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The land remains, but many people still are out a lot of money.
Five buyers who testified in the trial said they had either declared bankruptcy or allowed the property to go into foreclosure.
Foremost is Dade County, which is owed $500,000 in delinquent taxes, said Jane Moreland, the county tax assessor.
The county collects an estimated $6 million in property taxes annually.
Driving through the property Wednesday, County Executive Ted Rumley reflected on the hoped-for development on the land.
"They used to keep it manicured," Rumley said. "When you came through here it was just perfect.
"It would have been a small city compared to [Rising Fawn], and it would have brought a lot of people," he said.
Instead, it has brought a lot of misery.
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Today, about 500 acres of the land is a mix of undeveloped plots either in foreclosure or owned by individuals whose taxes are current.
A 435-acre chunk, one-fifth of the land, was donated to the Georgia Land Trust by banks looking to get out of the tangle the property had become, said Bobby Davenport, development director for the trust.
Much of that land contains cave systems that filter water used for drinking by county residents. There's Civil War history to the property, too. Davenport said Union troops marched through the land and up Lookout Mountain to battle Confederate soldiers.
An estimated 1,200 acres, more than half of the property, is under control of the bankruptcy trustee, Jerrold Farinash, said Shields.
Court records show that T.A.S. Properties moved from a voluntary bankruptcy known as a Chapter 11 to a Chapter 7, which ceded much of the control of assets to the trustee last year.
Rumley said in March that Farinash told people involved that the property would be sold in the coming months. The trustee could not be reached for comment.
The deadline for claims in the bankruptcy has been set for May 13.
In bankruptcy filings the land is valued at $5.5 million.
But with lots that formerly sold for between $145,000 and $250,000 now valued at $20,000, what the land can bring is anyone's guess, many said.
Development could still be a possibility.
Win Pratt, president of local real estate developer Pratt & Associates, said that in such a situation he would meet with all the people owed money who have a stake in the unsold lots.
When a property gets a bad reputation because of bankruptcy or other problems, Pratt said, a reputable developer needs to assess what's the total cost to gain control of the project.
Pratt is not involved with The Preserve, but he offered general comments on such developments.
Once a developer has reached agreements with all of the lienholders, he or she can begin marketing the property, he said. New sales could begin within six months or less, he said, but selling all of the lots, building homes and completing the work could take as long as a decade.
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Despite the criminal convictions, Shields blamed the development's failure on the recession that began in 2008.
Until the trustee took over, Shields said, he had an interested buyer and had hoped a land sale might clear all the debts.
"We're still doing what we can," he said.
Even when the bankruptcy ends, more people are waiting.
Vincent and Ann Mihalik, of Virginia, bought three parcels after visiting the land. They've remained current on their payments and taxes, said their Atlanta-based attorney, Scott Kuperberg.
The couple sued Southern Group for not honoring development promises that now make the land they bought for $300,000 nearly worthless.
Last year a judge ruled in their favor and awarded them nearly $11 million in damages.
Though there's still much left to be resolved, Rumley is confident that the property eventually will be developed.
"It's too good a piece of property not to."
Contact staff writer Todd South at tsouth@timesfree press.com or 423-757-6347. Follow him on Twitter @tsouthCTFP.