Second Suit Accuses GOP House Candidate of Fraud
June 25th, 2008 at 12:34 pm
The Observer has obtained a second lawsuit - 4848 Aspermont Ltd vs. Alamo Title, et al - accusing GOP House candidate Isaac Castro of fraud. Castro is running against state Rep. Joe Heflin (D-Crosbyton) for House District 85. The courts will ultimately decide the merits of these cases. Nonetheless, the timing is bad for Castro. The first suit, in Stonewall County, is likely to go to trial in August or September, in the heat of campaigning, according to plaintiff’s attorney Travis Ware. Depositions are already underway.
Filed in Dallas County in May, the 4848 Aspermont suit is linked closely to the Stonewall County estate battle we wrote about last week. The plaintiff, a real estate vehicle called 4848 Aspermont LTD, accuses Castro of conspiring with the Hamlin National Bank, two title companies, and a handful of real estate wheeler-dealers to flip a West Texas ranch three times without disclosing pending litigation over the ranch to the buyers. (In legalese, the required disclosure is called Lis pendens.) The case is a doozy, so here’s some narrative to help explain the situation…
At the heart of the 4848 Aspermont suit (download it here) is a 6,000-acre ranch. Two brothers - John and Bob Denison - are fighting over the estate in the Stonewall County case.
Castro has long represented John Denison. According to the suit, Brother John defaulted on loans from the Hamlin National Bank (also a Castro client) that were secured by the ranch. So the bank required John to sell off the ranch to pay back the loans. However, the title to the ranch was encumbered by ongoing litigation between the brothers, requiring that written notice (Lis pendens) be given to any potential buyer of the property. In January 2004, at a public auction, the ranch was purchased by T. Boone Pickens, the Texas oilman who is now going around Texas buying up property and water rights for his burgeoning water empire.
The suit alleges that Castro intentionally “caused” the title company to issue a commitment for title insurance that failed to disclose the Lis pendens. Then at closing, Pickens received a special warranty deed and an affidavit signed by John Denison that failed to mention the litigation. In other words, Pickens bought the ranch without knowing that it was in the crosshairs of an estate battle. As a result of the sale, the suit states, the bank recouped its loans, the title companies got their fees, and Castro “received payments of substantial fees owed to him for legal work related to” the Brothers Denison case. During this time period, Castro was representing John Denison, Hamlin National Bank, and was working with the title companies.
Later, Pickens discovered the Lis pendens and decided to unburden himself of the ranch, according to the suit. He sliced off 4,848 acres and sold the “4848 Ranch” to one Lyle Walker of Dallas in March 2006. Once again, the transaction was handled by Castro and the two title companies, according to the suit. And again, it is alleged that the Lis pendens was not disclosed to the buyer.
(Castro categorically denies that he was still involved at this point. “Your allegations that I have been involved in each and every transaction are false, and I believe you and your client know they are false,” Castro wrote to 4848 Aspermont’s attorney. Castro goes on to warn that if the suit is not dismissed “the consequences of failing to do so may be severe.”)
A few months later, Walker contracted to sell the ranch to 4848 Aspermont for a $500,000 profit. Once again, the allegations state that Castro and the two title companies prepared a title without the Lis pendens. Aspermont tried to sell the property to one Mark White for a healthy $1.5 million profit. However, this time when Castro and the two title companies prepared the title insurance the Lis pendens was listed. White decided he didn’t want the ranch with the encumbrance. “Therefore,” the suit states, “4848 Aspermont has been left holding the proverbial bag, a bag containing a piece of real estate with substantial debt and a questionable title.”
Again, Castro denies he had any involvement in these transactions after the sale of the ranch to Pickens. In a statement to the Observer Castro said the lawsuit “is an example of what is wrong with our political system. People have used a frivolous lawsuit to defame me in an attempt to get our campaign off track.” Castro does not elaborate on who these plotting “people” might be. But he takes Heflin to the woodshed for accepting money from trial lawyers and touts his own support for “loser pays legislation, which will discourage these meaningless lawsuits.”
The two causes of action brought against the defendants, including Castro, are fraud and conspiracy to commit fraud. Castro is representing himself in the suit.
