Fraud alleged in Graham County Land lawsuit

***Aug. 4, 2022 Update: Lawsuit settled between Graham County Land Company, Flexible Funding

Former Graham County Land Company president Randy Jordan transferred land to himself and his partner from one of his other companies, sold the land for $1.313 million, and is arguing that proceeds from the sale or from any of his other businesses should not be attached to pay down debts owed by his bankrupt company.

Flexible Funding LLC – which is owed an estimated $17 million by Graham County Land Company – is alleging fraud.

Through their attorneys, Jordan and Flexible Funding have been battling over every salvageable scrap of Graham County Land Company, a debris-removal company that once employed dozens of people in the region and had operations in several states.

A bankruptcy auction of Graham County Land Company’s fleet of vehicles and equipment was held on Jan. 26, and Flexible Funding has been going after other assets and real estate associated with the bankrupt company. Recent filings center on an office condominium and furnishings in Alpharetta, Ga., that Flexible Funding believes should be liquidated.

But it is a land transfer and sale in 2021 that has resulted in claims of fraud.

Flexible Funding LLC of Texas, itself embroiled in bankruptcy, sued Graham County Land Company in late 2021, claiming Graham County Land Company owed it more than $17 million. The lawsuit forced Graham County Land into receivership in October. The receiver, Alan Weiner of Focus Management Group, determined that Graham County Land Company could not continue to operate and has been winding up and liquidating the company under the N.C. Commercial Receivership Act.

In its search for assets to seize and liquidate, Flexible Funding’s lawyers learned of the land transfer and subsequent sale in 2021 of property, a 32-acre parcel sold to the Eastern Band of Cherokee Indians by Jordan and Warren Dudley Orr. The property is located between U.S. Highway 129 and Old U.S. Highway 129, with riverfront access on the Cheoah River north of Robbinsville and just outside town limits.

Jordan’s affidavit

In an affidavit, Jordan said he and partner Orr had been owners and managing members of Carolina Waste, LLC, a North Carolina limited liability company.

At the time the complaint in the lawsuit was filed on Sept. 14, 2021, Carolina Waste owned a 32.45-acre parcel in Cheoah Township, Graham County. Carolina Waste deeded the property to Jordan and Orr on Oct. 12, 2021.

“This conveyance is in the public record and was not concealed,” Jordan said in the affidavit.

Orr and Jordan subsequently sold the property to the Eastern Band of Cherokee Indians on Dec. 9, 2021, for $1.313 million.

Jordan received $605,698.07 from the sale, from which he paid more than $108,000 to attorneys and other professionals.

“I also made capital inputs to several other companies in which I have an ownership interest, totaling approximately $450,000,” Jordan said.

The companies were SC Services, LLC; Blue Rock Materials, LLC; Carver Contracting, LLC; JHC Steel, LLC; Jordan Properties-NC, LLC; and Mill Creek, LLC.

Jordan said he has also used proceeds to pay for his living expenses.

“Several of my companies are owed money by GCLC in an amount believed to exceed $1 million and are unlikely to be repaid,” Jordan said.

“Furthermore, as a result of loan defaults by GCLC and National Civil, LLC, several financing companies have seized equipment from my other companies pursuant to cross-default provisions, which equipment was necessary to those companies’ operations. I made the capital inputs to my other companies in an effort to keep them operating or provide necessary operating capital to enable me to rebuild my professional life.”

National Civil, LLC is also a company Jordan owns and is part of the bankruptcy.

In spending the proceeds, Jordan said, “I have not acted with any intent to defraud Flexible Funding. …I have many creditors other than Flexible Funding. In addition to this lawsuit, I am currently a defendant in at least four lawsuits wherein the plaintiffs are seeking a money judgment against me (among other relief).”

The lawsuits are:

* Mitsubishi Capital America, Inc. Hitachi Capital America Corp. v. Randy Jordan et al., pending in Superior Court, Graham County, N.C.;

* People’s United Equipment Finance Corp. v. Randy Jordan et al., pending in the United States District Court for the Southern District of Texas;

* C.TVT 2.0 LLC v. Randy Jordan et al., pending in the Third Judicial District Court, Salt Lake City Department, Salt Lake County, Utah;

* Volvo Financial Services, a Division of VFS US LLC v. Randy Jordan et al., pending in Superior Court, Guilford County, N.C.

Jordan completed a personal financial statement and gave a copy to Flexible Funding’s lawyers.

He said he has no regular source of income, and that his only source of “W-2 income” in 2021 was from Graham County Land Company.

“Given my lack of any regular income, allowing Flexible Funding to attach the proceeds or to otherwise enjoin my use of the proceeds would severely impair my ability to pay my regular monthly expenses, support my family, maintain my other businesses, and service other legitimate debt obligations, causing me irreparable harm,” Jordan said.

Flexible Funding’s assertions

Flexible Funding’s lawyers have asked the court to prevent Jordan from “engaging in further fraudulent transfers,” while final court decisions are pending.

“Jordan’s affidavit admits that he has disposed of proceeds, including transferring large sums to various third party entities he calls the “Jordan Companies,” Flexible Funding’s lawyers said in a court filing.

“… Jordan, by his own admission, is transferring and disposing of assets. If an insolvent defendant’s transfer of nearly half a million dollars to companies under his control during the course of litigation does not constitute ‘exceptional circumstances’ or indicate an ‘immediate danger that the debtor will destroy or alienate the property sought to be attached,’ as described in Hutchison, then nothing does,” the lawyers argued.

In his affidavit, “Jordan admits to disposing of proceeds to pay $108,000 to various attorneys and transferring $450,000 to six different entities in which he owns an interest. He describes the latter transfers as ‘capital inputs.’ But Jordan’s derivative statement about these transfers illustrates why they are fraudulent as to Flexible Funding. Jordan states he transferred the funds to his other companies to ‘provide necessary operating capital to enable me to rebuild my professional life.’ In other words, Jordan admits that rather than re-pay Flexible, he is turning his back on his obligations and transferring his money for his own personal and business purposes.”

Jordan offers no legitimate reason for his transfers, the Flexible Funding lawyers argued. “He claims, without evidence, that several of his companies are owed money by GCLC or had their equipment repossessed because of loan defaults by GCLC and National Civil, LLC. These facts are unsupported and irrelevant. The money from the proceeds that Jordan transferred to his other companies did not belong to GCLC or National Civil, LLC. It belonged to Jordan, so his implied setoff argument lacks merit.”

“… If a debtor’s transfer of money to third party entities under his control for unspecified future purposes — while he is insolvent and being sued for unpaid debts — is not sufficient to establish fraudulent intent, then no creditor will ever be able to establish such intent by circumstantial evidence. The debtor’s intent would always be whatever they say it is, rather than what objective facts and circumstances indicate.”

Although Jordan cites to other cases in which he is being sued and states that an attachment or injunction would impair his ability to service other legitimate debt obligations, it does not state that Jordan will actually use any of the proceeds to pay other creditors or obligations, the lawyers argued.

“He makes no statement about what other assets and income are available to him, such as, for example, the assets and profits of the six entities he identifies as ‘the Jordan Companies.’ Consequently, Jordan has not provided this court with any specific or reliable evidence that an attachment or injunction would result in any irreparable harm to him. In fact, Jordan’s admission that he has transferred $450,000 to his other entities for unspecified purposes contradicts that conclusion.”

Jordan’s response

In their own filings, Jordan’s lawyers argued why he should not be subject to having the court attach proceeds from other businesses he owns that are unrelated to Graham County Land Company.

A plaintiff seeking an order of attachment based on fraud “must allege the facts and circumstances supporting the allegation of fraud with particularity” and “must allege that the defendant has attempted or will imminently attempt to secrete away the property …”

“At the time the complaint in this matter was filed on Sept. 14, 2021, Jordan did not own any individual interest in the subject real estate. At the time of the complaint the property in question was owned by Carolina Waste, LLC and was not conveyed to  Jordan and Warren Dudley Orr until Oct. 12, 2021. In other words, the subject property was beyond the reach of Flexible Funding when this litigation was initiated.”

Flexible Funding was “fully aware that the property was previously conveyed by Carolina Waste, LLC to Jordan and Orr, as evidenced by the previous Motion for Prejudgment Attachment filed by Flexible Funding on Oct. 25, 2021 in the United States Bankruptcy Court for the Western District of North Carolina. This transfer can only benefit Flexible Funding insofar as the effect was to enhance Jordan’s assets rather than deplete them. Irrespective of how Jordan disposes of his portion of the proceeds, his net estate available to satisfy any prospective judgment in favor of Flexible Funding in this case will in no event be less than it was at the time this case was filed since the property in question was owned by a limited liability company at that time.”

Flexible Funding “asserts in essence that Jordan owes it money, Jordan has money that is not exempt, Jordan is spending his non-exempt money, but  Jordan is not paying Flexible Funding. From these bare facts, Flexible Funding jumps to the conclusion that Jordan is acting with an intent to defraud Flexible Funding. This is simply insufficient to show fraudulent intent warranting prejudgment attachment.”