It took nearly 10 years, but a business conflict involving Henry S. Miller Cos. has finally wrapped up. The firm prevailed in two separate lawsuits that were sparked by a $90 million real estate deal gone bad. The bizarre tale was detailed in a 2008 D Magazine story by Kurt Eichenwald:
The year-long fantasy that had consumed Steven Defterios’ life finally came crashing down in a five-minute phone call.
A broker with Henry S. Miller Commercial, Defterios had been struggling those many months with what he was sure would be the most lucrative deal of his career: the sale of almost $100 million worth of real estate to Jim Flaven, a man who boasted of owning an offshore trust fund worth upwards of a third of a billion dollars. Flaven’s eagerness to get the deal done—and his stories of working with his stepfather, a Boston real estate mogul—had set dollar signs dancing in the eyes of everyone involved in the proposed transaction.
Then, delays and excuses, each more improbable than the last. With other possible buyers shunted aside, several of the properties faced foreclosure as negotiations dragged on. Flaven grew increasingly elusive, refusing to return messages and ignoring demands from the seller, BNC Real Estate, to make good on his commitments. Finally, amid the emerging wreckage, Defterios decided to telephone the Boston tycoon, Stephen Karp, and ask about his stepson. The words were the worst he could have anticipated.
“I don’t know who Jim Flaven is,” Karp replied.
With that, one of the most bizarre con jobs ever to roll through Dallas unraveled. Flaven, the purported centimillionaire with the offshore trust fund, turned out instead to be a near-penniless East Coast truck driver who forged a trail of bad debts and angry victims of his many deceptions. There was no trust fund, there were no millions, there was no deal.
In 2008, BNC filed a lawsuit against Henry S. Miller and Defterios, who by then was no longer with the firm. The defendants were represented by Steven Terry of Newsom, Terry & Newsom, appointed by Diamond State Insurance, HSM’s real estate errors and omissions insurer. The jury returned a verdict of nearly $9 million against HSM, which eventually went into bankruptcy.
HSM, through Shields Legal Group, went on to sue Diamond State for breach of contract and other allegations. The court granted the real estate firm’s summary judgment; the case eventually was settled by the parties for an undisclosed amount that was greater than the policy limits, HSM says.
The firm also filed a legal malpractice suit against Steven Terry at Newsom, Terry and Newsom. The case was tried earlier this year, with a Dallas County jury awarding $4.6 million in damages to HSM. The court later awarded HSM $615,000 in attorney’s fees and damages, the firm reports.
A final judgment was just recently issued and signed by the court, identifying a $6 million settlement credit and bringing the matter to a close.
Sam Kartalis, president and COO of Henry S. Miller Realty Services, said the resolution was a long time coming. “After a decade of exhausting legal issues, legal fees and damage to the Henry S. Miller Company name, we successfully defended Henry S. Miller’s reputation,” he said in a statement. “This is not only a significant win for us, but for every real estate company doing business in Texas.”