Title Agency Owner Cops Plea To Pocketing $3.4M In Escrow Funds From Real Estate Closings Intended To Pay Off Existing Lien Holders

From the Office of the U.S. Attorney (Maryland):

• Deborah Williams, age 56, of Pasadena, Maryland, the owner of a Severna Park title company, pleaded guilty [last Friday] to mail fraud related to a scheme to divert settlement funds to her own benefit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

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• According to her plea agreement, [...] Deborah Williams used for her own benefit settlement funds from real estate closings that were deposited in Day Title’s escrow account and were intended to pay off the lien holders on those properties. [...] Williams attempted to conceal her illegal transactions by falsely representing on the settlement documents that her company had paid off lien holders, then sent the falsified settlement documents to the lender by commercial carrier. In fact, Williams either initiated stop payments of payoff checks that had been disbursed or intentionally failed to mail the payoff checks to the lien holder.

• Day Title’s failure to make the pay offs to the lien holders was not detected until sellers began receiving delinquency notices from their mortgage companies. The time delay between the settlement and the date when Day Title made the pay offs to the lien holders allowed Williams to replenish the escrow account with proceeds from new unrelated real estate settlements.

• A title insurance company that had issued policies through Day Title, began to receive claims from lien holders who had not been paid off and conducted an audit of Day Title. The title insurance company found over 16 properties where Williams had not paid off the lien holder. The company paid out a total of $3.443 million to these entities, as required under the title insurance policies that guaranteed that the buyer was receiving a title free of prior liens. As part of her plea agreement, Williams must forfeit $3.4 million, the amount she admits that she failed to pay to the lenders.

For the entire press release, see Pasadena Title Company Owner Pleads Guilty to Defrauding Lenders of over $3.4 Million (Diverted Real Estate Proceeds to Personal Use and Created False Settlement Documents). EscrowRipOffAlpha