Title Agent Gets 7 Years For Looting $3.4M From Escrow; Used Phony Docs, "Ponzi" Approach To Conceal Scam Involving 16 Properties With Unpaid Liens

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

• U.S. District Judge Catherine C. Blake sentenced Deborah Williams, age 57, of Pasadena, Maryland, the owner of [Day Title, Inc.,] a Severna Park title company, [...] to 84 months in prison followed by two years of supervised release for mail fraud related to a scheme to divert settlement funds to her own benefit, [...].

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• According to her plea agreement, [...] 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, [...] 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 payoffs 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 payoffs 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.

For the U.S. Attorney press release, see Pasadena Title Company Owner Sentenced to over 7 Years in Prison for Defrauding Lenders of over $3.4 Million (Diverted Real Estate Proceeds to Personal Use and Created False Settlement Documents). EscrowRipOffKappa