Disappearing Mortgage Payoff Proceeds From Home Refinancing Leaves Another Another Family In Trouble As Sticky-Fingered Closing Attorney Sits In Jail

A recent story in the Milwaukee Journal Sentinel described the financial wreckage created by Peter Elliott, a now-disbarred Wisconsin attorney currently serving a 10-year federal prison sentence for embezzling more than $3.6 million from clients. The following excerpt describes one of Elliott's dirty deeds when acting in the capacity of a closing attorney handling a refinance:

• When Nicole and Robert Wagner refinanced their home the previous year, Elliott - the closing attorney hired by National City Lenders - failed to use the new loan proceeds to pay off Wells Fargo, which wrote the original mortgage for their Hubertus home.

• Elliott even made monthly payments to Wells Fargo for more than a year while the Wagners were making their monthly payments to National City, according to Nicole Wagner and court records. Today the Wagners have paid several thousand dollars to a new lawyer as they try to clean up the mess and fight off attempts by Wells Fargo to foreclose on their home.

• Wells Fargo filed for foreclosure in 2009, a bid that was dismissed. In December, Washington County Circuit Judge Andrew Gonring rejected a motion to reopen the foreclosure.

• Wagner said the case is on her mind each day and has emotionally drained all members of the family. Selling the home would be difficult, if not impossible, because two lenders may argue they have open mortgages on the property. "Nobody knows who owns it," Wagner said. "I don't know who owns it."

• The problem has even affected her children, ages 7 and 9, who have wondered whether the family would have to move. "I keep thinking that this can't be true - there has to be something wrong, there is no way this is happening to us," Wagner said. "I never thought we would be sued or be in foreclosure  . . . I'm so depressed it's ridiculous."(1)

Source: Lawyers' clients kept in dark on past issues (Wisconsin keeps complaints about lawyers secret, sometimes at a high cost).

(1) In an associated report from the Milwaukee Journal Sentinel, see Convicted attorneys are still practicing (At least 135 attorneys with criminal convictions are practicing law today in Wisconsin - including some who kept their licenses while serving time and others who got them back before they were off probation, a Journal Sentinel investigation has found).