Title Agent Gets 6 Years For Illegally Pocketing $4.9M+ In Real Estate Closing Cash Meant For Existing Lienholder Payoffs On Home Sales, Refinancings

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

• U.S. District Judge Catherine C. Blake sentenced Gary Pierce, age 44, of Edgewater, Maryland, [] to six years in prison, followed by three years of supervised release, for conspiracy to commit wire fraud in connection with a five year scheme to divert or hold mortgage payoff funds from clients’ closings on 17 Maryland properties. Judge Blake also ordered Pierce to pay restitution of $4,174,044.41. Co-defendant Todd R. Bettin, age 42, of Crofton, Maryland, pleaded [] today to wire fraud in connection with the same scheme.

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• Beginning in 2007, Pierce and Bettin diverted or held mortgage payoff funds from clients’ closings for a matter of days, weeks and sometimes years. Pierce falsely represented on HUD-1 forms sent to the borrower’s lender that the payoff was made, when in fact Pierce intended to divert the funds.



• Pierce and Bettin fabricated wire confirmation reports, which purported to be a bank record of the transfer, to include in loan files. These were created in advance of audits in order to deceive the title insurers.



• Additionally, to forestall discovery by the lenders, Pierce and Bettin contacted the mortgage lender who should have been paid off and posed as the borrower/homeowner. Bettin would either create an on-line profile for the borrower and stop any mail from being sent to the borrower, or he would tell the lender that his, the borrower’s, address had changed and he would re-direct the lender to send all correspondence to a post office box owned by Pierce. Bettin would then make monthly mortgage payments to the existing lender.



• Believing that the bank had been paid off as a result of the settlement, the borrower stopped making monthly payments on that mortgage. And since that lender was receiving monthly payments, it had no reason to notify the borrower of any delinquency. With no delinquency in the account, the scheme went undetected.



• Because the existing mortgages were not paid off, the liens against the property were not removed and clear title could not be passed to the new lender and borrower. The total amount of diverted or otherwise improperly obtained funds totals $4,971,380.

For the U.S. Attorney press release, see Owner of Gambrills Title Agency Sentenced to 6 Years in Prison in $4.9 Million Mortgage Fraud Scheme (Employee Pleads Guilty To The Same Scheme).