Attorney/Title Agency Owner Cops Plea To Illegally Siphoning $2.2+ Million In Real Estate Escrow Funds; Says Strong Market Enabled Him To Keep Ponzi Scheme Afloat, Closing Existing Deals w/ Cash From New Transactions; Scam Collapsed When Market Downturn Stalled Sales, Forcing Him To Close Deals w/ 'Rubber Checks'

From the Office of the U.S. Attorney (Nashville, Tennessee):

• Garry Christopher Forsythe, 42, of Hendersonville, Tenn., pleaded guilty [] to wire fraud, announced United States Attorney David Rivera. Forsythe, a licensed Tennessee lawyer and former owner of Forsythe Title and Escrow, a real estate closing company with offices in Nashville, Brentwood, Hendersonville, and other locations, admitted to misusing escrow funds provided by real estate buyers and lenders.
  
  During a hearing [] before U.S. District Court Judge Aleta A. Trauger, Forsythe acknowledged that he had violated his duty to maintain funds that had been provided by real estate buyers and lenders in escrow, and to use such funds only to pay the expenses of the specific real estate transaction for which they were provided. Forsythe further admitted that, after shortages developed in Forsythe Title escrow accounts, he concealed these shortages from buyers and lenders and used funds that had been provided by buyers or lenders to pay expenses for unrelated real estate closings, and for other purposes. The total amount of escrow shortages was at least $2,249,000.
  
  Forsythe further acknowledged that his title company was able to continue operating despite the shortage of escrow funds while the real estate market remained strong, as Forsythe Title continued to receive funds from buyers and lenders that could be used to cover the shortfall, but that once the real estate market slowed, his company lacked the funds to pay the closing expenses of various buyers and lenders that had already provided funds. As a result, checks written by Forsythe Title to finalize home purchases and to pay other expenses relating to buyers’ real estate transactions bounced due to insufficient funds in the Forsythe Title escrow accounts.

Source: Hendersonville Attorney Pleads Guilty In $2.2M Real Estate Closing Scheme.