Sticky-Fingered Closing Agent Gets 11 Years For Escrow Funds Ripoff, Leaving Homeowners w/ 'Double Mortgages' & Over Two Dozen Unpaid Home Loans In Completed Real Estate Deals; Used 'Ponzi' Approach In Failed Effort To Keep Scam Afloat; Title Insurer Left w/ 'Clean-Up Duty,' Picks Up $7.7 Million Tab To Make Victims Whole

From the Office of the New Jersey Attorney General:

• Acting Attorney General John J. Hoffman announced that a title company owner was sentenced to prison [] for stealing a total of $7.7 million entrusted to him as a settlement agent to pay off multiple mortgage loans in connection with real estate closings he handled.
  
  Robert M. Sebia, 50, of Wilkes Barre, Pa., who owned and operated Crystal Title Agency, LLC, was sentenced [] to 11 years in state prison by Superior Court Judge Michael Toto in Middlesex County. Sebia pleaded guilty on Aug. 31 to an accusation charging him with second-degree theft by failure to make required disposition of property received and second-degree misconduct by a corporate official. Sebia was sentenced to six years in prison on the theft charge and five years on the other charge, with the sentences to run consecutively.
  
  As a result of his guilty plea, Sebia surrendered his New Jersey insurance license and entered a civil consent judgment to pay restitution of $7.7 million to First American Title Insurance Company, which was responsible for paying the claims filed due to his thefts.
  
  Deputy Attorney General Peter Gallagher took the guilty plea for the Division of Criminal Justice Financial & Computer Crimes Bureau. The investigation by the Division of Criminal Justice began with a referral from the New Jersey Department of Banking and Insurance.
  
  In pleading guilty, Sebia admitted that, between January 2014 and May 2014, he failed to use funds entrusted to him as a settlement agent to pay off more than 28 outstanding mortgage loans on various properties. The unpaid balances totaled approximately $7.7 million. Sebia diverted the funds for his own use or the use of Crystal Title Agency.
  
  First American Title Insurance Company, which had insured the titles on the properties, is paying off the mortgages in full for the affected homeowners. First American reported the thefts to the Department of Banking and Insurance. Crystal Title is no longer in business.
  
  “Sebia spent far beyond his means in both his professional life and his personal life, covering his extravagant expenses by crookedly stealing millions from clients,” said Acting Attorney General Hoffman. “He was a thief in a business suit – a very prolific thief – and it has earned him a very lengthy prison sentence.”
  
  “Sebia covered up his old thefts by committing new thefts, in classic Ponzi fashion, using part of the new loan proceeds he stole to hide his failure to pay off mortgages in prior home sales,” said Director Elie Honig of the Division of Criminal Justice. “He stole nearly $8 million before his criminal house of cards collapsed and landed him behind bars.”
  
  The investigation by the Division of Criminal Justice determined that Sebia would use the proceeds from new mortgages and real estate closings to pay off older mortgages that he had failed to pay off as a result of previous thefts. In some cases, Sebia would continue to pay a seller’s monthly mortgage payments to the bank even though the property had been sold and the real estate settlement had occurred. Since the mortgage bank continued to receive monthly mortgage payments, it was unaware that it should have received sale proceeds to pay off the seller’s mortgage when the real estate transaction closed.(1)
  
  Meanwhile, Sebia also diverted stolen funds to cover large operating losses of Crystal Title Agency. Sebia spent lavishly on business development for Crystal Title, throwing expensive parties where he hosted industry professionals. He also used stolen funds to pay extravagant personal expenses, including travel, entertainment, luxury items and rent payments.

Source: Title Company Owner Sentenced to 11 Years in State Prison for Stealing $7.7 Million Entrusted to Him to Pay Off Mortgages.

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(1) These payments are often referred to as "lulling" payments, ostensibly because they "lull" the victims into a false sense of security (essentially lulling them to sleep, so to speak), delaying their discovery that they've been fleeced.