South Florida Title Agency Duo Charged With Looting $10M From Escrow Account; Cash Earmarked For Completing Real Estate Closings

In West Palm Beach, Florida, the U.S. Attorney's Office announced four mortgage/real estate fraud indictments of 15 individuals in four separate cases, including the following:

West Palm Beach Residents Charged with Looting Title Company’s Escrow Account

• According to an indictment returned by a federal grand jury sitting in West Palm Beach, between July 2005 and May 2008, Roger C. Gamblin, 61, and Peggy L. Gamblin, 53, both of Royal Palm Beach, Florida, defrauded companies and individuals out of approximately $10 million.

• According to the indictment, the husband and wife owners and operators of Flagler Title Company teamed up to steal money from the escrow account for Flagler Title Company to cover company operating expenses and personal expenses. The fraud was committed by promising the Title Insurance Companies they represented and various companies and individuals with outstanding real estate transactions that money in the Flagler Title Company escrow accounts would be used solely in connection with real estate transactions and their fees would not be disbursed until the transactions occurred and Flagler had earned their fee. Instead, the Gamblins caused money to be transferred without completing the transactions or obtaining permission from the Title Insurers, buyers, sellers and mortgagees involved in the property transactions.

For the entire press release, see Palm Beach County Mortgage Fraud Task Force Brings Charges Against 15 Defendants For Lying To Banks To Get Money. EscrowRipOffKappa

Minnesota Regulators Take Action Against Title Agency That Allegedly Stiffed Underwriter Out Of Insurance Premiums Collected From Real Estate Closings

In St. Paul, Minnesota, the Duluth News Tribune reports:

• A family-owned and operated title insurance agency in Duluth and Two Harbors has been accused of fraud and operating without proper licenses by the Minnesota Department of Commerce. Scenic Title and Abstract Inc. is accused of collecting premiums from clients on behalf of Fidelity National Title Insurance Co. and never sending the collections to Fidelity. The title company, owned by Kevin Eckholm, is accused of failing to submit premiums in 237 instances in the past four years, court documents show.(1)

For more, see Title company accused of fraud.

For the Minnesota Department of Commerce press release, see Title Insurance Company in Duluth and Two Harbors charged with fraud.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on this story.

(1) The Minnesota Department of Commerce Order for Summary Suspension of the firm's licenses is effective immediately and will be considered at a hearing before an Administrative Law Judge. EscrowRipOffKappa title insurance legal issues

Maryland AG Charges Mortgage Broker With Felony Theft; Accused Of $100K+ Ripoff Of Proceeds From Client's Home Refinance

According to the Office of the U.S. Attorney in Maryland, the Maryland Mortgage Fraud Task Force members recently highlighted their progress in a press conference, including the filing of criminal, civil, and regulatory actions against more than 250 individuals and companies in 2009, including this recently filed case:

• On December 8, 2009, the Maryland Attorney General’s Office charged David Young Park, age 43, the former President of Capital City Financial Group in Ellicott City, with theft in Baltimore County Circuit Court. In June of 2007, Park was allegedly working as a mortgage broker and assisted the victim with the refinance of her home. The victim intended to use the more than $100,000 in equity to purchase a commercial condo for her business. Following settlement, Park allegedly obtained the victim’s proceeds from the title company without the victim’s knowledge, deposited them into his escrow account and spent the money on various personal and business expenses over the course of two weeks.

Source: Maryland Mortgage Fraud Task Force Announces Progress And Plans (State of Maryland v. David Young Park). EscrowRipOffKappa

NY Title Agent Charged With Misappropriating Escrow Funds From Real Estate Deals; Uses "Ponzi" Approach In Attempt To Conceal Earlier Thefts, Say Feds

From the Office of the U.S. Attorney (Southern District - New York):

• LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, [and other officials] announced that BRIAN H. MADDEN, who controlled and operated three title insurance agencies in New York and Suffolk counties, was arrested today for misappropriating millions of dollars of escrow and other client funds and embezzling a portion of those funds for his own benefit.

The Feds allege that:

• Commencing around early 2008, MADDEN misappropriated escrow and other client funds from Liberty Title, Skyline Title, and GNY Liberty Abstract in order to sustain operations at Liberty Title, and to support the significant cash draws he was taking from the company. In particular, between January 2008 and April 2009, MADDEN took approximately $2.2 million in cash draws from Liberty Title. Those cash draws, which at times amounted to $300,000 or more in a single month, far exceeded MADDEN's draws in prior years, and were taken despite the deterioration in the real estate market throughout 2008. To sustain Liberty Title's operations in the face of such draws, and to pay current client debts, MADDEN misappropriated escrow and client funds of other clients, essentially using new funds from clients to pay off older debts on behalf of other clients.

For the entire press release, see PRESIDENT OF TITLE INSURANCE AGENCY ARRESTED FOR MISAPPROPRIATING MILLIONS OF DOLLARS.

Go here, Go here, Go here, Go here, and Go here for other stories of alleged trust account / escrow account theft of funds.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on this story. EscrowRipOffKappa

Minnesota Title Closer Charged With Illegally Pocketing $220K+ By Paying Her Family Bills Out Of Real Estate Closing Funds

From the Office of the County Attorney for Dakota County, Minnesota:

• Dakota County Attorney James Backstrom announced that Kuntee Singramdoo, age 49 of Lakeville, has been charged with five counts of Theft and three counts of Theft by Swindle (all felonies), in connection with the theft of over $220,000 while she worked as an independent closer for a Burnsville title and real estate company.

***

• Singramdoo admitted to the Department of Commerce that she embezzled her client’s funds by issuing checks for her own benefit and her licenses were suspended in March of this year. She claimed to have had overwhelming personal debts for which she used the embezzled funds.

According to the County Attorney press release, the investigation revealed that Singramdoo used several methods to accomplish her thefts:

1. she would write checks for her personal bills or bills of other family members as part of a real estate closing and then enter those payments directly on mortgage forms as if the obligation was owed by the buyer or seller in the transaction;
2. she would accurately prepare documents for purposes of real estate closings and subsequently change the forms at a later date to reflect fraudulent payments; and
3. she would issue valid checks for payment as part of closings, but would never tender them to the payee and would subsequently reissue the checks to pay her own or her family member’s creditors.

For the entire press release, see Lakeville Woman Charged in Thefts Exceeding $220,000.

For the criminal complaint filed in this case, see State of Minnesota v. Singramdoo.

Go here, Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds. EscrowRipOffKappa

NH Woman To Stand Trial In $550K Vegas Escrow Scam; Blames Now-Convicted Employee For Swindle That Left Existing Mortgage Unpaid In Real Estate Sale

In Hudson, New Hampshire, the Nashua Telegraph reports:

• A Hudson woman is set to stand trial in Las Vegas next month on charges that she stole $550,000 from a lending company while working as an escrow officer several years ago. Sheila K. Jones, 46, of [...] Hudson, has pleaded not guilty to charges of felony theft and insurance fraud and is free on $10,000 bond pending the Jan. 19 trial. Conditions of the bond agreement did not prevent her from leaving Nevada, where she lived before moving to Hudson this past summer.

***

• Jones is accused of stealing the $550,000 from an escrow account that she opened to hold proceeds from the sale of a $650,000 Las Vegas home. She’s also accused of lying to an insurance company by telling them the [trust] deed [ie. mortgage] had or would be paid off, according to an indictment handed down by the Clark County District Attorney in Las Vegas. [...] Reached Tuesday, Jones and her lawyer said it wasn’t Jones who committed the thefts, but employees who were working for her. [...] Jones’ lawyer, T. Augustas Claus of Las Vegas-based Legal Resource Group, said one of Jones’ employees has already pleaded guilty to stealing and is in jail.

Source: Police say Hudson woman stole $550k.

(1) According to the story, Jones currently goes by the name Sheila Mitchell. At the time of the alleged swindle, she reportedly went by the name Sheila K. Williams. EscrowRipOffKappa

Fake Attorney Gets 7+ Years For $1.7M Escrow Ripoff In Conducting Real Estate Closings; Pocketed Funds Due To Existing Lienholders, Homeowners

In Philadelphia, Pennsylvania, the Philadelphia Daily News reports:

• A con man who passed himself off as an attorney was sentenced in federal district court yesterday to 7 1/2 years behind bars in connection with a scheme to bilk homeowners, lenders, title insurance companies and the city of Philadelphia of $1.7 million. Jason Bloom, 39, of Mount Laurel, N.J., has been in federal custody since he pleaded guilty on July 13 to wire fraud affecting a financial institution.

• Authorities said that Bloom [...] acted as a settlement and title-insurance agent for real-estate sales and refinancings for a firm in Trevose, Bucks County, and, later, his own company. Bloom kept money he received from settlements that was supposed to be used to pay off existing mortgages, pay real-estate taxes in Philadelphia and make refunds to homeowners for overpayments at closings.

***

• By pretending to be an attorney, Bloom increased the number of settlements that he could handle. Some jurisdictions in New Jersey permit only attorneys to handle real-estate closings. [...] Joyner ordered Bloom to make restitution of $1,730,874 to three title insurance companies, two financial firms and the city. (Homeowners ripped off have already been made whole, the feds said.)(1)

For the story, see Bogus lawyer stole $1.7M, gets 7 years.

(1) I get the feeling that the insurance companies that underwrite the title policies in real estate transactions pay out more to cover the looting of escrow accounts committed by their agents than they do in actual title claims. EscrowRipOffKappa

$900K Real Estate Deposit Part Of $2.2M In Escrow Cash Ripped Off From Clients By NYC Attorney, Says Manhattan DA

From the Office of the Manhattan District Attorney:

• Manhattan District Attorney Robert M. Morgenthau announced [Wednesday] the second indictment charging a lawyer with stealing settlement and escrow monies from his clients. This second indictment charges the defendant with stealing more than $1.5 million from five clients. This follows a previous indictment that was unsealed on May 19, 2009 charging the defendant with stealing $652,600 from 11 medical malpractice and personal injury clients. The total amount the defendant is charged with stealing in both indictments is $2.2 million.

• MARC A. BERNSTEIN, 54, of Bernstein & Bernstein, LLP in Manhattan, was arrested [Wednesday] on charges of grand larceny and scheme to defraud. [...] The investigation leading to [the current] indictment, and the one preceding it, revealed that BERNSTEIN engaged in a scheme to steal from his victims, many of whom were affected by medical malpractice or injury suffered as a result of car accidents. In the typical case, BERNSTEIN negotiated a settlement on behalf of the victim, took control of the incoming settlement money and then stole it.

• In one instance that has now given rise to charges, Bernstein, acting as an escrow agent, received $900,000 in real estate deposit money on a contract of sale for the purchase of a building in lower Manhattan and stole that money from the intended purchaser of the property.(1)

Go here for the entire Manhattan DA press release.

Go here, Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds.

(1) For those who have been screwed out of money or property through the dishonest conduct of a New York attorney in the course of providing legal representation, and seek some financial reimbursement for the screwing over, go to the The Lawyers’ Fund For Client Protection Of the State of New York for more information. For other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map. EscrowRipOffKappa

Florida Closing Agent Admits Pocketing Client's Refi Proceeds, Leaving Retiree Facing Foreclosure; Scammer Moved To State After NY Fraud Conviction

In Archer, Florida, The Wall Street Journal reports:

• Last summer, Lawrence Ford jumped into the fast-growing market for so-called reverse mortgages. The retired auto mechanic and horse trainer used the money he received to pay off his existing $70,000 mortgage and "piddled away" the remaining $24,000 on things like restaurant meals for his four girlfriends, he says. Or so Mr. Ford thought. Last month, the owner of the Orlando, Fla., title company that handled his loan admitted to stealing more than $1 million from several reverse-mortgage holders, including Mr. Ford. Bank of America Home Loans, a unit of Bank of America Corp., says the title agent never sent it the money required to pay off Mr. Ford's mortgage. As a result, Mr. Ford says, the bank recently threatened to foreclose on his seven-acre ranch in Archer, Fla. "That will put me on the streets with my cars and horses and tools," says the 68-year-old Mr. Ford. Bank of America, which says there is no immediate danger of foreclosure, adds that it is working with Mr. Ford "to find a home-retention solution."

***

• Before moving to Orlando in 2008, Garry Martin, 37, the title agent on Mr. Ford's reverse mortgage, was convicted of mortgage fraud in New York. In Florida, Mr. Martin orchestrated about 10 reverse-mortgage schemes,(1) pocketing about $1 million, prosecutors say. As title agent, Mr. Martin was obligated to distribute funds from his victims' reverse mortgages to retire their conventional mortgage loans. But according to prosecutors, he kept much of the money. To prevent his victims from catching on, he arranged for their monthly mortgage statements to be mailed to an address he controlled. The scheme unraveled when the banks contacted the victims about their missed mortgage payments.

• Mr. Martin, who pleaded guilty to stealing over $5 million from more than 50 victims of mortgage-related frauds, faces up to 20 years in prison. His attorney declined to comment. Mr. Ford, meanwhile, fears he may be running out of options. Unless the bank agrees to modify his loan, he says, "I don't see a way out."

For the story, see Mortgage Fraud: A Classic Crime's Latest Twists (As 'Reverse' Loans Grow More Popular, Scams Put Older Adults at Risk).

(1) Referring to this ripoff as a "reverse mortgage scheme" is somewhat misleading. What was done in this case was simply nothing more than a flat out theft of escrow funds by a corrupt closing agent, where the refinancing proceeds that were derived just happened to come from a reverse mortgage. There is nothing inherent about a reverse mortgage that makes pulling off this scam any easier than if a conventional mortgage was involved. EscrowRipOffKappa

Attorney Suspended For Taking, Failing To Return $308K In Client Trust Funds After Failed Foreclosure Sale Bid

In Tampa, Florida, The Tampa Tribune reports on some of the local attorneys recently sanctioned by the Florida Supreme Court for their bad behavior, including:

• Andrew Stuart Forman of Tampa was suspended until further order. An emergency suspension order states that Forman took $308,000 in trust to be used to bid at a foreclosure sale. The client was not the successful bidder, but Forman removed the money from the trust account and failed to return the funds.

For more, see 4 Bay area lawyers disciplined by high court (Four Tampa Bay area lawyers were among the 47 attorneys disciplined recently by the Florida Supreme Court).

For the most recent issue of The Florida Bar's "gossip sheet," see Supreme Court Disciplines 47 Attorneys (a significant number of whom were hammered for screwing around with trust/escrow funds belonging to their clients). EscrowRipOffKappa

Long Island Lawyer Accused Of Pocketing $80K+ In Real Estate Sale Proceeds Due To Seller, $20K+ In Alleged Debt Consolidation Scam

From the Office of the Nassau County, New York District Attorney:

• Nassau County District Attorney Kathleen Rice announced [...] that an East Meadow attorney has been arrested and charged with three felonies after three victims accused him of stealing more than $100,000 of their money. Craig Heller, 49, has been charged with for Grand Larceny in the Second Degree, Grand Larceny in the Third Degree, and Scheme to Defraud in the First Degree. He faces up to 15 years in prison if convicted. [...].

• Rice said that in June 2007, Heller was hired by a divorced couple to manage their debt consolidation. The ex-husband, of Bethpage, and ex-wife, of Seaford, each put $10,000 into an escrow account for Heller to pay their bills. Each party also agreed to pay Heller a $2,500 fee for his services. Heller soon received complaints from the ex-wife after she realized he was not paying off their debts. Heller agreed to repay both the $20,000 with interest and a portion of the attorney’s fee on Dec. 31, 2008. The money, however, was never repaid.

• In a separate incident, Heller, acting as escrow agent, was hired in November 2007 to remit a settlement check for more than $82,000 to the partial owner of a piece of Brooklyn property that was sold. The closing took place on April 18, 2008, but Heller never gave the victim, of Brooklyn, a check. He was ordered to pay the amount on Dec. 18, 2008, but failed to do so. As in the other case, Heller promised numerous times to pay his victim.(1)

For the entire Nassau County DA press release, see East Meadow Attorney Charged With Stealing More Than $100K from Three Victims (Heller faces 15 years in prison for thefts).

Go here, Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds.

(1) If a New York attorney, in the course of representing clients, screws them out of money or property through dishonest conduct, go to the The Lawyers’ Fund For Client Protection Of the State of New York for more information. For other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map. EscrowRipOffKappa

Grand Rapids "Grave Robber" Cops Plea In $4.2M Cemetary Trust Funds Ripoff; Suspected Of Similar Swindle Of $20M In Indiana

From the Office of the Michigan Attorney General:

• Attorney General Mike Cox [...] announced that Robert Earl Nelms pleaded guilty to two felonies for embezzling more than $4.2 million in cemetery trust funds from Chapel Hill Memorial Gardens in Grand Rapids, and failing to properly administer numerous funeral contracts over a three year period. "Stealing from the dead is a betrayal of the highest order," said Cox. "Families who have laid their loved ones to rest have a rightful expectation that this sacred ground will forever be protected."

***

• In total, it is alleged Nelms stole more than $24 million from cemeteries and funeral homes he controlled in Michigan and Indiana. He did this by selling cemetery products and services but failing to deposit the required portion in trust for cemetery upkeep and consumers' use. Approximately $4.2 million dollars were from the Grand Rapids cemetery, with Nelms facing charges in Indiana for the rest.(1)

For the Michigan AG press release, see Cemetery Swindler Convicted of Felony Embezzlement.

(1) According to the press release, this is the second defendant convicted by Attorney General Cox for involvement in a major theft of cemetery trust funds. Carter Green of Nevada was convicted in Wayne County Circuit court in December of 2007 for his role in aiding co-defendant Clayton Smart. Cox alleges that Smart embezzled as much as $70 million in cemetery trust funds from 28 Michigan cemeteries. Clayton Smart is awaiting trial in Tennessee on related charges. Upon completion of that trial, Smart will be transferred to Michigan for arraignment on charges filed by Cox, the press release states. EscrowRipOffKappa

Title Agent Admits To Stiffing Existing Lienholders In Real Estate Closings; Pocketed Cash Due Lenders, Wrote & Sold Phony Secured Notes, Kited Checks

From the Office of the FBI (Louisville, Kentucky Field Office):

• Candace Hill, United States Attorney for the Western District of Kentucky, announced that Wavy Curtis Shain, age 26, of Louisville, Kentucky, pled guilty on September 18, 2009, to nine counts of wire fraud, and one count of bank fraud.

• Shain pled guilty to using businesses he owned and operated, Derby City Title and Capital Distribution, LLC, to perpetrate fraudulent schemes on various lending institutions and mortgage companies. The schemes perpetrated by Shain included misappropriating substantial amounts of loan proceeds received by him on behalf of borrowers using Derby City Title to obtain loans to purchase homes or to refinance existing home loans, and, by doing so, failing to pay off existing loans and mortgages held by previous lenders.

• Additionally, Shain pled guilty to preparing false and fraudulent notes and mortgages purportedly associated with the purchase of houses and selling these instruments to willing buyers. Lastly, Shain plead guilty to perpetrating a check kiting scheme using business accounts maintained with US Bank and BB&T Bank.

For the entire FBI press release, see Louisville Man Pleads Guilty to Defrauding Loan Companies and Banks. EscrowRipOffKappa

Escrow Agent Cops Plea To $470K+ Closing Proceeds Ripoff; Insurance Premiums, Closing Costs Left Unpaid; Title Underwriter Left Picking Up The Tab

In Minneapolis, Minnesota, Minnesota Public Radio reports:

• A Prior Lake woman pled guilty Friday to stealing more than $470,000 in a mortgage fraud scam. Roseann Wagner admitted operating a scheme to defraud mortgage lenders, borrowers, and a title insurance underwriter in 2007. Wagner, a licensed insurance agent, accepted more than $470,000 from lenders at hundreds of closings, and then pocketed the money.

• As a result, title insurance premiums, title search costs, and recording fees on hundreds of residential mortgage transactions went unpaid. Wagner owned and operated Tri-Star Title, a title insurance agency. Tri-Star was the insurance agent for Stewart Title Guaranty Co., a Texas-based title insurance underwriting company. When Stewart Title Guaranty discovered that Wagner had stolen the funds, it absorbed the losses of the borrowers, and paid the premiums and other expenses.

• Wagner also admitted that she failed to file a tax return or pay taxes on more than $270,000 in 2007. She owes the Internal Revenue Service at least $70,000.

For the story, see Woman pleads guilty to $470,000 mortgage fraud scam. EscrowRipOffKappa

Title Agent Cops Plea To Illegally Dipping Into Escrow Funds From Real Estate Closings; "Katrina" Credited For Slamming Brakes On Ponzi-Style Scam

In New Orleans, Louisiana, the Times Picayune reports:

• A 68-year-old Metairie man pleaded guilty Wednesday in federal court to wire fraud for his role in a local refinancing scheme, authorities said. Hubert Edward Ellzey Jr. acknowledged that, as an independent title agent for Commonwealth Land Title Insurance Company of Louisiana, he wired money from the refinanced properties to a special escrow fund, court records show. He dipped into this account and used the money for personal use [...], according to a news release from U.S. Attorney Jim Letten's office. Ellzey also used the company money from future home closings to pay off some of the previous loans he should have canceled.

• The scheme was unearthed shortly after Hurricane Katrina because all the closings came to a halt and Ellzey was unable to account for the money he had taken, Letten's office said. In all, Ellzey defrauded his employer of about $775,000. He is scheduled to be sentenced in January.

Source: Title agent pleads guilty to misusing money in wire fraud case. EscrowRipOffKappa

Miami Feds Bag 41 Suspects In Fraud Scams Involving Double HUD-1s, Complicit Straw Buyers, "Shotgun" Apps, I.D. Theft, Forgery, Pocketing Loan Payoffs

In Miami, Florida, the South Florida Business Journal reports:

• State and federal agents announced that charges have been filed against 41 people in six separate cases(1) totaling more than $40 million in fraudulent mortgages. Tuesday’s announcement is part of a crackdown on mortgage fraud, begun in September 2007, that has targeted mortgage brokers, bank employees, title agents, attorneys and straw buyers.

The following are some of the highlights of the six alleged scams, according to the press release from the U.S. Attorney's Office:

• Recruiting complicit straw buyers, title agents, lender employee.
• Preparation of fraudulent mortgage loan applications on behalf of complicit straw borrowers using false employment verifications, pay stubs, income and funds on deposit, and IRS Forms W-2,
• Use of "double HUD-1s" - false duplicate HUD-Settlement Statement Forms created and submitted to the lending institutions, which grossly inflated the true purchase price of the properties,
• Use of "shotgun" loan applications - obtaining near-simultaneous loans for the same piece of property from multiple lenders,
• I.D. theft / forgery scam - entirely false real estate sales were concocted by stealing the identities of unwitting home owners, forging the sales documents in their names, and using complicit straw purchasers to obtain mortgages, all without the real property owners’ knowledge or consent,
• Pocketing loan payoffs - involved legitimate borrowers seeking to re-finance and payoff existing mortgages. Unbeknownst to the borrowers, defendant allegedly kept the loan proceeds for himself and did not use the funds to pay off the borrowers’ pre-existing loans.

For more, see:

• South Florida Business Journal: Dozens charged with mortgage fraud totaling $40M,
• U.S. Attorney's press release: 41 Defendants Charged In Separate Schemes That Resulted In Approximately $40 Million In Fraudulent Mortgages (Defendants include Bankers, Appraisers, Mortgage Brokers, Title Agents, Real Estate Agents, and Straw Buyers).
• Miami Feds' "Mortgage Fraud Scorecard."

(1) Those implicated in the alleged scams are:

• Indictment #1: Mayra Rodriguez, 31; Lucia Peluffo, 29; Nelson Bermudez, 36; Yamile Segurola, 24, all of Miami; Carlos Rodriguez, 29, of Homestead; Mayelin Salas, 36, of Miami Springs; Nelida Rodriguez, 48, of Opa Locka; Sonya Balmaseda, 35, of Hialeah; Jorge Egeraige, 38, of Hialeah; Jaime Rojas, 39, of North Miami Beach; Alejandro Rabelo, 49, of Miami Beach; Pedro Huezo, 58, of Opa Locka; Jose Arriete, 53; Gerard Wenzel, 50; Elias Fleites, 55; Marcelo Fernandez, 41; Lucy Segurola, 51; Ricardo Segurola, 51; and Jorge Lugo, 46, all of Miami. According to the Indictment, defendants Mayra Rodriguez, Mayelin Salas, Nelida Rodriguez, Yamile Segurola, and Lucia Peluffo were employed at companies owned by Magile Cruz (Cruz previously pled guilty and was sentenced in January 2009 to 120 months’ imprisonment for her participation in this scheme). Cruz’s companies included Star Lending Mortgage, State Mortgage Lending, Sherley Title Services, Doral Title Services, and Professional Title Express, all in Miami-Dade County.
• Indictment #2: Bryan A. Guarch, 29, Richard Pi, 27, Edwin Garcia, 30, Carlos Martinez, 29, Wayne Bermudez, 29, Oscar Quintero, 28, Sunsy Garcia, 29, Ryan Barouh, 27, Jason Cuza, 30, Anthony Silverio, 26, all of Miami, Rafael Jaramillo, 32, of Hialeah Gardens, Mario Estrada Mora, 25, of Miami Beach, and Vanessa Negron, 27, of Boiling Springs, South Carolina.
• Indictment #3: Sixto Figueroa, 57, and his wife Susy Figueroa, 44, Rolando Herrera, 63, and Manuel Garcia, 40, , Yolanda Garcia-Montes, all of Miami.
• Indictment # 4: Fielding Dameron, 60, of Miami.
• Indictment # 5: Stephen LaLonde, 42, of Fort Lauderdale.
• Indictment # 6: Milennys Foira, 35, of Doral, FL, and Richard Diaz, 26, of Miami, FL, (recruited Jean Claude Cahen, who was previously charged and convicted, to use his identity and credit to buy a selected property in Miami, Florida). EscrowRipOffKappa shotgunning

Maryland Accountant Cops Plea To Ripping Off $1M+ From Escrow Account, Then Torching Offices Of Employer/Law Firm After Getting Canned

In Dundalk, Maryland, WBAL-TV Channel 11 reports:

• Federal prosecutors said a former accountant for a Dundalk real estate law firm pleaded guilty to stealing more than $1 million and burning the firm's offices. George Perez, 33, of Dundalk pleaded guilty Wednesday to theft and arson charges. Prosecutors said the April 2007 fire caused $800,000 in damage to the law firm six days after it fired Perez.(1) Federal prosecutors said Perez was hired in January 2004 to track money from foreclosure sales and disbursements in the firm's escrow account. From December 2005 to April 2007, Perez was accused of transferring $1,044,309 into personal accounts, using the money to pay gambling debts and buy real estate.

Source: Fired Accountant Guilty Of $1M Theft, Arson.

For the U.S. Attorney (Maryland) press release, see Former Accountant of Dundalk Law Firm Admits to Stealing over $1 Million and Arson (Defendant Disappeared for Almost a Year After Failing to Appear in Court).

(1) According to the U.S. Attorney press release, the fire caused substantial damage not only to the law firm’s offices, but also to other businesses that occupied the building, including offices of a physician, an accounting firm and a pharmacy. A firefighter who responded to the fire was injured and taken to the hospital to be treated for burns he suffered. He was released after treatment. EscrowRipOffKappa

Minnesota Title Agent Cops Plea To Swiping $400K+ In Clients' Escrow Funds From Real Estate Transactions

In St. Paul, Minnesota, the Star Tribune reports:

• A Brooklyn Center man pleaded guilty [last week] in U.S. District Court to using as much as $1 million from clients of his mortgage title company for his own benefit. Terry Louis Lemke, 40, owns All Metro Title. He pleaded guilty to one count of wire fraud and one count of money laundering. As part of a plea agreement, Lemke says he knowingly and intentionally defrauded clients from June 2006 through 2007, a statement from the U.S. attorney's office said. The All Metro Title clients thought the money was being deposited into an escrow account as part of real estate transactions.

• In the plea agreement, Lemke admits to defrauding more than $400,000 and possibly as much as $1 million, the statement said. Specifically, the statement says, on June 23, 2006, Lemke electronically transferred $193,226.76 from Lehman Brothers Bank in Colorado to an All Metro Title account. On the same day, he paid $20,746.18 from the All Metro account to a personal credit card bill, the U.S. attorney's office said.

Source: Brooklyn Center title firm owner admits to fraud (As part of a plea agreement, Terry L. Lemke said he diverted money from clients to himself). EscrowRipOffKappa

Closing Agent's Use Of Rubber Checks To Pay Off $1.6M In Existing Mortgages Leaves Refinancing Homeowners Mired In Legal Mess, Facing Foreclosure

In Will County, Illinois, the Chicago Tribune reports:

• In early April, Jeff Franson refinanced his mortgage, switching it from Chase to SecurityNational Mortgage Co. On a sunny Saturday in early October, as he was mowing the front lawn of his Mokena home, a process server drove up and handed Franson papers that showed Chase was planning to foreclose on his home. Franson was current on his mortgage with SecurityNational. But the $93,702.51 check cut by Counselors' Title Co. to pay off the Chase loan bounced. After months of phone calls and letters between Franson, his attorney and the companies involved, Chase filed foreclosure papers in Will County Circuit Court.

***

• Franson and at least seven other Midwestern homeowners who did business with Counselors are wondering what's in store for their homes and what happened to the $1.6 million that was supposed to pay off their loans. [...] The crux of the problem for Franson and other homeowners who closed their transactions at Counselors' offices is that Ticor Title Insurance Co., a national title insurance underwriter, says it terminated its underwriting agreement with Counselors before those closings occurred.

***

• In early May, less than a week after Chase notified Franson of the bounced check, Ticor filed suit in federal court in Cincinnati against Counselors, [and its three principals, James Erwin and Shari Erwin of Chicago and Damian Sichak of Homer Glen], claiming they had committed breach of contract and fiduciary duty, fraud and negligence, among other allegations. Ticor's suit states that it terminated its contract with Counselors on March 13, but that Counselors continued to "issue purported Ticor title insurance 'commitments' " and "is representing to its customers that Ticor remains its title insurance underwriter." In the filing, Ticor said it was aware of eight affected borrowers in Illinois, Indiana and Ohio, including Franson, and loans totaling almost $1.6 million. The suit also stated that Counselors told Ticor a fire destroyed many of its records at its Crestwood office in January and, as a result, it was unsure how many other checks it issued would bounce. Ticor's suit also claims the Erwins and Sichak are personally liable for Counselors' failure to comply with its agency agreement.(1)

For more, see Homeowners left in a lurch after mortgage refinancing checks bounce (Borrowers face foreclosure after title company fails to pay off original mortgages).

(1) Separately, in July, Landmark American Insurance Co., which provided Counselors with professional liability insurance, filed suit in Cook County Circuit Court against Counselors, the Erwins, Sichak and Ticor, the story states. Landmark claims it is not responsible for covering any claims if there is a court finding of dishonest, fraudulent, criminal or intentional activity, if the principals were found to have signed personal guarantees, if the company is insolvent or if the escrow funds were improperly handled, according to the story. title insurance legal issues EscrowRipOffKappa

Co-Owner Gets Reduced Penalty In Title Agency Scam; Mortgages Unrecorded On 3000+ Deals, Insurer Stiffed On Premiums, Lienholders Left Unpaid

In St. Paul, Minnesota, the Star Tribune reports:

• The Minnesota Commerce Department, which has accused a Twin Cities title company and an affiliated insurance company of keeping the money from more than 3,000 real estate mortgage transactions, has agreed to a settlement with a co-owner in which she'll pay a fraction of her penalty as long as she stays out of the business.

• In an enforcement action [in August] against Jennifer K. Frantz, the department listed her penalty at $500,000 but said that she'll only have to pay $7,500 of it as long as she complies with other parts of the settlement. Frantz was a co-owner of Zen Title and TitleSource, doing business as TitleDirect. Besides keeping mortgage money, the Commerce Department said it failed to remit $196,000 in premiums to an insurer and failed to make $1.3 million in mortgage payoffs to prior lenders. The companies are in Mounds View.

• In addition, Frantz's license as a real estate closer and notary were revoked and she is barred from any work that requires a license from the department. "She's been barred from the industry. That's her main penalty," said department spokesman Bill Walsh. Frantz's attorney, Tom Kelly of Minneapolis, said the settlement reflects that she was a minor stakeholder in the company.

• In March 2008, the department ordered the companies to pay $2 million in civil penalties.(1) After negotiations, Frantz reached the August settlement. Walsh said that order still stands against the other two owners, Charles E. Bethel and Trent C. Jonas.

• In the document ordering the $2 million in penalties, the department said the companies caused losses to lenders and exposed homeowners to disputes that can cloud property titles. It also said an $800,000 mortgage that wasn't recorded was for one of the owners. Walsh said the department has referred the case for criminal prosecution. "What they did was criminal. They essentially closed mortgages and did not finish. They did not send the money on, they did not pay the loans," Walsh said, calling it a "huge fraud." Some of the mortgages were in Minnesota and some in other states, he said. Kelly said he did not expect criminal charges to be brought against his client. Neither Bethel nor Jonas could be reached for comment [...].(2)

Source: State OKs deal in real estate loan case (A settlement with a co-owner of Zen Title and TitleSource cuts her share of a $2 million penalty to $7,500 and a ban from the industry).

See also, Minneapolis/St. Paul Business Journal: Title firms co-owner settles with state.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on this story.

(1) See Minneapolis/St. Paul Business Journal: Title firms hit with $2M fines (The DOC contends that the companies, which operated out of the same office, failed to record more than 3,000 mortgages on real estate deals they closed and failed to make more than $1.5 million in payments to mortgage lenders and insurers, among other charges).

(2) According to the Minnesota Department of Commerce website, all licenses held by this outfit have been revoked. EscrowRipOffKappa title insurance legal issues