Florida Escrow Company Abruptly Closes Down; $ Millions May Be Missing

WPTV Channel 5 in West Palm Beach, Florida is reporting on the abrupt closing of Vero Beach escrow company, Coastal Escrow Services. Reportedly, a fax went out from the company to area real estate agents last week stating that it ceased doing business as an escrow company and not to send them any more deposits. The company is said to have managed millions of dollars at any particular time and their is speculation that there may be people who will be taking a severe financial beating if the worse comes to pass and the funds are not accounted for. Vero Beach Attorney Ira Hatch, who owns the company, could not be reached for comment. For more on this part of the story, see Real Estate Fraud.

In addition, TC Palm is reporting that:

• "Two lawsuits have been filed in Indian River County Circuit Court against Ira C. Hatch's defunct firm Coastal Escrow Services Inc. seeking in excess of $700,000. The lawsuits claim that the company has refused to return clients' deposits and bounced checks."

There may be hundreds of victims missing deposits placed with Hatch's escrow business; the missing deposits are being estimated to be in excess of $3 million. For more on this part of the story, see Defunct escrow business owner Hatch sued for deposits.

For copies of the lawsuits, see:

• Michael Thorpe Real Estate Inc. vs. Coastal Escrow Services, Inc. (class action status sought),
• Allen vs. Coastal Escrow Services, Inc., et al.

For related stories, go here for questions raised over attorney Ira Hatch's past; or go here for investigation into Coastal Title Services by the Florida Department of Financial Services and The Florida Bar, or here for a number of related issues.

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Title Insurance Underwriter To Cover Some - But Not All - Customer Losses In Florida Treasure Coast Escrow Scandal

In Vero Beach, Florida, TC Palm reports:

• Insurance underwriters for a title company owned by Vero Beach attorney Ira C. Hatch Jr. will compensate customers that lost money with the now-defunct company, a spokeswoman for the Florida Department of Financial Services said Thursday. Lawyers Title Insurance Corp. and Attorneys' Title Insurance Fund said they would pay claims by businesses that used Coastal Title Services [a title insurance agency], said spokeswoman Nina Banister. The agreement does not apply to customers of Coastal Escrow Services [an escrow company], Banister said.

[...]

• Banister said escrow companies are usually part of a title agency, real estate agency or a mortgage broker, but that a licensed attorney can separately operate an escrow business. The Florida Department of Financial Services launched an investigation into the title company after Hatch shut down it and Coastal Escrow. "My understanding is it (Coastal Escrow) should have been attached to a title company, and part of the investigation is why did he have them separate?" Banister said.

For more, see Insurance group to reimburse clients of Coastal Title Services.

For recent related stories, see:

• Realty group feels effects of Coastal Escrow collapse (TC Palm - 10-28-07),
• Hatch asks court to dismiss lawsuit against him in Vero Beach (TC Palm - 10-26-07),
• Former Hatch colleague speaks (Kevin Doty strongly denies involvementin Escrow case involving missing $4M) (TC Palm - 10-21-07)
• Hatch escrow case proceeds slowly in Vero Beach (TC Palm - 10-20-07),
• Ira Hatch going to court this morning (TC Palm - 10-19-07),
• Hatch's wife wants $215,000 returned from police (TC Palm - 10-9-07),
• Coastal Escrow suits mount (TC Palm - 10-6-07),
• Hatch seeks to have lawsuit frozen until investigation completed (TC Palm - 10-1-07),
• Marjorie Hatch's accounts unfrozen after Vero Beach police seize money (TC Palm - 9-25-07),
• Hatch probe may take months (TC Palm - 9-25-07),
• Records suggest Ira C. Hatch, family lived comfortable life (TC Palm - 9-24-07),
• Hatch's wife seeks bank accounts in Vero Beach (TC Palm - 9-21-07),
• Ira C. Hatch's attorney will meet with state attorney’s office today (TC Palm - 9-20-07),
• Go here for other posts and links to other media reports on this story.

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Florida Attorney Gives Up License In Multi Million $ Escrow Scandal

On Florida's Treasure Coast, TC Palm reports:

• Ira C. Hatch, whose escrow and title businesses are under civil and criminal investigation, agreed Monday to give up his law license for 10 years, the Florida Bar said. “We’ve received the signed disbarment by consent,” said John Stewart, an attorney with Stewart & Evans of Vero Beach, which represents the Bar on the Treasure Coast. “This obviously recognizes how serious the charges are that have been levied against him.” The Bar is investigating charges Hatch misspent $200,000 of client funds on deposit in a Hatch & Doty trust account between July 1 and Aug. 31.

In addition, the story refers to the hot water Hatch is in regarding the escrow company he owns:

• Hatch shut down Coastal Escrow Services last week, leaving real estate agents, businesses and consumers without their deposits on real estate transactions and property leases. The state attorney general’s office in Indian River County has estimated more than $3 million is not available to customers. Treasure Coast law enforcement officials said Monday it could be months before they file charges in their investigation of Coastal Escrow. On Friday, Vero Beach law officers searched the offices of Coastal Escrow and seized documents and computers.

A local payroll firm has also complained to cops, alleging that Hatch stiffed them with $25,000 of rubber checks, funds from which were intended to pay employees and the taxes and worker compensation payments. For more, see Florida Bar: Hatch voluntarily disbarred.

See also, Hatch gave up license in FL but still able to practice law in NY.

Go here for other posts and links to stories on this ongoing investigation.

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Another Multi Million $ Florida Escrow Scandal; $8 Million Missing

It's been a busy last week and a half or so in Florida for escrow agents accused of swiping other people's money that has been entrusted to them in connection with pending real estate transactions.

In the most recent scandal, reported in the St. Petersburg Times, a whistleblower's phone call coming from within Gulf Coast Title Closings and Escrow Services is reported to have triggered an investigation that resulted in yesterday's arrest of Gulf Coast's owners, Cheryl L. Wehlau and John T. Wehlau, who are currently being held by authorities on $5-million bail. They were each charged with 25 felonies - grand theft, money laundering and theft of escrowed funds.

According to an attorney for Commonwealth Land Title Insurance Co., the underwriter that wrote title insurance policies for Gulf Coast and discovered the misappropriations, $7.99-million was stolen from escrow accounts at Gulf Coast, leaving Commonwealth holding the bag, having to cover hundreds of bad checks that started bouncing all over Florida.

Hundreds of people and companies filed claims on bad checks disbursed at Gulf Coast closings, including one couple who sold their home and walked out of a Gulf Coast closing with a rubber check for almost $140,000. After three weeks of experiencing panic and increased high blood pressure when discovering that Gulf Coast had shut down, the couple received full reimbursement from Commonwealth, which reportedly was legally required to cover the Gulf Coast losses.

The funds were allegedly spent entirely on a lavish lifestyle, as a search of the couple's assets hasn't turned up much. For more, see Lavish life over, pair face prison (Title business misspent millions, authorities say).

Go here for other posts on this story.

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Arizona Regulators Crack Down On Escrow "Skimmers"

The Arizona Republic reports:

• "Arizona regulators are cracking down on escrow officers for skimming hundreds of thousands of dollars off home sales. So far this year, a handful of those officers have been banned from the escrow business and the mortgage industry for writing unauthorized checks out of home-sale funds to relatives, real estate agents, loan officers, contractors and cleaning companies. Some also have been convicted of theft."

• "Barred from the business for writing unauthorized checks out of home-sale proceeds are: Anna Solis, Denise Claudia Ramsey, Margie Means, Annette Damico and Sandra Flores. The state regulator also has moved to ban Nancy Wilson from the business amid allegations that she embezzled $129,418 from her former employer, LandAmerica of Phoenix..."

For all the details, see Escrow officers under scrutiny.

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More On Collapse Of Florida Escrow Company; Over $3M Estimated In Missing Real Estate Deposits

(revised 9-19-07)
On Florida's Treasure Coast, TC Palm reports:

• Realtors and brokers in Indian River County are in a closed door meeting at the Quail Valley Boat House discussing the collapse of Ira C. Hatch’s Coastal Escrow Services Inc.
  About two dozen Realtors are in attendance. [...] Hatch shut down Coastal Escrow Services earlier this month, leaving real estate agents, businesses and consumers without their deposits on real estate transactions and property leases. The Vero Beach Police Department has estimated that more than $3 million is not available to customers. No charges have been filed against Hatch or any of his associates and no one has been arrested.

For more, see Realtors, brokers in Indian River Co. meeting on collapse of escrow service.

See also, Former Hatch customers sue for $222,750 (TC Palm - 9-18-07).

In a related story regarding today's disbarment hearing regarding Ira Hatch's law license, see Florida Supreme Court to hear Hatch disbarment. Go here for a copy of Ira C. Hatch's consent to disbarment filed with the Florida Supreme Court.

Go here for other posts on this investigation.

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Two New York Attorneys Charged With Stealing Escrow Funds

The North Country Gazette reports:

• "Two Nassau County attorneys have been arrested in connection with separate thefts of more than $900,000. Barry Chasky, 54, of Point Lookout, has been charged with second degree grand larceny after allegedly embezzling nearly $900,000 from the escrow accounts of First American Title Insurance Company. In a separate case, Joseph Corrado, 48, of Pleasantville, has also been charged with third degree grand larceny in connection with an alleged theft from the escrow account of a Garden City client who hired the defendant to negotiate a loan refinancing."

Chasky is the owner of Triad Abstract Company, which is an agent of First American Title Insurance Company.

Corrado was hired to negotiate a loan modification for a local homeowner who was in default on his home mortgage. Allegedly, the homeowner gave Corrado a total of $35,000.00 to hold in escrow during the negotiations, who reportedly pocketed the money, doing little more than filing a notice of appeal during the process. To date, Corrado has returned only $4,000, creating a financial loss of $31,000 to the homeowner, according to the story. A foreclosure action resulted in the home being sold at auction.

For more, see Legal Duo Charged With Theft Of Escrow Funds.

See also, Nassau County District Attorney press release - DA Files Charges against Two Lawyers (In separate cases, attorneys accused of stealing more than $900k).

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Links To Recent Stories On 1031 Exchange Intermediaries Stealing Escrow Funds

The following links are to articles about some of the more recently reported stories of 1031 exchange qualified intermediaries making off with their clients' escrow money that was to be used for investment:

• No cure for rogues (Abuse of "1031" shelter won't be cured by more rules)
• Looting the Escrow Account: A 1031 Cautionary Tale Continued (Buyers in Hundreds of Pending Deals Left in Lurch as 1031 Intermediaries Go Belly Up or Disappear Altogether)
• I-Team: Judge Rules Former Owner of Collapsed Financial Firm Must Testify
• Big Swindle in the high desert (The Southwest Exchange litigation ensnares an array of businesses in its web)

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Defunct Ohio Escrow & Title Closing Agency Owner Charged With Stealing $400K

The Newark Advocate reports:

• "A Granville woman faces 12 felonies after being accused of issuing “bad checks” from her company’s escrow account after loan closings. Donna Lemmon Perkins, 43, of Granville, was indicted Friday on multiple counts of theft, money laundering, and engaging in a pattern of corrupt activity. She is accused of stealing almost $400,000 from six area victims in 2005 and 2006. Lemmon Perkins was the owner of the now-defunct Lemmon & Associates Title Services. Upon closing the business in February 2006, it was discovered that money was missing from the title agency escrow account, Licking County Assistant Prosecutor Dan Huston said."

For more, see Granville woman indicted for theft, money laundering (no longer available online).

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Tennessee Escrow Agent Awarded 15 Month Stay In Federal Pen

In Tennessee, The Chattanoogan reports:

• "A former escrow agent who authorities say defrauded Milligan-Reynolds Title Company of over $76,000 over a three-year period was sentenced Monday to 15 months in federal prison. Cindy Gail Almany pleaded for no jail time, saying it would make her family suffer. [...] But Federal Judge Sandy Mattice said some prison time was warranted to deter others from committing similar fraud. Ms. Almany was also ordered to repay the $76,487 she took."

Reportedly, the theft was accidentally discovered while she was away from the office. For more, see Escrow Agent Gets 15 Months In Federal Prison.

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Minnesota Feds Indict Two Closing Agents For Allegedly Stealing $2 Million

The Star Tribune reports:

• "Two Minnesota executives of a real estate closing firm have been charged with stealing more than $2 million in home mortgage loans by routing $370 million in loans to the wrong bank account. A federal grand jury indictment handed down Thursday charged Molly L. Heise, 49, of Chaska, the owner of real estate closing firm Profile Title & Escrow Corp. of Bloomington and New Hope, and Christine A. Hein, 38, of Buffalo, the company's chief financial officer, with multiple counts of criminal wrongdoing, including wire fraud and money laundering. It was the latest in a small flood of real estate scams in Minnesota. In the past two months, 11 people have been charged with types of mortgage fraud and five have pleaded guilty, said the U.S. attorney's office in Minneapolis, which prosecuted the cases."

For more, see Two charged in $2 million scam (The women indicted Thursday were among 11 people in the past two months facing charges of mortgage fraud in Minnesota).

See also: Fraud probe nets pair (Title company execs indicted) (Pioneer Press)

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Some NY Attorneys In Hot Water For Real Estate Related Fraud

Eight lawyers or former lawyers from the Lower Hudson Valley have been charged, pleaded guilty, sentenced, or investigated by state or federal prosecutors in the past two months, according to an article in The Journal News, reported at nynews.com.

Among the lawyers in hot water is Pleasantville attorney Anthony Bellettieri, who is currently under a federal investigation in the theft of more than $10 million from real estate escrow accounts of clients. Further, J.P. Morgan Chase has sued him and his firm in December, saying $17 million was stolen through a check-kiting scheme. The attorney representing Bellettieri's law partners - Robert Fonte and Tara Anne Laudonio - claims that his clients are also victims in the case.

For the full story, see Lots of lawyers are making headlines, but as defendants.

For other recent attorney related investigations for real estate fraud, see:

• Lawyer Nailed In Shady "Cash Back" Land Deal
• Theft Of Client Funds Concerns Connecticut Bar Association
• Massachusetts Cops Probe Attorney Involvement In Loan Scams
• Attorney Charged With Theft of 300K+ Home Sale Proceeds
• Westchester DA Nabs Attorneys For Alleged Theft Of "Home Sale Proceeds"
• FBI Investigate NY Attorney For Alleged $600,000+ Theft Of Home Sale Proceeds

For other stories involving real estate related fraud by attorneys and closing agents, see this collection of reports at The Mortgage Fraud Blog, presented by The Prieston Group.
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New York Feds Charge Closing/Settlement Agent With Pocketing Escrow Funds

Newsday reports:

• "A mortgage escrow official surrendered to the FBI [last Wednesday] to face charges that he pocketed funds intended to pay off home loans, officials said Wednesday. Steven Leff, 44, a principal of National Settlement Agency, a firm that has offices in Melville and Manhattan, acts as a settlement agent handling real estate closings for a number of banks. He was released on a $1 million bond late Wednesday after appearing in federal court in Brooklyn, according to federal prosecutors."

For more, see Exec faces mortgage scam charges.

Go here for other posts on Steven Leff.

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Massachusetts Attorney / Escrow Agent Pockets Loan Proceeds Meant For Lienholders

The Worcester Telegram & Gazette News reports that a guilty plea to income tax evasion and two counts of wire fraud was entered in a Boston Federal Court by disbarred attorney Alan Mason, 61, who operated Alan Mason Legal Services Inc. in Worcester.

It is alleged by prosecutors that Mason defrauded at least 10 lenders and Stewart Title, a real estate title insurance company, of more than $6.2 million between June 2001 and June 2006 while acting as an escrow agent for real estate transactions. Despite the plea agreement, Mr. Mason disputes that he received more than $1 million from the fraud or that it involved 10 or more victims.

Allegedly, some of the loan proceeds from real estate transactions that were intended to pay previous lien holders of properties was pocketed by Mason, leaving Stewart Title, for which Mr. Mason was an agent, on the hook for the unpaid liens requiring payment to cure the defective titles to the properties. For more, see Lawyer admits to tax evasion (Fraud counts included in plea).

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NY Attorney Going To Prison For Ripping Off Aunt & Leaving Her Homeless

In Westchester County, New York, The Journal News reports:

• "Annette Rivera made plans to buy their dream house in Riverdale even as she was grieving over the death of her husband, Latin jazz great Ray Barretto. But on the closing date last October, most of the $860,000 she needed was missing. She had put it in escrow with her lawyer and niece, Shelley Ann Rivera. But the woman she once loved as a sister had kept the escrow money for herself and absconded to Las Vegas. Annette Rivera, her son and several of their friends were in Westchester County Court [July 11] as the suspended lawyer was sentenced to one to three years in state prison and ordered to repay $700,000 she still owes her aunt."

The victimized aunt stated in court that she (1) developed ulcers and other medical problems from the stress, (2) has been unable to pay for her son's college education, (3) was living with her son in her niece's home but had to leave when it was foreclosed upon, and (4) along with her son, are now homeless, relying on friends for loans to cover legal bills and places to stay.

For more, see Lawyer with penchant for gambling sentenced in theft from aunt.

For a prior story, see Attorney pleads guilty to defrauding her aunt of cash (Mid Hudson News).

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Indiana Feds Indict Closing Agent In Escrow Scam; Customer Loses Home

The Times (Munster, Indiana) reports that a federal grand jury indicted Therese Hundley, 52, of Lowell, Indiana on two counts of mail fraud, Hundley stands accused of mailing fraudulent checks worth more than $35,000. Reportedly, she operated Statewide Escrow Services in Crown Point, and, according to the story:

• "is accused of taking money and checks for paying real estate tax and homeowner insurance bills and then not paying the taxes or the bills. Customers' insurance was cancelled, and Lake County sold a customer's home for nonpayment of taxes ..."

For more, see Lowell resident faces mail fraud charges.

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New York Attorney Discipline Committee Keeping Busy

In a recent article, The New York Daily News reports on the work of the attorney Disciplinary Commitee of one Department of the Appellate Division of the State Supreme Court.

Thomas Cahill, chief counsel for the Disciplinary Committee of the Division's 1st Department, which covers Manhattan and the Bronx, is interviewed for the Daily News story. His office, which polices the 76,777 lawyers in Manhattan and the Bronx, has a staff that includes 20 full-time attorneys, many of whom are former prosecutors, investigators, an accountant and paralegals. It handles about 3,500 matters a year in a complex process that begins with screening of complaints.

Most ripoffs by attorneys involve theft from escrow accounts and trusts and estates or billing for work that wasn't done, according to an analysis by The Lawyers' Fund for Client Protection of the State of New York. Among the examples of attorney misconduct cited in the article include incidents where:

• an attorney deposited over $470,000 from the proceeds of a home sale in Peekskill, New York into his business checking account and gave the homeowner a rubber check for the proceeds of the home sale,
• the same attorney, who failed to remit to his clients the $354,900 proceeds from the sale of an Italian restaurant (he pocketed $319,000; the balance is reportedly still being traced),
• an attorney who pleaded guilty to participating in a $750,000 mortgage scam,
• an attorney who reportedly represented approximately 200 clients buying real estate who had her clients buy title services at a company next door that she also owned, which the New York State Appellate Court judges called "an impermissible conflict of interest."

The article also cites the variety of excuses that the rogue attorneys offer up when they get nailed. For more, see Rotten lawyers face raft of raps in ripoffs.

For information on filing attorney grievances and obtaining relief from dishonest attorney conduct in New York State, see:

• A Guide To Attorney Disciplinary Procedures In New York State, and
• The Lawyers’ Fund For Client Protection of the State of New York.

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Disbarred Virginia Attorney Pleads Guilty To Mortgage Fraud

In Virginia, the Martinsville Bulletin reports:

• "Former Collinsville attorney Jimmie R. Lawson pleaded guilty Thursday in U.S. District Court to one federal count of mail fraud, according to the U.S. Attorney’s Office. [...] 'He pleaded guilty to using the mails to obtain money from various lending institutions by falsifying closing documents,' said [Assistant U.S. Attorney Pat] Hogeboom, summarizing the government’s evidence and Lawson’s plea. [...] The government and Lawson agreed that the losses were between $2.5 million and $5 million, Hogeboom said."Reportedly, Lawson had his law license revoked in 2005 by the Virginia State Bar Association because of allegations of reports of lying to clients, stealing client funds and using those funds in unsuccessful business ventures, forging documents, being involved in fraudulent mortgages and other allegations of less-than-upstanding conduct. He currently faces an embezzlement charge in state court, and was also successfully sued by boxer Riddick Bowe for $1.03 million, claiming that Lawson "improperly borrowed money" from an escrow account used in a home purchase.

For more, see Former Collinsville attorney pleads guilty to mail fraud.

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Another New York Lawyer In Hot Water

In Westchester County, NY, The Journal News reports:

• "Denise Cooper ... has been disbarred after admitting she could not successfully defend herself against complaints that she misappropriated more than $137,000 worth of client funds. [...] The state's Grievance Committee began the probe into allegations that she converted $40,000 worth of client funds from her attorney escrow account on one occasion, and $97,592 from a foreclosure sale in another. Cooper had an office in Elmsford."

For more, see Elmsford lawyer disbarred.

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Feds Nail Two Attorneys In Unrelated Fraud Conspiracies

In two unrelated cases, a Virginia and a Kentucky atttorney have each gotten nailed by Federal authorities in conspiring to commit bank or wire fraud.

In Virginia:

The Fairfax County Times reports:

• "A United States District Judge on Aug. 30 sentenced a former bankruptcy attorney from Fairfax, Leslie W. Lickstein, to 12 months and one day in prison following his conviction in May 2007 of conspiracy to commit bank fraud. Lickstein, 54, was also ordered to pay $1.1 million in restitution."

Lickstein allegedly prepared a bogus HUD-1 closing statement involving a multi-million dollar home mortgage that ultimately went into default, causing the bank to take a $1.1 million hit. For more, see Attorney sentenced in mortgage fraud scheme.

In Kentucky:

An Associated Press report in the Lexington Herald-Leader states:

• "Court documents unsealed in Lexington contain an admission by a 41-year-old lawyer that he conspired to commit wire fraud. Kim Clay of Lexington admitted in documents unsealed yesterday that he worked with real estate buyers and sellers to falsify information on mortgage forms, deceiving banks and mortgage companies. Clay is the owner of Universal Title. He was indicted in May, last year on state charges related to missing money from Universal Title's escrow accounts. As part of an agreement that Clay reached with federal prosecutors, the state charges will be dropped."

Source: Lawyer admits conspiracy to commit wire fraud.

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