Wednesday, August 03, 2011

Insurance Underwriter Lawsuit: Million$ Mi$$ing From Title Agent's Escrow Accounts; Existing Liens Left Unpaid, Homeowners Now Stuck With 2 Mortgages

In Mineola, New York, Courthouse News Service reports:
  • TitleServ, one of the largest title agencies in the country, swiped $7.9 million from customers' escrow funds, the underwriter WFG National Title Insurance Co. claims in Nassau County Court.(1)

  • New Jersey Title Insurance Co.(2) has filed a similar complaint against TitleServ, which "was authorized to write title insurance policies in at least 26 states, including New York, on behalf of plaintiff," according to the complaint.

  • WFG says that "TitleServ was one of the nation's largest title insurance agencies and was authorized to write title insurance policies on behalf of other title insurance underwriters in 47 states." It also "engaged in escrow and settlement services on its own behalf."


  • WFG says TitleServ was "evasive" when it tried to schedule an audit of the company in early March. By the end of the month, TitleServ had refused to set a date, and WFG says it "became uncomfortable" and terminated their contract. WFG says that on April 3, Citibank and Chase told their mortgage managers to stop using TitleServ, which closed up shop five days later.


  • TitleServ refused to grant the auditors access, then "relented" four days later, after negotiations with its president James Conway III's attorney, WFG says. TitleServ's President Conway and Chief Financial Officer Rocco Abbondandolo are co-defendants, along with 20 John Does. WFG claims that TitleServ never gave its auditors "complete access to TitleServ's books and records" to which WFG was entitled, but the partial review gave indications of "suspicious activity."


  • In an April 15 phone call with WFG representatives, "defendant Conway acknowledged that approximately $6 million was missing from the TitleServ trust accounts. Conway was unable or unwilling to declare who or what was responsible for the missing trust funds," the complaint states. "Additional documents and information reveal that approximately $7.9 million is actually missing from TitleServ trust accounts related to WFG insured closings."

  • The FBI raided TitleServ's offices in Woodbury, N.Y., on April 27, and carried away boxes of documents.

For the story, see Underwriter Says Title Insurer Swiped Millions.

See also, Newsday: Suits allege $18M missing from Titleserv escrow:

  • Three lawsuits filed against Woodbury-based title insurance agent Titleserv since its abrupt closing April 8 allege that more than $18 million slated for paying off mortgages, taxes and other costs is missing.

For the lawsuit, see WFG National Title Insurance Company v. Titleserv, Inc., et al.

(1) For more on Titleserv, see:

(2) New Jersey Title Insurance Company has recently issued a statement that, at present, it is not writing new title insurance policies. It apparently has taken a big hit as a result of certain defalcations that have recently belted the company, and is reportedly focusing on the resolution of said defalcations and claims received on issued policies. See Financial Stability Rating® of New Jersey Title Insurance Company Withdrawn.