Owner of Maryland Title Agency Sentenced for $3.4M Defalcation
|September 10, 2009|
The owner of a Maryland-based title agency was sentenced Sept. 9 to seven years in prison followed by two years of supervised release for stealing more than $3.4 million from the company’s escrow accounts.
Deborah Williams, sole officer and director of Day Title Inc., was sentenced by U.S. District Judge Catherine C. Blake. Day Title had offices in Severna Park, Md., and conducted residential and commercial real estate closings and issued title insurance policies.
“Mortgage lenders and borrowers depend on title companies to use loan proceeds to repay outstanding mortgages and other debts,” said U.S. Attorney Rod J. Rosenstein. “Maryland’s Mortgage Fraud Task Force will pursue criminals who rip off lenders and borrowers, and we will seize and forfeit their criminal proceeds.”
From April 14, 2005 until May 8, 2008, Williams used for her own benefit settlement funds from real estate closings that were deposited in Day Title’s escrow account and were intended to pay off the lien holders on those properties, the plea agreement stated.
Williams either made wire transfers directly from the escrow to herself, family members, friends and co-workers, or transferred money from the escrow account to Day Title’s operating account, which she then used for her personal benefit. Williams attempted to conceal her illegal transactions by falsely representing on the settlement documents that her company had paid off lien holders, then sent the falsified settlement documents to the lender by commercial carrier. In fact, Williams either initiated stop payments of payoff checks that had been disbursed or intentionally failed to mail the payoff checks to the lien holder.
Day Title’s failure to make the payoffs to the lien holders was not detected until sellers began receiving delinquency notices from their mortgage companies. The time delay between the settlement and the date when Day Title made the payoffs to the lien holders allowed Williams to replenish the escrow account with proceeds from new unrelated real estate settlements. A title insurance company that had issued policies through Day Title began to receive claims from lien holders who had not been paid off and conducted an audit of Day Title. The agency’s underwriter, Security Title Guarantee Corp. of Baltimore, found over 16 properties where Williams had not paid off the lien holder. The company paid out $3.4 million to these entities, as required under the title insurance policies that guaranteed that the buyer was receiving a title free of prior liens.
Last year, the Maryland Insurance Administration formed a commission to make recommendations for changes to state laws relating to the title insurance industry. It is co-chaired by Sen. Delores Kelley and Del. David Rudolph. The commission held several public hearings over the past year discussing issues surrounding the title insurance industry. The American Land Title Association testified during the June 25 hearing in Annapolis, Md.