Title Company Owner Sentenced in $1.5 Million Fraud Scheme
A title company owner was sentenced to two years in prison for wire fraud in connection with a scheme to use over $1.5 million in mortgage closing funds for her personal use, including running two businesses.
Harriet Taylor co-owned and managed two title insurance companies—Regal Title Co. LLC and Loyalty Title Co. LLC—located in Columbia, Md. Pursuant to an agreement with a national title insurance underwriter, which is required by Maryland state law, escrow accounts were established for both businesses separate from company operating accounts for the purpose of holding and disbursing funds received from lenders for real estate closings.
According to Taylor’s plea agreement, starting in 2009, she caused some mortgage lenders to wire their funds entrusted for real estate settlements to Regal’s operating account, rather than to the escrow accounts. Furthermore, Taylor also caused funds in Regal’s and Loyalty’s escrow accounts to be transferred back and forth to the companies’ respective operating accounts.
By using commingled funds during this time, Taylor kept the two businesses’ running while enriching herself with both company and escrow funds, the Department of Justice said. For all of 2009, Taylor paid herself more than $477,000 from three company operating accounts.
Meanwhile, as shortfalls in the escrow accounts increased, Taylor failed to remit insurance premiums to the title insurance underwriter, Old Republic National Title Insurance Co. Other problems that Taylor faced while running this scheme included not paying recording fees for deeds as well as not compensating off prior liens, including four that belonged to the government-sponsored entities Fannie Mae and Freddie Mac.
The Department of Justice said Old Republic became aware of this scheme during a 2009 audit of Regal. At this time, Old Republic told Taylor to stop commingling the funds, but this did not happen.
For example, five months later following another audit of both companies, Old Republic discovered that in nine cases Taylor used the payoff checks that were supposed to pay prior lien holders and immediately terminated her as an agent.
Subsequently, Old Republic was obligated to satisfy the prior liens against the properties affected by the misuse of settlement funds and to complete other transactions Regal and Loyalty failed to perform. Through January 2010, Old Republic incurred a total loss of approximately $1.5 million.
Besides the prison term, U.S. District Judge William Quarles Jr. also ordered Taylor to pay restitution of $1.2 million to Old Republic and $253,000 to CAN Surety, the insurer on Taylor’s errors and omissions policies.