Maryland Settlement Officer Sentenced for Diverting Funds

U.S. District Judge J. Frederick Motz sentenced Marny Arlen Bailey of Highland, Md., to 21 months in prison followed by five years of supervised release for wire fraud in connection with a scheme to steal real estate settlement funds that were intended to pay off the homeowners' previous loans. Judge Motz also ordered that Ms. Bailey pay restitution of $877,000 to the title company who paid off the homeowners' loans after the fraud was discovered. According to Rod J. Rosenstein, U.S. attorney for the District of Maryland, Ms. Bailey owned Executive Settlements, a company that handled residential real estate closings. Whenever real property that was subject to a lien or mortgage was sold or refinanced, Executive Settlements and Ms. Bailey were obligated to pay the original mortgage lender out of the proceeds of the transaction. Beginning in late 2007 or early 2008, Ms. Bailey used funds, which were intended to pay off mortgage lenders, for her own purposes. In early 2008, she diverted whole settlement amounts to her personal accounts and started gambling in an attempt to recoup the amounts she had stolen. When the bank where Bailey had her escrow account advised her to take her business elsewhere, Bailey transferred the balance in her escrow account, over $184,000, to an operating account and spent it. In February and March of 2008, she stole settlement monies from as many as four homeowners, for a total of over $877,000. The FBI arrested Bailey on May 23, 2008 in Atlantic City, N.J., where she was living in casinos and gambling.