Title Company Owner Pleads Guilty to Stealing Loan Funds

admin —  September 12, 2012 — Leave a comment

Harriet M. Taylor, 56, Ellicott City, Maryland, pleaded guilty to wire fraud in connection with a scheme to use over $1.5 million in mortgage closing funds for her personal use or to operate her title companies.

According to her plea agreement and court documents, Taylor co-owned and managed two title insurance companies, Regal Title Company, LLC and Loyalty Title Company, LLC, located in Columbia, Maryland.  Taylor entered into an agreement with a national title insurance underwriter to establish escrow accounts for Regal and Loyalty, separate from company operating accounts, for the purpose of holding and disbursing funds received from lenders for real estate closings.

Beginning in 2009, however, Taylor caused mortgage lenders to wire their funds entrusted for real estate settlements to Regal’s operating account, rather than to the escrow accounts.  Taylor also caused funds in Regal’s and Loyalty’s escrow accounts to be transferred back and forth between their respective operating accounts.  By using commingled funds throughout 2009, Taylor kept her two businesses afloat, while enriching herself with both company and escrow funds.  From January through December 2009, Taylor paid herself $477,877.50 from three company operating accounts.

As shortfalls in the escrow accounts increased, Taylor failed to remit insurance premiums to the title insurance underwriter, Old Republic National Title Insurance Company (Old Republic), pay recording fees for deeds and pay off prior liens, including four of which belonged to the government sponsored entities, Fannie Mae and Freddie Mac.

Old Republic learned of the misuse of settlement funds from a 2009 audit of Reg al and an early January 2010 audit of LoyaltyOld Republic terminated its agency relationship with the two companies, but 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.  Accordingly, in January 2010, Old Republic incurred a total loss of $1,518,532 which resulted from paying off prior liens, paying recording fees, and for insurance premiums collected by Regal and Loyalty but not forwarded to Old Republic.

Taylor faces a maximum sentence of 30 years in prison and a fine of $1 million.  U.S. District Judge William D. Quarles, Jr. scheduled her sentencing for January 17, 2012, at 9:30 a.m.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Acting Special Agent in Charge Timothy P. Groh of the Federal Bureau of Investigation; and Inspector General Steve A. Linick of the Federal Housing Finance Agency. 

United States Attorney Rod J. Rosenstein praised the FBI and the Federal Housing Finance Agency – Office of Inspector General for their work in the investigation.  Mr. Rosenstein thanked Assistant U.S. Attorney Jefferson M. Gray and Special Assistant United States Attorney Stephen Learned, assigned from the Federal Housing Finance Agency’s Office of Inspector General, who are prosecuting the case.

               

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