Accountant Steals Escrow Funds From Foreclosures

Allison Tussey —  September 18, 2009 — Leave a comment

George Michael Perez, 33, Dundalk, Maryland, pleaded guilty to wire fraud and arson in connection with a scheme to defraud the law firm where he was employed, (the law firm concentrated its practice in real estate law, and would receive and disburse substantial sums of money while handling the sales of foreclosed properties) and to failure to appear at a federal hearing

According to his guilty plea, in January 2004 a law firm located in Dundalk hired Perez to work in its accounting department. Perez was responsible for keeping track of the flow of money in the firm’s real estate escrow account. Over time, the firm became dissatisfied with Perez‘s work performance and terminated his employment on April 16, 2007.

On April 23, 2007 the Baltimore County Fire Department responded to a fire in the building occupied by the law firm. The fire was concentrated on the fourth floor which housed the firm’s offices, and a room in the basement which the firm leased for document storage. Further investigation revealed that the fire was intentionally set by someone igniting piles of paper. The fire alarm system had been disabled, which could be done by entering a code on a pad located near the firm’s entrance. Law firm employees, including Perez, knew the code numbers. The door to the room in the basement was locked, requiring forced entry to suppress the flames. The key to the door, which was kept on a hook by a secretary’s desk on the fourth floor, could not be found at the time of the fire. The key was subsequently seized from Perez‘s home.

Investigators also found that a safe in an attorney’s office had been opened with the key that was still in the door to the safe. The contents of the safe were missing. The attorney kept the key hidden in an ornament on a credenza. Investigators also found eight of the firm’s computers in an alley alongside the building, along with some of the contents of the safe.

The fire caused substantial damage not only to the law firm’s offices, but also to other businesses that occupied the building, including offices of a physician, an accounting firm and a pharmacy. Damage caused by the arson is estimated to be $800,000. A firefighter who responded to the fire was injured and taken to the hospital to be treated for burns he suffered. He was released after treatment.

Two weeks later, an audit revealed that from December 2005 to April 12, 2007, Perez had made 114 fraudulent wire transfers totaling $1,044,309 from the firm’s escrow account into Perez‘s personal account. Perez used the money stolen from the firm’s escrow account to pay off gambling debts and to invest in the purchase of real estate.

Perez was indicted on March 27, 2008 on charges arising from the theft and arson. He was released under the supervision of Pretrial Services on a number of conditions, including that he not violate any law and that he immediately notify Pretrial Services should he be arrested. Perez was arrested for assault in April, 2008 by Baltimore County Police. He failed to advise the Pretrial Services of this arrest. The government requested a review of Perez‘s release and a court hearing was scheduled for May 8, 2008. Perez failed to appear at the hearing and efforts to locate him were unsuccessful. Perez was subsequently arrested in April 2009.

Perez faces a maximum sentence of 20 years in prison for wire fraud, a mandatory minimum of seven years and a maximum of 40 years in prison for arson, and 10 years in prison for failure to appear in court. U.S. District Judge William D. Quarles, Jr. scheduled sentencing for December 7, 2009 at 9:30 a.m.

United States Attorney for the District of Maryland Rod J. Rosenstein made the announcement.

“This investigation exemplifies how ATF and our partners won’t leave any stone left unturned,” says ATF Special Agent in Charge Theresa R. Stoop. “We will work on a case until the person found responsible is held accountable for all of their actions.”

United States Attorney Rod J. Rosenstein thanked the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Federal Bureau of Investigation, the Baltimore County Police Department and Baltimore County Fire Department for their investigative work. Mr. Rosenstein commended Assistant United States Attorney Stephen M. Schenning, and Special Assistant United States Attorney Adam Lippe, who are prosecuting the case.

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Allison Tussey

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