Deborah Williams, 56, Pasadena, Maryland, the owner of a Severna Park title company, pleaded guilty to mail fraud related to a scheme to divert settlement funds to her own benefit.
As previously reported on Mortgage Fraud Blog, and according to her plea agreement, Williams was the sole officer and director of Day Title, Incorporated, a title company with offices in Severna Park, Maryland, that conducted residential and commercial real estate closings and issued title insurance policies. From April 14, 2005 until May 8, 2008, Deborah 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. 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 pay offs 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 pay offs 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 title insurance company found over 16 properties where Williams had not paid off the lien holder. The company paid out a total of $3.443 million to these entities, as required under the title insurance policies that guaranteed that the buyer was receiving a title free of prior liens. As part of her plea agreement, Williams must forfeit $3.4 million, the amount she admits that she failed to pay to the lenders.
Williams faces a maximum sentence of 20 years in prison. U.S. District Judge Catherine C. Blake has scheduled sentencing for September 9, 2009 at 9:30 a.m.
United States Attorney for the District of Maryland Rod J. Rosenstein made the announcement. “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.”
US Attorney Rosenstein thanked the Federal Bureau of Investigation for its investigative work and expressed his appreciation to Maryland Insurance Commissioner Ralph S. Tyler for the assistance provided by the Maryland Insurance Administration. Mr. Rosenstein commended Assistant United States Attorney Stephen M. Schenning, who is prosecuting the case.