Title Company Owner Admits Diverting Escrow Funds

Allison Tussey —  October 31, 2011 — 2 Comments

Gary Pierce, 44, Edgewater, Maryland, pleaded guilty to conspiracy to commit wire fraud in connection with a five year scheme to divert or hold mortgage payoff funds from clients’ closings on 17 Maryland properties.

According to his plea agreement, Pierce owns and manages At Home Settlements, LCC, a real estate title agency with an office in Gambrills, Maryland. 

In 2007, Pierce applied for and received a mortgage on a property in Edgewater, Maryland, that he did not own.  Pierce used funds obtained from the lender to perpetuate the scheme and diverted $50,000 from the funds provided by the mortgage lender to himself.  The true owner of the property had no knowledge that documents were created that purported to show that he had sold the property to Pierce.

Beginning in 2007, Pierce and his co-conspirator diverted or held mortgage payoff funds from clients’ closings for a matter of days, weeks and sometimes years.  Pierce falsely represented on HUD-1 forms sent to the borrower’s lender that the payoff was made, when in fact Pierce intended to divert the funds.  Pierce and his co-conspirator fabricated wire confirmation reports, which purported to be a bank record of the transfer, to include in loan files.  These were created in advance of audits by the title insurers in order to deceive the title insurers. 

Additionally, to forestall discovery by the lenders, Pierce and his co-conspirator contacted the mortgage lender who should have been paid off and posed as the borrower/homeowner.  Pierce‘s co-conspirator would either create an on-line profile for the borrower and stop any mail from being sent to the borrower, or he would tell the lender that his, the borrower’s, address had changed and he would re-direct the lender to send all correspondence to a post office box owned by Pierce.  The co-conspirator would then make monthly mortgage payments to the existing lender.  With no delinquency in the account, the scheme went undetected.

Because the existing mortgages were not paid off, the liens against the property were not removed and clear title could not be passed to the new lender and borrower.  The total amount of diverted or otherwise improperly obtained funds totals $4,971,380.  

Pierce faces a maximum sentence of 20 years in prison and a fine of $250,000.  U.S. District Judge Catherine C. Blake scheduled his sentencing for February 10 , 2012, at 10:00 a.m.

The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available www.justice.gov/usao/md/Mortgage-Fraud/index.html.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Special Agent in Charge Kenneth R. Taylor, Jr. of the Housing and Urban Development Office of Inspector General – Office of Investigations; and Howard County Police Chief William McMahon.

United States Attorney Rod J. Rosenstein thanked the FBI, HUD OIG and Howard County Police Department for their work in the investigation.  Mr. Rosenstein commended Assistant U.S. Attorney Leo J. Wise, who is prosecuting the case.

Allison Tussey

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2 responses to Title Company Owner Admits Diverting Escrow Funds

  1. we all know he is.

  2. was the co-conspirator todd bettin? Im sure it is as he claims he’s not part of it when I know he is.

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