BALTIMORE—Harriet M. Taylor, age 56, of
Ellicott City, Maryland, pleaded guilty today 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.
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.
According to her plea agreement, 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 Regal and an early January 2010 audit of
Loyalty. Old 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 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.
Today’s announcement is part of efforts
underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF)
which was created in November 2009 to wage an aggressive, coordinated and
proactive effort to investigate and prosecute financial crimes. With more than
20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners,
it’s the broadest coalition of law enforcement, investigatory and regulatory
agencies ever assembled to combat fraud. Since its formation, the task force
has made great strides in facilitating increased investigation and prosecution
of financial crimes; enhancing coordination and cooperation among federal,
state, and local authorities; addressing discrimination in the lending and
financial markets; and conducting outreach to the public, victims, financial
institutions, and other organizations. Over the past three fiscal years, the
Justice Department has filed more than 10,000 financial fraud cases against
nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.
For more information on the task force, visit www.stopfraud.gov.
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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