Thursday, July 1, 2010

Judge Unsympathetic To "Poor Business Decisions" Defense As Title Agent Gets 11+ Yrs For Looting Escrow Cash; 15 Refin'cing Homeowners Left w/ 2 Loans

In Fort Wayne, Indiana, The Journal Gazette reports:

  • The courtroom was packed Friday to see what sentence Joseph Garretson would receive for running what state officials called one of the worst fraud cases they had seen. Allen Superior Court Judge Fran Gull ordered the former title broker to spend 11 1/2 years in prison and to pay more than $3.4 million in restitution. Friday’s sentence came more than five months after Garretson, 37, pleaded guilty – admitting to conversion or misappropriation of title insurance escrow funds, corrupt business influence and unlawful loan origination activities.


  • Along with numerous letters from family and friends, Garretson’s sister, Jodi, and his grandmother-in-law spoke on Garretson’s behalf. Most, as well as Garretson himself, characterized his conduct aspoor business decisions,” made to keep up a certain lifestyle as the economy and mortgage industry tanked.(1)


  • [Judge] Gull listened to victim after victim describe their anxiety over the possibility of losing their homes.(2) So far, Garretson has paid less than $60 in restitution, which, if paid at that pace, would take more than 28,000 years to make the victims whole, [Allen County Deputy Prosecutor Tim] McCaulay said.

For the story, see Broker given 11.5 years in fraud scheme.

See also, The News-Sentinel: Broker gets 11.5 years for $3.4 million mortgage fraud scheme.

(1) Reportedly, Garretson said he was a victim of a shakedown and was adamant that he gave much of the money taken, about $1.8 million, to Todd Leary, former Indiana University basketball star and radio commentator, who faces 17 felony counts alleging his involvement in the title fund scheme. Leary was arrested in February, days after Garretson’s guilty plea and minutes before he was to call the IU-Purdue basketball game at Assembly Hall in Bloomington. According to court documents, Garretson told prosecutors Leary pressured him for money, threatening to reveal the scam, the story states.

(2) According to this story, several of Garretson's victims described him as a friend whom they trusted to refinance their home mortgages with title insurance, settlement and escrow services through Fort Wayne Title. The plan Garretson sold was to use an escrow agent to immediately pay off the mortgages using money derived from the refinancing. But Fort Wayne Title did not pay off the mortgages, pocketing the funds and using fraudulent statements to fool the homeowner into a false sense of security. The scheme resulted in net losses to homeowners of more than $2.7 million. It left 15 victims with two mortgages on their plate, according to Secretary of State Enforcement Officer David Maxwell.

Reportedly, Judge Gull was visibly moved, and said she was troubled by the stories the victims told about Garretson's actions, saying he “wreaked havoc” for his own benefit. Gull recalled one victim saying she could not plant flowers at her home because it would inevitably be taken from her for non-payment. “I'm just a lowly criminal court judge, Mr. Garretson, and I don't deal a lot with financial crimes,” Gull said. “I have a front-row seat to some of the most horrible crimes in humanity. What you've done here is horrible.”

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