Thursday, November 10, 2011

Sticky-Fingered Title Agents Continue Getting Hammered; Suspect Cops Plea To Mortgaging Home Out From Under Unwitting Owner, Diverting Closing Cash

From the Office of the U.S. Attorney (Baltimore, Maryland):

  • Gary Pierce, age 44, of 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.


  • In 2007, Pierce applied for and received a mortgage on a property in Edgewater 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.

For the U.S. Attorney press release, see Owner of Gambrills Title Agency Pleads Guilty to Stealing Approximately $5 Million in Mortgage Pay-offs from Closings (Attempted to Conceal the Fraud Scheme by Making Monthly Mortgage Payments to the Original Lenders Whose Mortgages Should Have Been Paid Off).

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