A New Mexico title company operator stands accused of fraud and is suspected of defrauding over 100 customers through his title and abstract business.

Joseph Vallejos, owner and operator of JM Abstract and Title Company of Socorro, New Mexico, was arrested at his home last Thursday and charged with two counts of felony fraud, and records were seized from his home, office, and bank.  Additional charges are expected, according to local authorities.

Over 100 alleged victims have called authorities so far, according to a detective assigned to the case.  Allegations include misappropriation of funds, falsified title reports, issuance of false title insurance policies, and bounced checks.  Damages allegedly total in the hundreds of thousands of dollars, but investigators do not yet have a precise estimate.

Vallejos is subject to at least four civil lawsuits, according to local news reports.  Two of the lawsuits allege that Vallejos did not properly disburse funds after closings.  In one instance, Vallejos was alleged to have represented to a customer that a mortgage had been paid off, but later found out that two checks sent by Vallejos to pay off his old mortgage had bounced.  In the other, Vallejos was alleged to have failed to deposit funds from the sale of a home into the bank account of his customer.

If allegations are true, Vallejos may have been writing fraudulent title insurance policies for up to 18 months prior to his arrest.  According to allegations in a civil lawsuit filed against Vallejos and JM Abstract and Title by his former underwriter, Commonwealth Title, Vallejos had continued to issue title insurance policies as if they were underwritten by Commonwealth long after the company had terminated its agency relationship with JM Abstract and Title in March 2009.  In that suit, the judge issued a restraining order to stop JM Abstract and Title from issuing further fraudulent policies, and ordered the company's bank accounts temporarily frozen. 

Even though Vallejos had allegedly been canceled by his underwriter in 2009 and was required to have a sponsoring underwriter to remain licensed, his state insurance license was renewed in January 2010.  Commonwealth was listed on his 2010 license as his sponsor.  His license was not revoked for lack of a sponsoring underwriter until July 9th, 2010, according to public records obtained from New Mexico's Public Regulation Commission website.

Vallejos allegedly may have continued to write title insurance policies even after the state canceled his license, and Vallejos was notified by state authorities on August 16th that he was in violation of the New Mexico insurance code.  When state authorities became aware of evidence that Vallejos was still writing insurance policies, they issued a consumer alert on October 22, warning consumers that it was "concerned that several consumers may be holding invalid policies purchased through Vallejos over the course of the past few years."  A criminal investigation of Vallejos was launched on November 8th.