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Thief Of Hearts
by Robert Franco  | 2007/04/02
Once again, Dateline NBC has earned two thumbs up for an excellent expose on Matthew Cox, a con man who ripped off homeowners, mortgage lenders, and title companies. His mortgage fraud allegedly netted him about $5 million. See Fraud by the Book for the full story.
Source of Title covered this case as arrests were being made last year. See Woman Admits to Role in Mortgage Fraud Scheme, Woman Sentenced for Mortgage Fraud, and Secret Service Nabs Suspected Felon. It was interesting to see some of what went on behind the scenes in the Dateline report.
Cox started as a mortgage broker, though a crooked one. It was well known in the Tampa mortgage industry that Cox was up to something. "You just knew because other people in the business would talk how Matt’s office is," one bank rep told Dateline. “If you need a W-2, he’ll make it always appear. If you need someone’s Social Security card, he’ll make it appear.”
After using a stolen identity to get an $80,000 mortgage, he was caught. He pleaded guilty to conspiracy and grand theft. He was sentenced to three years on probation and ordered to stay out of the mortgage business. But that didn't keep him from committing more mortgage fraud.
He was able to fake good credit to buy literally dozens of Tampa properties, including an apartment building... And then secretly, leaving almost no mark at all, according to investigators, he used his building like a burglar’s tool. Again, using a false name, he filed fake documents to make it appear it was paid off... It’s reported Cox took out mortgages on this building worth nearly a $1 million, five times what it was worth.
Cox then began using women, single moms, he met on the Internet. He got them to commit mortgage fraud for him. For this, Dateline dubbed him the "Thief of Hearts."
They were more like Robin Hood, Cox told her—the big fat insurance companies would cover the losses, nobody would actually get hurt.
And so she was willingly sucked in.
Alison rented a home, forged a deed, and then just as Cox told her he’d done again and again, filed phony paperwork to get three real mortgage loans borrowing nearly $400,000 against a property she didn’t even own.
Then, she bought a house under a fake name and incredibly, the Social Security number of her own young son... She filed false paperwork to make it appear a mortgage was paid off, then pulled out hundreds of thousands of dollars and leaving lenders holding the bag.
He went on to involve other women in similar schemes. From Florida, to Georgia, to Tennessee, Cox and his gullible accomplices continued to buy properties with stolen identities, file phony releases, and take out more mortgages.
Atlanta-area lenders who’d been stiffed began alerting authorities about Cox’s schemes.
"The number of victims, the number of stolen identities used, the number of prior mortgages that are erased—all of that makes this case very unique, said Gale McKenzie, assistant U.S. attorney, Atlanta."
Oh... and Dateline also reported that Cox had written a novel several years prior about a con man committing mortgage fraud all across the country. The passages from the book paralleled his crime spree. I suppose that the way he preyed on single moms and followed his own script for the crimes is what made this story exciting enough for Dateline to cover. However, its not what I find most fascinating.
It is incredible how much damage one person can do with a little bit of knowledge about our real estate records. Imagine what a criminal could do if he could figure out how to leverage that knowledge with anonymous online access to the public records and e-recording. Cox had inside information. No doubt he learned much of what he needed to know as a mortgage broker and his position gave him access to much of the information he needed to perpetrate his fraud. But, any savvy con man could most likely figure out how to do the same thing with the information we are putting online.
It we want to make mortgage fraud tougher to get away with, we need to protect the information fraudsters use. Yeah, its public record, but we don't need to serve it up to them on a silver platter.
Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com
[read more...]
Categories: Fraudulent Transfers, Mortgage Fraud
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A Playground For Criminals
by Robert Franco | 2007/02/14
Sadly, there seems to be no end to the crime spree in the title industry. Unscrupulous employees embezzling funds from title companies, rogue escrow agents falsifying documents, dishonest agents stealing from their escrow accounts, and the list goes on. What is it that has created this playground for criminals?
Here are a few recent headlines:
- State and federal officials are examining the actions of Barbara Haywood, a former employee of First American Title, whom they believe may have stolen at least $50,000 from her former employer.
- A grand jury in Seattle, Washington indicted six people after they were linked to a massive identity theft scheme that used personal identifying information provided by employees of a mortgage company and escrow firm.
- Norvel Brown, the former president of Mississippi Valley Title Company of St. Louis, Missouri, pled guilty on February 6, 2007 after admitting that he stole more than $3.2 million from his commercial escrow accounts and the Department of Housing and Urban Development (HUD).
- Officials arrested Nina Rogers, a title company employee, for allegedly stealing more than $30,000 from ERA First Advantage of Newburgh, Indiana.
When I became a title agent, I was given instructions by my underwriter to take steps to help protect them, as well as myself, from some of these risks. Simple things like have 2 people review the disbursements, keep unused checks locked up, balance the escrow account every month, etc. Furthermore, I was told that my underwriter would audit my records every year. Perhaps once a year is not very often, but it serves as a warning that if you try to fudge your books, you will get caught.
I operate a very small office with only a few employees and I handle most of the escrow work myself. Still, I try to follow those procedures. I heard a story once about a title agent that kept the unused checks in her desk draw and one of her employees stole a few out of the middle of the stack. It went unnoticed for several months because (1) she didn't keep the checks locks up, and (2) she didn't balance her account regularly. You just can't be too careful when you are responsible for handling large amounts of other people's money.
Perhaps it is time to see more safety procedures put in place and more monitoring by the underwriters. It seems that most underwriters have a small staff that actually conducts audits and they are already overburdened trying to manage one audit per year for all of their agents. Isn't that something that could be easily outsourced? It seems that there would be plenty of work for a firm that specializes in conducting quarterly audits for the underwriters. With the amount of money we are talking about, it would be well worth the expense if it prevented just one theft.
But audits alone are not sufficient. Agents need more training on proper procedures so that they can implement better safety standards to protect the information they collect. Theft of information from escrow files can be just as damaging to customers and the title companies' reputation.
More training could also help escrow officers detect fraud in real estate transactions. Even if its not the title agent, or their employees, perpetrating the fraud, they are the best line of defense to protect the public from fraudulent transfers and mortgage fraud. With the high turn-over at a lot of title companies, fraud prevention and awareness training should be an ongoing process in every office.
It is time to re-evaluate the title industry's practices. The status quo is not working. Crime continues to run rampant in the industry and we need to devise new standards to protect ourselves, our customers, the public at large, and the integrity of the industry.
Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com
[read more...]
Categories: Fraudulent Transfers, Mortgage Fraud, Title Industry
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