Lump of Coal?
By Lisa A. Tyler
National Escrow Administrator
The criminals exposed in this month's edition of Fraud Insights are sure to get nothing more than a lump of coal this holiday season. But the employees who discovered their bad deeds are getting far more – a $1,000 reward!
The holiday season historically has an increase in the volume of scams, such as check fraud. Stay on your toes by learning about the latest trick – stealing checks, altering the check information and cashing the check. The details are laid out in "Check Washing Scare."
Have you ever seen a judgment in favor of a title company? Laurie Watts from our Baton Rouge office recently found one in her title report. Find out what the other title company had to say when she questioned them about the basis for the judgment in the story entitled, "We're All in This Together."
Find out what you can do to protect the Company from accepting another non-legitimate power of attorney by reading "Another Forged POA." The power of attorney is the most commonly forged document in our industry. Read how Rebecca Conrad from our Dallas operation detected one in a recent transaction.
Last, but certainly not least, we have developed an online tracking system for all completed escrow training hours! Commencing on January 2, 2008, all direct operation settlement employees will have access to view their accumulated training hours through the Company's intranet. Read all about it in "Our Gift to You."
I don't care how you get your story to me, just get it to me! Submit your next heroic story to the Company via e-mail at email@example.com.
We are looking forward to a better 2008 and want you to be more successful! Attend one of the 2008 Fantastic Escrow Training events in your area to obtain the latest information on closings in this market. To find the locations and dates scheduled for 2008, log onto home.fnf.com. Under Business Tools, select Training and then Training Events to view the Escrow Training Calendar. Happy holidays to all. See you in the New Year!
Check Washing Scare
Mailboxes were recently broken into in Las Vegas and residents there are discovering checks sent to them have been stolen, altered and cashed. One of those checks was issued by a Fidelity branch in Chester, Calif.
Angie, a mortgage broker from Vision Home Loans in Las Vegas, contacted our office to track down a payment due to her company in the amount of $10,510.69. The check had been issued and sent by Donna O'Connell, a seasoned escrow officer with Fidelity's Plumas County, Calif. operation. After pulling the file, Donna informed the caller the check had been sent and subsequently cashed.
Vision Home Loans claimed they had not received payment and asked for a copy of the cancelled check. Donna obliged only to discover the check had been "washed," meaning the payee name and address had been changed, in this case to "James Kaahunui" at a Las Vegas residence.
Donna contacted her accounting center. The accounting center alerted Fidelity's Banking Administration team, who then put them in contact with Bank of America's fraud resolution department. Bank of America immediately contacted the Las Vegas police department as well as the postal inspector. In the meantime, Vision Home Loans discovered several groups of locked mailboxes located outside of its office had been opened with a crowbar. The police and postal authority confirmed many businesses in the area had their mailboxes broken into, with checks stolen, payee names altered and checks eventually cashed.
Luckily for FNT and Vision Home Loans, the crook that ended up with our check deposited the item in his Bank of America account. We assume he planned to drain and close the account once the check cleared. However, because Donna and her accounting team acted swiftly, Bank of America was able to freeze his account while the money was still in it.
In the meantime, James Kaahunui was located and arrested. Donna and her accounting team are working closely with the bank to complete the required fraud paperwork and to supply the supporting evidence. Bank of America has agreed to put the funds back in the trust account so the funds can be reissued to Vision Home Loans without loss.
Moral of the Story
When a customer contacts our offices with a problem regarding a check, take the time to investigate. If there are any wrong doings, make sure to contact your National Escrow Administration team or Banking Administration and together we can find resolution. Acting swiftly enables our trust banks to work with local law enforcement to catch criminals and obtain restitution. The more time that passes, the less likely the authorities are to apprehend the criminal.
And a word of advice for anyone who has had their mail tampered with, contacting the postal inspector is the fastest way to get the money back while apprehending the criminal on a federal offense!
Our Gift to You
Commencing on January 2, 2008, all direct operation settlement employees will have access to their accumulated escrow training hours online and in real time through the Company's intranet.
To bring in the New Year the Company will launch a new feature on the Company's intranet entitled, "My Settlement Training." This new report will reflect accumulated settlement training hours for our employees. Training hours for Chicago Title Company employees have been accumulating since June 1, 2005. All other employees training hours will be tracked automatically starting January 1, 2008.
The tracking for most types of training is performed automatically by the system:
- Seminar Events (6 hours)
- Live Webcast Events (6 hours)
- Web-Based Training Modules (20 minutes each)
- Pre-recorded Webcast Events (actual recorded time)
- The Escrow Training Challenge (4 hours upon completion of all 5 levels)
Local training events must be approved by national escrow administration before the hours can be accumulated on behalf of the employee. The employee or the presenter can submit the curriculum and the sign-in sheet to us as proof of attendance at firstname.lastname@example.org.
You can logon to the system and check your accumulated training at home.fnf.com, select "Business Tools," select "Training" and select "My Settlement Training" on the left-hand side of the screen. We look forward to receiving your feedback. Please contact the national escrow administration team at email@example.com.
We're All in This Together
Another title company files a judgment lien against parties who perpetrated a forgery that cost them thousands. That recorded judgment later saved our Company from making the same mistake.
Laurie Watts, a residential closing specialist with Baton Rouge Title Company (a wholly-owned Chicago Title Company subsidiary), received a title report for a sale that, according to the real estate agents, needed to close ASAP. The report disclosed a judgment lien against the seller named in the purchase agreement and exceeded the sale price of the property.
Laurie pulled a copy of the lien only to discover the plaintiff was another title company in town. This sounded unusual to her, so she called the other company to find out the basis for obtaining a judgment lien. Through her conversation, she discovered the seller on her transaction was also the buyer on the previous transaction handled by the other company. The buyer on the previous transaction had defrauded the title insurer by forging the then property owner's signature on the conveying deed. The other company told Laurie their own employee and the loan officer conspired with the buyer to purchase the property, mortgage it and walk away with cash.
The buyer quickly cashed the title company's check before the title company discovered the scam. The other title company had to pay the lender on the purchase money transaction, as well as put the property back in to the actual owner's name. As a result, the court awarded the other title company a money judgment in order to recover their losses.
And, get this – the buyer now, through Laurie's transaction, was trying to sell yet another piece of property with the same seller name as the last transaction and involving property on the same street as the property in the fraudulent transaction!
Needless to say, Laurie refused to close her transaction and she contacted all branch offices in her area with the names of the parties involved, so they didn't get caught in the same trap. Thanks to Laurie for saving the Company from loss of thousands of dollars! And in exchange, we have rewarded Laurie with $1,000.
Moral of the Story
If the other title company hadn't filed a judgment lien against the perpetrators, other companies, such as ours, would have fallen for their scam. By filing a judgment lien, everyone who does business with the criminal will beware. It is unusual to find a judgment in favor of a title company, so it is good thing Laurie followed through with her instincts to find out the basis for obtaining a judgment.
Another Forged POA
You would think crooks would by now know better than to commit forgery through a power of attorney. Every underwriter in the industry views transactions involving powers of attorney as high risk. However, we receive multiple stories regarding forged power of attorney documents each month, and here is the latest.
Rebecca Conrad, commercial counsel for Chicago Title Company in Dallas, was recently given power of attorney to review and approve a transaction involving the sale of acreage in San Antonio. The transaction involved multiple sellers and the power of attorney gave one of the owners the ability to sign on behalf of his wife.
The power of attorney was a Texas statutory form and not much cause for alarm, until Rebecca noticed the execution date. The wife had signed the power of attorney on the same day the husband signed the deeds on behalf of his wife and himself as attorney-in-fact. Rebecca called the attorney who prepared the deed, who then confirmed the husband came to his office and executed the deed before a notary public in his office. The husband had arrived and presented the original power of attorney.
Next Rebecca called the notary on the power of attorney. She asked if the wife had appeared before him and he said he notarized the document in his office, but this wasn't exactly what Rebecca had asked. So she continued to drill him with questions, such as why the wife would have signed a power of attorney the same day her husband signed the deed conveying their interest in another office across town. Why didn't the wife just sign the deed instead of granting a power of attorney? The attorney broke down under the line of questioning and stated the wife was actually in Austin, when the attorney's office was in San Antonio.
Rebecca asked once more, "Did she appear before you?" The notary put her on hold for a long time and when he came back on the line he said Rebecca should consider the power of attorney "no good." He admitted he executed the acknowledgement as a favor for his brother and the wife had not appeared before him. When the husband in title was questioned, it was determined the wife was actually in China!
To this day, Rebecca is not sure whether the wife knew of the land sale or not. The wife's undivided interest in the property would have been invalid had she closed and insured the sale. As a result of our refusing to close, the sale fell through and the rest of the sellers are considering reporting the attorney who notarized the power of attorney to the State Bar for ethics violations.
In return for her detection of the forged power of attorney, Rebecca has received a $1,000 reward and a letter of recognition on behalf of the Company.
Moral of the Story
Transactions involving powers of attorney are risky for title insurers for the following reasons:
- Often there is no contact with the principal.
- If the principal is deceased the POA does not survive them.
- Proceeds are often diverted to the agent/attorney-in-fact.
- POA's are statistically the most forged document in the industry.
- It is usually a relative or trusted friend who misuses a power of attorney.
When presented with a power of attorney, it is important that our employees:
- Send a copy of the POA to a title officer for review.
- Ask if the agent/attorney-in-fact possess the original POA. If not, it could indicate fraud, forgery or unauthorized use of the POA.
- Make contact with the person granting the powers.
- If the principal can't be contacted, find out why and evaluate (deployed military, in nursing home, deceased, etc.).
- Make sure the principal is aware of the terms of the transaction.
- Verify they executed the POA of their own free will.
- Verify POA is still in full force and effect.
- Do not accept disbursement instructions from agent/attorney-in-fact that divert proceeds from the principal. (Be careful of transfers to other escrows or direct deposits to bank accounts – do they benefit our principal?)
- Agent/attorney-in-fact must sign (as in script, not print) the principal's name and sign their own name as agent/attorney-in-fact.