So You Want To See Your Name In Print?

By Lisa A. Tyler
National Escrow Administrator

Welcome to the 60th Edition of Fraud Insights. Can you believe it? It's our Diamond Anniversary edition! We thought we would have run out of material long before now! Unfortunately, that's not the case. In this edition we bring you a story about an escrow officer with Fidelity who was terminated, with cause, for actions such as falsifying expense reports, misappropriating escrowed funds and closing her own refinance transaction. The Company takes a hard line and prosecutes for such actions. Read all about it in "So You Want To See Your Name In Print?"

After such an incredible tale, we suspected our readers would need an uplifting story. Read how one of our own employees helped bring a shoddy contractor to justice in "Contractor Found Guilty Of Fraud." It will lift your spirits!

After five years of publishing, we thought it was the perfect time to remind our readers of the purpose of this monthly newsletter.

  • As claims awareness and prevention are a top priority for the Company, FNF's National Escrow Administrators are committed to providing an insightful and interesting newsletter that facilitates these goals. Fraud Insights is designed to keep our employees aware of fraud and forgery occurrences in our industry that result in claims and ultimately loss of revenue to the Company.
  • In addition to raising awareness, it is our goal to provide FNF employees with tips and tools that will aid in the detection and prevention of fraud.
  • Through this newsletter, we provide improved processes and procedures for all operations to embrace.
  • We provide monetary rewards to those employees who were able to thwart fraud in their own local areas of responsibility – to the tune of a cool grand! To-date we've given out more than $71,000 in rewards – that's more than $1,000 per issue. You could be next!
  • Lastly, Fraud Insights should be used as a marketing and sales tool for distribution to your customers; keeping them abreast of what is happening in the industry and keeping YOU top-of-mind.

As you can see, the benefits of readership are numerous. Continue reading, contributing and sharing the contents of this newsletter with other industry professionals! Together we can change the industry for the better.

We're ready for an AWESOME new year!

Whether you're curious about new regulations, state or federal real estate programs or how to add efficiencies to your daily workload, our 2011 AWESOME Escrow Training Events will provide you with the most up-to-date information. We will kick off the New Year in California and travel the entire year to bring you information you can use to be a better resource for your customers and for the Company.

Be sure to register for an event in your area through the Company's Intranet at




So You Want To See Your Name In Print?

A bankruptcy court found the debt of a lien in favor of Fidelity against a former employee non-dischargeable. After trial, the bankruptcy court found the escrow officer used her position within the Company to commit embezzlement and fraud. She committed these acts against the Company and her customers.

In 2002, Fidelity hired Kimberly Ann Gillaspie as a branch manager and escrow officer. During her employment, Gillaspie opened a buyer's real estate consultant company called Pueo Real Estate Services Unlimited. After management learned of her new company and its overlapping business with Fidelity, they counseled Gillaspie against working on Pueo business during Company time. Gillaspie promised she wouldn't. The management team began to look at Gillaspie's expense reports and branch expenses more closely. The management team found an expense report with falsified expenses and immediately terminated Gillaspie.

After Gillaspie's termination, the management team audited Gillaspie's closed escrow files. Irregularities were found in two of her files.

In one transaction a holdback of funds in the amount of $11,000 was disbursed to Pueo Real Estate Services – Gillaspie's company – without instruction from either principal. Later it was discovered the funds were sent from Pueo Real Estate Services to the buyer. In actuality, the dispute that caused the holdback of funds had been resolved by the seller. It was the seller that was due the funds, and upon discovering the misappropriation of funds, Fidelity sent the seller the money.

In the second transaction Gillaspie disbursed $19,837 to the County Tax Collector to pay the property taxes at close of escrow. About a year later the tax collector refunded the money back to escrow because the taxes had already been paid. Months later a $9,000 refund was disbursed to Pueo Real Estate Services. Then within weeks $9,500 of the refund was disbursed to one of the real estate agents in the transaction. A few months later the remaining $1,337 was disbursed to the same real estate agent. Fidelity stepped in and refunded the $19,837 to the charged party in the transaction, making them whole.


Wait…it gets worse! After firing Gillaspie, Fidelity received a claim from a lender she had borrowed money from. The lender claimed she promised them a first priority mortgage and that she had failed to record the mortgage. The lender further claimed that Fidelity was responsible because Gillaspie used her position with Fidelity to gain the lender's trust, and arranged the closing through the Fidelity office she managed.

The loan was in favor of Grunewald Equity Funding, Inc., (a private party lender) in the amount of $140,000. Gillaspie had signed the mortgage and then told Grunewald Equity Funding she would set up the recording of the mortgage, for which she charged $25.

Shortly after closing, the lender received a copy of the cover sheet of the mortgage with a certification that the mortgage had been recorded with the Bureau of Conveyances. As it turned out, the certification stamp was falsified. The mortgage was not recorded and the certification stamp was taken from an unrelated mortgage between different parties and secured by an entirely different property. Gillaspie concocted a false cover page by cutting and pasting a photocopied certificate from another mortgage!

After Gillaspie fell into default in her obligations to Grunewald Equity Funding, the lender ordered a title report and learned its mortgage had not been recorded. Grunewald Equity Funding made a claim against Fidelity based on Fidelity's failure to record the mortgage. Fidelity investigated the matter and paid $158,412.81 to Grunewald Equity Funding. In exchange, Grunewald Equity Funding assigned its note and mortgage over to Fidelity.

At the time, Gillaspie already had a first mortgage with American Savings Bank even though Gillaspie represented to the lender its lien would be in first position. Oddly enough, after closing on the Grunewald Equity Funding loan, a release of the American Savings Bank loan was recorded in the Land Court. Shortly thereafter, MERS, acting on behalf of American Savings Bank, filed a petition in the Land Court alleging the signature on the release was forged! The Land Court granted the petition and removed the forged release of the mortgage.

More than likely Gillaspie forged the mortgage release. She was allegedly having financial difficulties at the time. Fidelity fired her about two months before the release was recorded, depriving her of a source of income. In addition, she fell into default on the new mortgage loan and a check she wrote to the lender was returned for insufficient funds. Ultimately, Gillaspie filed for bankruptcy.

Moral of the Story:
As a result of Fidelity's findings, Fidelity's top management contacted the local authorities as well as outside counsel. They entered a petition for restitution in the Bankruptcy court. Fidelity sued Gillaspie in Federal Bankruptcy court for full restitution of its losses. The Bankruptcy judge signed a judgment for $231,330.92 together with interest, plus the legal costs of Fidelity.

In the Findings of Fact and Conclusions of Law documented by the U.S. Bankruptcy Court in Fidelity's case against Gillaspie it stated "Ms. Gillaspie used her position as branch manager, escrow officer and supervisor of the other escrow officers in Fidelity's office to give these improper transactions a false patina of regularity, in order to conceal her misconduct."

This story sends a message to all Fidelity employees contemplating embezzlement, or using his/her position within the Company to defraud the public, that those actions will not be tolerated. Not only do those types of actions call for immediate termination, but the Company will prosecute to the full extent of the law.



Contractor Found Guilty Of Fraud

A federal jury returned guilty verdicts in a four week trial against a contractor accused of defrauding at least four local families out of one million dollars. A key witness in the trial was a construction escrow specialist from Fidelity National Title. Her knowledge and expertise were essential in convicting the contractor for his crimes.

Fidelity's Crystal Lake, Ill. office had a contractor they reluctantly did business with. The contractor didn't properly represent the allocation of funds on the construction escrows, failed to account for down payments, didn't properly show parties paid and failed to disclose or properly account for subcontractors or suppliers. Due to this contractor's actions, several customers were left with unfinished projects and had to pay a great deal of money to have other contractors finish the work.

The contractor defrauded at least four families by charging them for supplies he then used on a strip mall he owned. He also charged the defrauded families for additional fees not allowed under the contracts, as well as for work that he did not perform. In addition, he failed to pay subcontractors for work they did on various homes. The families and subcontractors contacted the authorities and the contractor was arrested and jailed.

The U.S. Attorney's office contacted Nancy May, a construction escrow specialist at the Crystal Lake, Ill. office. They requested she assist in the investigation of the contractor. Nancy obliged and went to several interview sessions where she walked the U.S. Attorney and special agents through the process of a construction escrow. Nancy carefully explained how the process worked, pointed out details and documents that would demonstrate the wrongdoing, and helped the U.S. Attorney and special agents work through the complicated facts.

The trial came up on the docket earlier this year. Nancy was called to testify at the trial as one of the main witnesses in the prosecution's case against the contractor. The contractor had been jailed for the past three years and represented himself at trial.

At the trial Nancy was cool, calm and collected, despite the difficult experience of having to face this contractor on the witness stand. Wearing his orange prison jumpsuit, he asked her rambling questions, but she didn't back down. She did her duty and told the truth. Failing to learn his lesson, the defendant even called Nancy to the stand during his case in chief. (The defendant's case in chief is the portion of the trial in which the defense presents its witnesses and evidence.)

The defendant failed to establish a single fact in his favor and damaged his own case in doing so. He gave Nancy the opportunity to emphasize exactly what he had done wrong in failing to disclose contractors that ended up encumbering several properties.

The contractor was convicted of two counts of mail fraud, two counts of wire fraud, 11 counts of failing to pay IRS taxes he withheld from the wages of his employees, three counts of failing to file unemployment tax returns and three counts of failing to file personal income tax returns. Each of the fraud charges carries a maximum sentence of 20 years in prison, three years of supervised release, restitution and fines of more than $250,000. Not to mention the other charges could result in between one and five years in prison each, with probation and fines.

Moral of the Story:
Unfortunately, many people in our Family of Companies have had to experience situations involving the fraudulent conduct of customers. Reporting fraud is one thing, but taking the extra step to assist in the prosecutors' understanding of the complicated nature of what we do and having the courage to step up at trial are attributes we should all be proud of. Nancy exhibited the finest qualities when she took on these challenges, did the right thing and helped obtain a conviction on behalf of the People.

For her knowledge, experience and valiant efforts, the Company has rewarded Nancy with a letter of recognition and $1,000.