By Lisa A. Tyler
National Escrow Administrator
In the January 2009 edition we ran a story involving would–be–crooks attempting to purchase real estate repeatedly using a "Bonded Promissory Note." In the story the settlement agent was asked to work up an estimate of the full purchase price plus closing costs. The buyer would then deposit the Bonded Promissory Note into escrow for the full amount and instruct the settlement agent to deposit the note, as if it would pay at the bank. At that time, sellers were desperate to unload their properties and accepted offers from crooks on a regular basis, only to find out they really did not have the money to complete the purchase.
In the April 2012 edition we reported the not–so–mastermind behind the scheme was convicted and faced up to 30 years in federal prison without parole, as well as monumental fines. Fast forward to 2014 and there is a new twist to the scheme and a whole new "mastermind" behind it. Read "HOW to steal a mansion" to discover the latest tactics in the plan to purchase real estate with no real money.
There is a reason file–to–file transfers of escrow funds require management level approval. We have learned over time that employees who have helped themselves to funds out of the escrow trust account, have to replace the money they stole. Most often they cover their tracks by using funds from another escrow file - typically dormant funds no one is looking for.
At some point, luck runs out and it becomes a challenge for the thief to unwind all the transfers to make the principals whole. Read the story entitled "FILE–to–file transfers" to discover how an escrow officer's defalcation ultimately led to a prison sentence.
This edition contains the third story in the continuing saga of FIRPTA nightmares. Unfortunately, this story is all too common in the untimely remittance of funds to the Internal Revenue Service (IRS). Many offices, just like the one in this story, miss the 20 calendar day deadline and end up paying costly penalties and interest as a result.
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