banner
article1photo
byline
in this issue
article1
article2
article3

 
A contract was deposited into escrow at Chicago Title Company in Glendale, California, on February 28, 2017, with a closing date three days later barely giving Veronica Alexander, the escrow officer, much time to order the title report.

The property owner was a limited liability company (LLC), so in addition to the title report she also needed to collect the organizational documents to verify who had the authority to sign on behalf of the LLC. The title report came back with no liens on the property and the property taxes were paid current.

This was a seller carry–back transaction, so the organizational documents were all that was still needed in order to close. The organizational documents were not deposited by the seller within the three days, so the closing date was extended. Finally, on March 15, 2017, Veronica received everything she needed. The buyer and seller signed their closing documents and the buyer deposited their down payment.

Veronica sent the documents to her title officer, Mary Distin, for recording. Mary reviewed the documents and sent an email message to Veronica, telling her the recording had been pulled and to contact her manager, Tony Taranto, for more detailed information, since she would be out of the office the following day.

The next day Veronica contacted Tony to find out why the recording was pulled. Tony explained that Mary had searched the Secretary of State's database to confirm the LLC that owned the property was still active, and during her search she discovered two filings.

The original filing reflected the LLC as cancelled back in 2014 with a managing member by the name of "Azali" and a new filing in 2017 reflecting the managing member as "Khalil." The name stood out to Mary, so she did some more digging.

Mary recalled pulling a recording on a transaction a few weeks prior, where the owner was a corporation that had been suspended by the Secretary of State. In a previous transaction the corporation was recently reinstated by "Khalil."

Mary and Tony had reached out to the former president and owner of the suspended corporation to confirm he truly still owned the corporation and was selling the subject property. During the conversation the owner confirmed he was selling the property, but he had been recently contacted by "Khalil" who was attempting to extort money from the owner and president of the corporation in order to sell his company back to him!

Mary and Tony worked with their underwriting team to close and insure the transaction for the true president of the corporation and owner of the subject property who was being victimized by "Khalil." Mary knew she recognized the name!

Veronica escalated this latest transaction to her manager, Tony, who was able to contact the original managing member of the LLC, "Azali." He confirmed he was not in any way associated or familiar with "Khalil" nor was his property for sale!

Tony informed the escrow officer and she resigned as escrow holder returning all funds on deposit to their original remitter. Veronica told Tony this was one of three sales the same seller and buyers representing different entities opened with her on three different properties.

On the first one, the title report called for an Uninsured Deed Affidavit, so the transaction was quickly cancelled by the seller. On the second, Veronica had just resigned as escrow holder upon learning "Khalil" was not the true owner of the LLC or the property. Now, she was preparing to resign as escrow holder on the third transaction.

In the meantime, Mary and Tony quickly figured out these fraudsters must have a way of searching for suspended corporations or cancelled LLCs. They re–file under the same entity name and attempt to sell the property and run away with the proceeds from the sale. As a result of Mary's detection of the crime and prevention of a possible claim, she has been rewarded $1,500 and has received a letter of recognition from the Company.

 

 
 

MORAL OF THE STORY

Whenever the property owner is an entity, the organizational documents should be obtained as early in the transaction as possible to give the title officer ample time to investigate the ownership and uncover any fraudulent activity. If there is any recent change in the filings that adds or deletes parties with authority, the title officer must independently verify the current parties which appear to have authority.

 
 

 

Note: The Company has paid out $179,500 in rewards to employees who have discovered and prevented fraud and forgery in their own transactions. You could be next! Be sure to share your heroic stories with us by submitting the complete details to settlement@fnf.com.

 

 
  SHARE    
 
 
 
footer_line
 
stop fraud! share
 
footer_line
 
 
FNF Home