FOR IMMEDIATE RELEASE:
July 1, 1999
Attorney General J. Joseph Curran, Jr., announced today that the former operator of a Reisterstown title company, Landmark Title, has pleaded guilty to embezzling nearly $120,000 of his customers' escrow funds. Steven L. Friedman, 53, of Reisterstown, Maryland pleaded guilty today in Baltimore County Circuit Court to one count of fraudulent misappropriation by a fiduciary. Judge J. Norris Byrnes did not set a date for sentencing.
According to the statement of facts provided to the Court, Friedman, through a series of transactions, illegally transferred $119,283.12 in real estate settlement funds from Landmark's escrow accounts to its operating accounts. The money was spent on a variety of business and personal expenses including payroll expenses and the repayment of loans Friedman made to his business. By law, none of this was Friedman's money, but rather the property of his settlement customers who needed it to pay costs associated with purchasing a home, such as paying off prior mortgages.
Additionally, the investigation revealed that Landmark routinely failed to pay its title insurance premiums even though it collected those premiums from its customers. Landmark also failed to record lien releases for mortgages that were paid off, despite the fact it charged customers a lien release service charge and collected money from customers to pay the release fees charged by county clerks. Finally, investigators learned that Friedman had gouged some settlement customers by intentionally overstating loan payoff amounts on settlement sheets, paying the lower balance and pocketing the difference.
"Mr. Friedman laid a deceitful hand on almost every aspect of his business," said Attorney General Curran. "He illegally moved around money that wasn't his, and in some cases, put the money in his own pocket."
Fortunately, Friedman's customers were not financially damaged by these actions. Landmark's title insurance underwriter, Old Republic, has agreed to absorb the losses. In addition to the nearly $120 thousand that was misappropriated, Old Republic estimates that Landmark failed to pay approximately $23,000 in title insurance premiums and failed to record more than 1,300 lien releases for which fees of roughly $88,000 were collected.
This marks the second prosecution to result from the investigation into Landmark Title. Earlier, the Attorney General's Office successfully prosecuted Dennis Busky, a former settlement officer at Landmark, after it was learned that he embezzled $175,000 in Landmark escrow funds to finance a real estate project. Busky was sentenced to serve nine months in jail and ordered to make complete restitution.
To help prevent consumers from falling victim to an unscrupulous title agent, Attorney General Curran offers the following advice:
This case was investigated by the Attorney General's Criminal Investigations Division with assistance from the Insurance Fraud Division of the Maryland Insurance Administration.