Press release from Indiana Attorney General Greg Zoeller:
Hoosier victims of escrow fraud receive more than $125,000 in restitution
Indiana lawmakers created unique solution to aid fraud victimsAttorney General Greg Zoeller today announced 97 victims of financial fraud have received $125,679.22 in restitution for taxes and insurance bills that went unpaid by American Escrow, a Chicago-based company.
“Paying property taxes and insurance is not optional for homeowners. Escrow accounts give people a peace of mind that their critical bills will be paid on time by money held in trust. That peace of mind turned into a nightmare for thousands of homeowners all over the country when they discovered their tax and insurance bills had not been paid and the money had been squandered,” Zoeller said. “This restitution will not undo the stress or erase the experience of being defrauded, but it will make people whole and hopefully allow them to gain back the financial stability for which they have been fighting.”
In early 2009, angry homeowners from dozens of states flocked to the internet to trade stories about what losing their escrow money meant for their families and to file complaints against the company. Attorneys General in Illinois, Iowa, Michigan and Pennsylvania soon filed lawsuits against the crumbling escrow company which had already been plagued by internal fraud and embezzlement. Indiana Attorney General Greg Zoeller filed suit in June 2009 claiming the company violated state consumer protection laws. In January he won a court judgment ordering American Escrow to pay more than $600,000 in fines, attorneys’ fees and consumer restitution.
The judgment proved uncollectible because the company had no assets so Zoeller approached the state legislature for help in finding a way to provide restitution for victims. The outcome was a new law, House Enrolled Act 1332, which was passed by the Indiana General Assembly this spring. The law set aside $150,000 to pay restitution out of a loan broker account held by the securities division of Secretary of State Todd Rokita’s office. The account is funded from license registration and renewal fees collected from loan brokers, mortgage loan originators, and principal managers.
Zoeller thanked legislators for their efforts in passing the new law.
“This piece of legislation is significant in that it not only made restitution available for fraud victims, it went a step further by creating new regulations that will prevent this from ever happening again in Indiana,” Zoeller said. “I want to thank the General Assembly for finding a creative solution to this tough problem.”
In addition to providing restitution to victims, House Enrolled Act 1332 states only a financial institution or title insurance company can maintain a borrower’s escrow account and all others are prohibited from doing so. This new provision in the law is expected to curb practices that could lead to abuses.
Homeowners affected by American Escrow’s fraud were required to submit a complaint with the Attorney General’s office no later than Monday, April 26 to qualify for restitution.
Related weblinks:
Attorney General’s website
House Enrolled Act 1332