December 3, 10

NEWS / Owners of Guaranty Title Sentenced for $4.1 Million Fraud

SPRINGFIELD, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced today that the owners of Guaranty Title, formerly headquartered in Nixa, Missouri, have been sentenced in federal court for their roles in $4.1 million wire fraud, bank fraud and money laundering conspiracies.

Richard G. “Rick” Burton, 60, of Nixa, Mo., and Kathy Cyrena Allen, also known as Kathy Stanton, 53, of Sarcoxie, Mo., were sentenced in separate hearings before U.S. District Judge Greg Kays on Tuesday, Nov. 30, 2010. Burton was sentenced to six years and six months in federal prison without parole. Allen was sentenced to three years and three months in federal prison without parole. The court also ordered Burton and Allen to pay $4,150,663 in restitution, for which they are jointly and severally liable.

Burton and Allen participated in a scheme to defraud financial institutions and individuals of more than $4.1 million through a series of illegal financial transfers related to stolen escrow payments. They attempted to conceal their criminal activities through a substantial check-kiting scheme. Both Burton and Allen pleaded guilty to conspiracy to commit wire fraud and conspiracy to commit money laundering. Allen also pleaded guilty to conspiracy to commit bank fraud.

Burton was the president and majority owner of Guaranty Title Company of Southwest Missouri, Guaranty Title Company d/b/a Guaranty Title and Closing Company, and Guaranty Properties, Inc. The companies, referred to collectively as Guaranty, provided real estate title and closing services. Allen, who had a 42 percent ownership interest in Guaranty, was the vice president during the time of the conspiracy. Guaranty’s main office was located in Nixa, with at least 10 branch offices located in Aurora, Branson, Mount Vernon, Ozark, Springfield and Republic, Mo.

Conspiracy to Commit Wire Fraud

Burton and Allen have each admitted that, from May 12, 2005, to June 18, 2007, they defrauded mortgage companies and individual customers of escrow money which had been wired to Guaranty to pay real estate closing costs.

When real estate buyers and sellers hired Guaranty to facilitate the closing of real estate contracts, Guaranty agreed to hold buyers’ money for closing costs in an escrow funds account separate from funds that Guaranty owned. Guaranty was prohibited from commingling that escrow money with the firm’s business operations money, because it did not own the escrow money it received.

Burton and Allen admitted that they took a portion of the escrow money that had been transferred into these escrow accounts. In violation of Guaranty’s promise not to do so, they caused $3,467,709 of stolen escrow funds to be diverted into the firm’s business operations account and used the money for the day to day business operations of Guaranty. In order to conceal the source of those deposits into the operations account, they instructed Guaranty’s in-house bookkeeper to record deposits of stolen escrow money into Guaranty’s business operations account as loans, including loans from a fictitious company called “K & S Investments.”

Conspiracy to Commit Bank Fraud

By April 2007, deposits into Guaranty’s main escrow account no longer covered shortages caused by the theft of escrow funds. Allen and Burton concealed this shortage by causing checks to be written and deposited between various accounts held by Guaranty at Great Southern Bank and Ozark Mountain Bank that did not contain sufficient funds to cover the checks. This check-kiting scheme continued until June 18, 2007, when Old Missouri Bank discovered the fraud and closed the bank account. As a result of this check kiting, they caused Ozark Mountain Bank to lose $682,954.

Conspiracy to Commit Money Laundering

Burton and Allen admitted that they participated in a conspiracy to commit money laundering from May 12, 2005, to June 18, 2007. They conducted financial transactions that involved the proceeds of the wire fraud and bank fraud conspiracies, in order to promote that criminal activity and to conceal the source of the proceeds of the unlawful activity.

This case was prosecuted by Assistant U.S. Attorney Randall D. Eggert. It was investigated by the Federal Bureau of Investigation, IRS-Criminal Investigation and the Missouri Department of Insurance, Financial Institutions and Professional Registration.

http://kansascity.fbi.gov/dojpressrel/pressrel10/kc120110.htm

Tags: branch office, criminal investigation,