Owners of Guaranty Title Indicted for $2.6 Million Bank Fraud, Wire Fraud, Money Laundering Conspiracies
|U.S. Attorney’s Office November 18, 2009|
SPRINGFIELD, MO—Matt J. Whitworth, United States Attorney for the Western District of Missouri, announced today that the owners of Guaranty Title, formerly headquartered in Nixa, Mo., have been indicted by a federal grand jury for participating in a $2.6 million conspiracy to commit bank fraud, wire fraud and money laundering.
Richard G. “Rick” Burton, 59, of Nixa, and Kathy Cyrena Allen, also known as Kathy Stanton, 66, of Sarcoxie, Mo., were charged in a 19-count indictment returned by a federal grand jury in Springfield on Tuesday, Nov. 17, 2009.
The federal indictment alleges that Burton and Stanton, through their companies, conspired to defraud financial institutions of more than $2.6 million through a series of illegal financial transfers related to stolen escrow payments. The indictment also alleges that Burton and Stanton attempted to conceal their criminal activities through a substantial check-kiting scheme.
Burton and Stanton were the co-owners 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. 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
The federal indictment alleges that Burton and Stanton participated in a conspiracy to commit wire fraud from May 12, 2005, to June 18, 2007. According to the indictment, Burton and Stanton 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. The escrow money deposited into Guaranty’s main escrow account was electronically transferred to certain escrow accounts at several branch banks in southwest Missouri. These transfers made escrow money available for mortgage closings at a particular Guaranty branch office that a particular branch bank served.
In May 2005, Burton and Stanton allegedly began taking a portion of the escrow money that had been transferred into these escrow accounts. In violation of Guaranty’s promise not to do so, Burton and Stanton caused $2,040,937 of stolen escrow funds to be deposited into the firm’s business operations account and used the money for the day to day business operations of Guaranty.
Burton and Stanton allegedly instructed Guaranty’s in-house bookkeeper to record deposits of stolen escrow money into Guaranty’s business operations account as loans from Stanton or from a fictitious company called “K & S Investments” (named for Stanton’s initials).
In addition to the conspiracy, the indictment charges Burton and Stanton with six counts of wire fraud related to wire transfers of escrow funds from financial institutions into Guaranty’s main escrow bank account.
Conspiracy to Commit Bank Fraud
The federal indictment alleges that Burton and Stanton participated in a conspiracy to commit bank fraud from April 1, 2007, to June 18, 2007.
By April 2007, the indictment says, current deposits into Guaranty’s main escrow account no longer covered shortages caused by the theft of escrow funds. Burton and Stanton 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, Burton and Stanton caused Ozark Mountain Bank to lose approximately $682,954.
In addition to the conspiracy, the indictment charges Burton and Stanton with five counts of bank fraud related to financial transactions that occurred as part of the check-kiting scheme.
Conspiracy to Commit Money Laundering
The federal indictment alleges that Burton and Stanton participated in a conspiracy to commit money laundering from May 12, 2005, to June 18, 2007.
Burton and Stanton allegedly 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.
In addition to the conspiracy, the indictment charges Burton and Stanton with five counts of money laundering related to financial transactions of wire fraud proceeds.
Whitworth cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being 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.