Owner of Guaranty Title Pleads Guilty to $2.7 Million Wire Fraud Conspiracy
| U.S. Attorney’s Office April 13, 2010 |
SPRINGFIELD, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced today that the owner of Guaranty Title, formerly headquartered in Nixa, Mo., pleaded guilty in federal court today to his role in a $2.7 million wire fraud conspiracy and money laundering.
Richard G. “Rick” Burton, 59, of Nixa, pleaded guilty before U.S. Magistrate Judge James C. England this morning to conspiracy to commit wire fraud and conspiracy to commit money laundering. Burton was charged in a Nov. 17, 2009, federal indictment.
Burton admitted that he participated in a scheme to defraud financial institutions of more than $2.7 million through a series of illegal financial transfers related to stolen escrow payments. Burton attempted to conceal his criminal activities through a substantial check-kiting scheme.
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. 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 admitted that, from May 12, 2005, to June 18, 2007, he 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 admitted that he 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, Burton caused $2,040,937 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.
Burton 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,” which was created to help conceal the source of the deposits.
By April 2007, deposits into Guaranty’s main escrow account no longer covered shortages caused by the theft of escrow funds. Burton assisted in concealing 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 caused Ozark Mountain Bank to lose approximately $682,954.
Conspiracy to Commit Money Laundering
Burton admitted that he participated in a conspiracy to commit money laundering from May 12, 2005, to June 18, 2007. Burton 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.
Under federal statutes, Burton is subject to a sentence of up to 40 years in federal prison without parole, plus a fine up to $1,250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
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.