Indiana Attorney General Greg Zoeller has announced 97 financial fraud victims have received $125,679.22 in restitution for taxes and insurance bills that went unpaid by defunct American Escrow, a Chicago-based company. 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. Zoeller filed suit against American Escrow in June 2009 for violations of state consumer protection laws. A court judgment was ordered in January requiring the company to pay more than $600,000 in fines, attorneys' fees and consumer restitution.
"Paying property taxes and insurance is not optional for homeowners. Escrow accounts give people a peace of mind that 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 hopefully allow them an opportunity to gain back the financial stability for which they have been fighting."
The judgment proved uncollectible because the company had no assets so the state legislature passed a new law making restitution funds available for the fraud victims. The new law, House Enrolled Act 1332, set aside $150,000 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 as well as fines and penalties collected from brokers found to be in violation of Indiana law.
Attorney General Zoeller thanked Indiana Reps. Jeb Bardon (D) and Woody Burton (R) for their efforts in passing the new law.
"This piece of legislation was 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 Rep. Bardon and Rep. Burton for their dedication to protecting Hoosiers and 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.
For more information, visit www.in.gov/attorneygeneral.