Lawsuit: Mo. title company missing $4.5M

Lawsuit: Mo. title company missing $4.5M

	Published : Fri, 29 Jun 2007 21:43 By : Agencies Print this Story

OZARK, Mo. (AP) - About $4.5 million is missing from the accounts of a southwest Missouri title company that abruptly closed its doors last month, according to a lawsuit filed by the company's underwriter.

The lawsuit, filed in Christian County, also alleges that Nixa-based Guaranty Title Co. had a scheme to move funds between banks and accounts to cover its shortages. The lawsuit was filed by underwriter Commonwealth Land Title Insurance Co. on Wednesday.

The lawsuit says Guaranty's sudden closure last month was due to a main bank freezing Guaranty's accounts for lack of sufficient funds.

Commonwealth is suing Guaranty Title for breach of contract, according to court records.

On Thursday, a Christian County court granted a temporary restraining order that stops Guaranty Title and its officers from accessing company bank accounts, business documents, accounting records or offices.

An attorney for Guaranty Title and two officers named as defendants, Kathy Allen and Richard Gene Burton, did not return phone calls seeking comment.

It was not immediately clear how large of a market share Guaranty Title had in the booming real estate market around Springfield. Christian County, where Guaranty is based, has ranked among the top 100 fastest growing counties in the nation for several years as retirees and families move in from bigger metro areas for the Ozarks' rural charm.

Guaranty Title is the region's third-largest title company, based on number of full-time employees, according to the Springfield Business Journal's 2007 list. It has 45 employees in nine closing offices.

However, employee numbers do not necessarily reflect a company's size by sales or market share. Real estate agents and title company executives contacted by The Associated Press said they believed Guaranty did most of its business around Nixa, in Springfield and in Branson, but that it was certainly not the biggest area title company in terms of business volume.

Title companies provide insurance that the titles to real estate are legally valid. They also provide closing services for buyers and sellers and hold escrow accounts for a range of property-related items, such as insurance.

Commonwealth's lawsuit alleges that its auditor found that Guaranty owed about $4.8 million in payments as of late June but had only about $222,000 in escrow accounts at its main bank, Great Southern Bank in Springfield.

The auditor's affidavit, attached to the lawsuit, said Guaranty had been notified by Great Southern Bank on June 18 that the bank was freezing Guaranty's accounts due to insufficient funds. Guarantee informed its underwriter Commonwealth, which instructed Guaranty to stop operating as a title company.

Commonwealth's auditors went to Guarantee and found discrepancies, including significant shortages in the company's main escrow accounts and checks written on accounts without sufficient funds.

Auditor Kevin Hickey said co-owner Kathy Allen 'admitted in front of me and other witnesses a scheme of inappropriately commingling and transferring funds between and among different banks and multiple accounts to replenish shortages and to also mask shortages.'