By Jeff Lehr
jlehr@joplinglobe.com
A Sarcoxie woman and a Nixa man have been indicted by a federal grand jury in connection with an alleged conspiracy to commit bank fraud, wire fraud and money laundering totaling more than $2.5 million.
Kathy C. Allen, also known as Kathy Stanton, 66, and Richard G. Burton, 59, were charged in a 19-count indictment handed up Tuesday in U.S. District Court in Springfield.
The indictment alleges that Allen and Burton conspired to defraud financial institutions of the money through a series of illegal transfers of funds involving escrow payments. They then tried to conceal this activity through a complicated check-kiting scheme, according to the indictment.
Three companies
Burton and Allen are the owners of three companies referred to collectively as Guaranty, which provided real estate title and closing services, according to the U.S. attorney’s office for the Western District of Missouri. The companies are identified in federal court documents as Guaranty Title Company of Southwest Missouri, Guaranty Title and Closing Co., and Guaranty Properties Inc.
Guaranty’s main office was in Nixa. The companies operated at least 10 branch offices in other cities, including Springfield, Branson, Ozark, Republic, Mount Vernon and Aurora, according to the U.S. attorney’s office.
Allen and Burton are accused of conspiring to commit wire fraud and money laundering from May 12, 2005, through June 18, 2007. The time frame the indictment cites for the alleged bank fraud, involving Great Southern Bank and Ozark Mountain Bank, is between April 1 and June 18 of 2007.
The U.S. attorney’s office said in a news release Wednesday that mortgage companies and individual customers would send Guaranty escrow money to pay for real estate closing costs. In its role in the closing of real estate contracts, the company had agreed to hold such money for closing costs in an escrow funds account separate from company funds.
The U.S. attorney’s office said Guaranty was prohibited by law from commingling escrow money with the firm’s operating funds because it did not own the escrow money. The escrow money typically was transferred electronically to escrow accounts at several branch banks to make it available for mortgage closings at Guaranty offices that those branch banks served.
Beginning in May 2005, Allen and Burton allegedly began transferring some of the escrow money from these accounts into Guaranty’s operations account and using it for day-to-day business. The amount of the escrow money allegedly stolen in that fashion has been determined to be $2,040,937, the U.S. attorney’s office said.
Burton and Allen instructed the company’s bookkeeper to record those deposits as loans from either Allen or a fictitious company called “K&S; Investments,” the indictment alleges. In addition to the count of conspiracy to commit wire fraud, the defendants are charged with six counts each of wire fraud in connection with alleged transfers into the company’s main escrow bank account.
Shortage
The indictment states that by April 2007, deposits into Guaranty’s main escrow account could no longer cover shortages caused by the defendants’ theft of escrow money. They then began trying to conceal this shortage through a series of checks written on and deposited in various accounts at Great Southern Bank and Ozark Mountain Bank, the indictment alleges.
The alleged check-kiting scheme continued until June 18, 2007, when Ozark Mountain Bank discovered the fraud and closed the company’s bank account, the U.S. attorney’s office said. But the check-kiting caused an alleged loss of about $682,954 to Ozark Mountain Bank.
Besides the conspiracy counts and the wire-fraud counts, the defendants are facing five counts each of bank fraud and five counts each of money laundering.
Federal case
The alleged bank and wire fraud cited in a federal grand jury indictment was investigated by the FBI, the criminal investigation division of the Internal Revenue Service, and the Missouri Department of Insurance, Financial Institutions and Professional Registration.
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