In January 2009, as financial markets burned and the Bernard Madoff scandal broke, an alarmed lawyer asked Maryland Title Co. owner George Sybert Sr. about a bounced check from a mortgage-closing escrow account.

Sybert admitted taking $300,000 out of the account. Investigators later discovered that he actually took $690,000 by forging the lawyer's name on two checks, according to documents from the Maryland Insurance Administration and prosecutors. And that was only the beginning of the grim accounting.

Last week Sybert, 67, was sentenced to eight years in prison after pleading guilty to stealing nearly $6 million from clients, banks and the lawyer.

It's the lesser-known side of the mortgage disaster. As lenders foisted billions of dollars in mortgage debt on unqualified borrowers buying overpriced houses, too often there was a sticky-fingered settlement agent standing nearby.

Since the beginning of 2008, the Maryland Insurance Administration has revoked the licenses of or imposed penalties on more than three dozen title and real-estate settlement companies, including Maryland Title. In 2009 alone, the agency fielded about a dozen complaints concerning misappropriation of funds by title agents, estimates Darlene Arnold, assistant chief enforcement officer for the administration.

Complaints of all kinds about title-insurance companies ballooned from 90 in 2005 to more than 600 last year, according to the agency. It had to double the number of agents investigating title complaints to four.

If reform of Wall Street is a priority in Washington, stopping the homeowner heartache from title-insurance scams ought to be near the top of the list for Annapolis.

Sybert's record shows the impotence of the law, the cluelessness of regulators, or both.

The son of C. Ferdinand Sybert, who was Maryland's attorney general from 1954 to 1961 and a Court of Appeals judge from 1961 to 1965, George Sybert Sr. started a title-insurance agency in the late 1980s and soon ran into trouble.

A 1992 audit by an underwriter showed he had failed to pay more than $70,000 in title-insurance premiums, according to court documents. An investigation by the insurance commission showed he had been operating without a license since 1989. Sybert settled the case. And yet he got right back into the business.

Sybert operated Maryland Commercial Title into the early 2000s, when another underwriter, Chicago Title, discovered he was shifting funds from a client escrow account into the firm's operating account. Chicago Title fired him as an agent on Nov. 29, 2001, according to court documents. The next day, he formed Maryland Title Co.

There he began using money from the firm's operating account to pay personal mortgages, including a note on a $500,000 Ocean City condo, prosecutors with Baltimore state's attorney's office said. Client money from Maryland Title's escrow account also went into Sybert's personal account, they said.

In Ponzi-scheme fashion, he used new assets to pay off old liabilities, delaying paying off refinanced mortgages with the proceeds from new mortgages, said Elizabeth A. Ritter, the assistant state's attorney who handled the case.

Title insurance, which is usually required by mortgage companies, protects people from the risk of buying property from somebody who doesn't own it. Title companies also handle real estate settlements, which means agents briefly gain custody of hundreds of thousands of dollars during the ownership transfer. In Maryland, it seems, it has been all too easy for title companies to help themselves, too.

Last month, David Wehrs Sr., the 55-year-old owner of Maryland Title and Escrow (a different company from the Maryland Title owned by Sybert), was sentenced to three years in prison for defrauding home buyers and investors. Promising investors a "guaranteed" annual return of 10.85 percent, Wehrs deposited their money in Maryland Title and Escrow accounts and used it to day-trade the stock market. He lost $1 million, according to federal prosecutors.

Suzanne Hall says she nearly lost her Cockeysville house a few months ago after her settlement company, Maple Leaf Title, failed to pay off her old mortgage with the proceeds from a new, refinanced loan. The old mortgage company initiated foreclosure proceedings. Her credit rating was wrecked, says the 51-year-old single mother. The old mortgage was eventually settled, but Hall was stuck with $17,000 in lawyer bills.

"I was an emotional wreck trying to work through this," she said. "Two kids in college. It was horrible."

Maple Leaf Title appears to be out of business. Its phones are disconnected. The Insurance Administration says it is aware of complaints against the company. Maple Leaf owner Anthony Weis, who has not been charged with wrongdoing, did not respond to a phone message left at his home.

Sybert's victims included developers, home buyers and two banks. He pleaded guilty to 13 counts of theft. Chevy Chase Bank is listed in court records as being owed more than $200,000; PNC Bank, more than $400,000. The money seems to have disappeared, spent on houses, trips to Europe and so forth, prosecutors said.

Government knows it has a problem.

In a recently concluded report, the Commission to Study Title Insurance in Maryland, appointed by the legislature two years ago, wants the insurance commissioner to study setting up a guaranty fund to pay back future victims. It also suggests making title-insurance underwriters more responsible for the behavior of agents such as Sybert who represent them at the closing table.

Those are decent ideas. But the report lacks a sense of urgency and outrage over the mounting rip-offs. It seems far too easy to obtain a title-insurance agent's license in Maryland; there are more than 400 agencies. Why Sybert was allowed to stay in business with his blemished record is a mystery.

At a sentencing hearing Friday, Sybert, already in police custody, appeared thin and stooped. Law enforcement officials did not allow me to ask him questions, but prosecutors said he had previously apologized to victims. He did not "realize the full consequences" of his actions, they said.

The full consequences are that people lost $6 million by trusting somebody known to the state of Maryland to have a history of misdirecting client money. Thank goodness prosecutors and regulators are putting the mini-Madoff out of business.

But why didn't they do it years ago?