An article in the Dec. 18 Sunday Sun about title insurance agents reported incorrectly that William Hackney, a former lawyer in Glen Burnie, was convicted of stealing client money from an escrow account. In fact, earlier this year, in a civil proceeding in Anne Arundel County Circuit Court, Mr. Hackney signed a confessed judgment in which he acknowledged responsibility for $450,000 found missing from his title company's escrow account.
The Sun regrets the errors.
Joseph E. Goldberg Sr. raced off in his Ford Explorer Oct. 14 and hasn't been seen since.
The state and an insurance company say $2.3 million of his clients' money is missing from Land Title Research, the Ellicott City firm where he sold real estate title insurance and settled property sales.
United General Title is suing him, and the state has launched a criminal investigation.
The Goldberg case is "one of the worst insurance nightmares" in Maryland history, affecting dozens of property transactions in virtually every county, Thomas P. Raimondi, a state insurance official, said during a court hearing Friday at which the state took over Land Title's remaining assets.
The missing money could mean big legal and financial problems for the buyers of these properties.
But even if Mr. Goldberg, 41, ends up convicted of criminal charges, there is little to prevent him from eventually returning to the same obscure but potentially lucrative business -- with perhaps the same access to millions of dollars changing hands in property transactions.
A Sun investigation has found that although thefts from the escrow accounts of those who sell title insurance and conduct property settlements are a growing problem nationwide, Maryland has been ill-equipped to do much about it. The investigation shows that:
* Some Maryland title agents convicted of stealing money from settlement escrow accounts or successfully sued for the same reason are back in the business today. The Maryland Insurance Administration, charged with regulating the title insurance business, has few means to prevent them from participating in real estate settlements.
* Even if state regulators did stop felons from returning to the title insurance business, the information required on applications for licenses to sell title insurance is skimpy and, until this year, was rarely verified. Furthermore, if a title firm is listed as entirely owned by lawyers -- as was Mr. Goldberg's company -- it doesn't need to have a license or tell the state who actually is handling its property settlements.
"It's simply outrageous when you have someone who's been convicted of stealing money from an escrow account back operating in the same business again," said Glen Jackson, head of Maryland Land Title Association, an industry group, and president of Sentinel Title, one of the Baltimore area's largest settlement companies.
Chris Romano, chief of the state attorney general's criminal investigations unit, has prosecuted numerous title insurance company employees charged with dipping into escrow accounts where they are supposed to hold clients' money temporarily -- and using the money for investments, vacation homes and luxury cars.
"It's a privilege to have a license to sell title insurance," Mr. Romano said. "When you steal escrow money, there has been a complete breach of trust to that privilege. I hate to use the cliche, but the foxes are being allowed back to guard the henhouse."
Mr. Romano, Mr. Jackson and others in the industry say the need for changes in Maryland's regulation of the title insurance business is highlighted by the case of Howard L. Perlow.
Mr. Perlow was a lawyer who operated a company known as Bay State Title for about 10 years. Before its collapse in 1989, it was one of the state's largest title insurance companies, at times running millions of dollars a month through its escrow account.
In 1989, investigators found that $1.6 million was missing from the Baltimore-based company's escrow account and had been used by Mr. Perlow to bankroll a Maryland estate, clothes, jewelry and a vacation home in Boca Raton, Fla.
Mr. Perlow pleaded guilty to stealing money from the escrow account and in 1990 was stripped by the Attorney Grievance Commission of his license to practice law.
At his sentencing in 1991, Baltimore Circuit Judge Edward J. Angeletti said the lawyer took a good career and "threw it all
away."
The judge sentenced Mr. Perlow to 3,000 hours of community service and five years in prison with all but one year suspended.
He also barred Mr. Perlow from involvement in "any kind of transaction."
That order was later modified to prevent him only from handling "any funds associated with any real estate transaction or settlement" except money in his personal deals.
Today, Mr. Perlow is vice president at Residential Title & Escrow, a successful Reisterstown title insurance and settlement company.
The firm's president, Myles L. Lichtenberg, said Mr. Perlow does attend settlement transactions but that "he has no check-writing authority" on any company accounts.
His duties are restricted to marketing the company's services to real estate firms, mortgage lenders and others and trouble-shooting problem settlements, Mr. Lichtenberg said.
Mr. Perlow "knows probably more than anyone in Maryland about the settlement business," Mr. Lichtenberg said. "He's a very valuable member of our staff. He brings in a significant amount of our business."
Judge Angeletti declined to comment when asked whether Mr. Perlow's current work squares with his sentencing order.
Mr. Perlow did not respond to requests for an interview.
Mr. Lichtenberg attributes questions about Mr. Perlow's role at Residential Title to "sour grapes," saying, "This industry is very competitive. People who are complaining about Howard are only doing so because we're so successful.
"Everyone deserves a second chance, and Howard Perlow is no different," Mr. Lichtenberg said. "He has the right to make a living."
Others convicted of stealing from escrow accounts who have returned to the title insurance business in Maryland include:
* Steven Busky, convicted this year of stealing $175,000 from Landmark Title and using the money to invest in real estate. During a sentencing hearing, the state asked Baltimore County Circuit Judge J. Norris Byrnes to bar Mr. Busky from engaging in the settlement business. Judge Byrnes dismissed the request, saying he didn't want to prevent Mr. Busky from earning a living.
Mr. Busky said in a telephone interview that he now works for a Reisterstown title company, handling settlements. He would not identify the firm. "Title and settlement work is what I know and do best," he said.
* William Hackney, convicted in 1994 of stealing client money from an escrow account at his Glen Burnie firm, the now-closed Central Maryland Title. Mr. Hackney was disbarred in April 1994. Today, he said, he works at a Glen Burnie law firm as a legal assistant.
Occasionally he handles settlements, he said.
"People like me and Howard Perlow don't belong back in the title insurance business," Mr. Hackney said. He said the state should more tightly control an industry that is "so competitive and cutthroat" that it breeds underhanded behavior.
"It's just way too easy to get [a title insurance] agency going in Maryland," Mr. Hackney said. "There's all kinds of crooked behavior going on."
Title agents who take clients' money can go back into the same business in Maryland because of toothless state regulations.
Lynn Wilburn, a national title fraud expert from Houston, says Maryland is one of several states lacking regulations specifically barring those convicted of stealing settlement funds from getting back in the business.
The state insurance commissioner can reject license applications if the commissioner deems applicants unfit. But even the deputy state insurance commissioner, Joseph Kelly, acknowledges that many who get into trouble over missing escrow funds easily find a back door through which to return to the business.
"They either move around from state to state, or they find friends who let them work for their companies. It's hard for us to keep track of them," Mr. Kelly said.
That's because the state application for a license to sell title insurance -- and therefore conduct settlements -- doesn't require the applicant to list the names of all workers at a firm. And lawyers who want to sell title insurance and conduct settlements don't have to seek a license or file anything with the state concerning their title business or their employees.
Additionally, officers at several large title insurance firms say they have never had a request from the state to check their records to ensure that only licensed agents are selling title insurance.
In Mr. Goldberg's case, state insurance records show that he did not have a license to sell title insurance.
The records for Land Title Research list only one person, Gary Rybczynski, an Ellicott City lawyer.
"I agreed to be the attorney of record for the company strictly out of friendship to Mr. Goldberg," Mr. Rybczynski said. "I've never participated in a settlement and never even went to Land Title's offices. I'm absolutely shocked at how he misled me."
Two former Land Title employees, who would not allow their names to be used, agree that virtually all settlements at the company were conducted by Mr. Goldberg and its office manager, Patricia Horak.
Ms. Horak also did not have a license to sell title insurance, state records show. She did not respond to a request for an interview last week.
Mr. Rybczynski said that when the state shut the company down in October, he was dumbfounded to find that Mr. Goldberg and " Ms. Horak lacked licenses to sell title insurance.
Little about the affable Mr. Goldberg's low-key lifestyle would have let on that he might have been embezzling millions. He lived in a modest rancher in Marriottsville, dressed unpretentiously, owned a few sport vehicles and had a penchant for collecting guns.
State insurance officials said Friday in court that indications of his alleged scheme can be traced back to at least 1991, but no one -- officials or business associates -- claims to know what he might have done with the money.
Maryland has begun improving some aspects of its regulation of the title business. The state hired 10 investigators this year to verify for the first time the accuracy of information provided on new applications for all insurance agent licenses, including title agent licenses.
Next year, investigators plan to begin randomly checking renewals. Mr. Kelly, the deputy insurance commissioner, said the state also recently began trading information with other states in an effort to prevent embezzlers from setting up shop elsewhere.
Some in the industry think the state also should raise the amount of the bonds that title insurance agents must post to get a license, from the current $100,000 to more than $500,000.
They say lawyers who sell title insurance also should have to post bonds, which now is not required.
Insurance underwriters around the country -- who back up the title insurance policies sold by Maryland title agents -- aren't waiting for state reforms.
For a long time, underwriters were hesitant to take thieves to court.
"They wanted to sweep it under the rug to avoid their own image being hurt," said Mr. Wilburn, the fraud expert.
"But it just led to the problem growing geometrically as the crooks moved around."
With their greatest losses now coming from escrow fund thefts -- rather than from faulty property titles -- insurance companies have begun holding agents more accountable.
Steps taken by the industry include a new data bank under the American Association of Land Title Agents, which lists the names and backgrounds of those who have been sued over or convicted of stealing title fees or escrow money.
Some of the nation's largest underwriters are conducting their own in-depth background investigations of local agents before letting them sell their policies.
But Mr. Wilburn said underwriters still don't get enough information -- as the Goldberg case may show.
When United General Title, the company that appears to have been hit hardest with losses in Mr. Goldberg's case, appointed him two years ago to sell its policies, he enjoyed a good reputation in the local settlement business.
But United General's attorney, Andrew Levy, said the company did not know about one bit of Goldberg family history:
Mr. Goldberg's father, Bernard Goldberg Sr., also of Ellicott City, was convicted of theft and stripped of his license to practice law in 1986.
He had stolen $613,412 from an escrow account at his Howard County settlement and title insurance company, and the elder Mr. Goldberg said at his sentencing that some of the money had been taken by his son.