Escrow funds bilked
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Homeowners from Pittsburgh to Colorado say they've been bilked by a Chicago-based escrow company that failed to pay their real estate taxes and insurance, and drained their accounts before notifying them it was shutting down this week.
The Illinois attorney general's office said it was investigating American Escrow LLC, which is supposed to pay tax bills and homeowners insurance with money it collects from customers through monthly payments.
The AG's office said it was unclear how much money was missing or how many people were affected.
"We are looking into the situation to determine if anything can be done to help customers," spokeswoman Natalie Bauer said.
Jenn Siko, of Latrobe, said she received a letter from American Escrow March 21 informing her that the company was closing her account and shutting down March 31 due to economic and unfortunate circumstances.
"Basically, they said the $1,200 I had in my account was gone," she said.
Now, she said, she will have to come up with $583 next month to pay her homeowners insurance premium and $400 for county real estate taxes. American Escrow had been handling the payments since 2002 when she refinanced her mortgage, Ms. Siko said.
Christie DiVittis, of Chippewa, said she also was out about $1,200, money that should have built up in her escrow account through the $265 monthly payments American Escrow automatically deducted from her bank account.
"It takes the rug right out from under you," she said yesterday. "Times are hard as it is. Now you have to scramble to make payments when you thought the money was in your account. It's hard."
Calls yesterday to American Escrow were referred to company attorney Larry Levine, who didn't respond. An e-mail to company President Derek Lurie was returned as undeliverable.
Ms. Siko said she spoke by phone last week to Mr. Lurie, who told her the company was brought down by a former employee who embezzled money.
According to published reports, the company's former chief financial officer pleaded guilty to felony wire fraud in 2005 and was ordered to pay more than $700,000 to the company in restitution. Mr. Lurie told the Chicago Tribune last week that little of that money had been returned.
American Escrow customers posting on an online chat board said the company continued to withdraw monthly payments from their bank accounts last month even as it was mailing out letters saying it was going out of business. The chat room contained posts from American Escrow customers in nearly a dozen states.
Ms. DiVittis said the company withdrew monthly payments from her account in January and February and "tried to do it again" in March after she received her going-out-of-business letter but she caught the transaction online and put a stop payment on it before the money went out.
The attorney general's office in Pennsylvania said it would coordinate complaints from residents here with the AG's office in Illinois.
"The best thing to do is contact us so we can get a better picture of how many people are involved," said Nils Frederiksen, spokesman for the AG's office in Harrisburg. People can file a complaint online at www.attorneygeneral.gov or call the hot line at 1-800-441-2555.
Customers also should contact their local real estate taxing agencies and homeowners insurance company to make arrangements to pay their bills, he said.
"Don't just ignore" the situation, Mr. Frederiksen said. "You want to ensure you are not facing fines or the lack of insurance."
First Published April 3, 2009 12:00 am