Guaranty Title co-owner settles state complaint

A Sarcoxie woman who co-owned a Nixa-based title agency that suddenly shut down last year has settled a complaint with the Missouri Department of Insurance, Financial Institutions and Professional Registration.

Kathy C. Stanton co-owned the now-defunct Guaranty Title Co. with Rick Burton, of Nixa, and Stephanie Gray, also of Sarcoxie. In June 2007, the title insurance business shuttered at least nine regional offices and laid off about 45 people without warning.

In the weeks that followed, auditors with the agency’s Virginia-based underwriter, LandAmerica Financial Group, discovered $5.1 million missing from Guaranty Title’s escrow accounts at area banks – likely the result of an alleged check-kiting scheme. In July 2007, the underwriter filed a lawsuit against Guaranty Title in Christian County Circuit Court.

Stanton, who also is known as Kathy Allen, admitted to LandAmerica’s senior auditor that she participated in a “scheme of commingling and transferring funds between and among different banks and multiple accounts to replenish shortages and to also mask shortages,” according to court records.

In early June, Burton and Gray signed a consent order that immediately and indefinitely revoked their state-issued insurance producer licenses. Stanton signed a similar but separate order later that month, waiving her right to appear before the Administrative Hearing Commission in November in Jefferson City.

DIFP’s Consumer Affairs Division has alleged that Guaranty Title’s owners “collectively misappropriated funds from escrow and other business accounts for personal gain.” According to the DIFP complaint, the title agency failed to:

• remit some $400,000 in title insurance premiums for more than 5,000 unreported policies to LandAmerica;

• disburse funds from escrow accounts with corresponding deposits; and

• conduct reasonable reconciliations of escrow and disbursement accounts.

FBI Supervisory Special Agent Dean Bryant told Springfield Business Journal in June that the bureau was “aggressively” investigating Guaranty Title’s collapse. To date, no arrests have been made or criminal charges filed in connection with the alleged fraud uncovered at the agency, although several civil suits filed by former customers are pending.

This story originally appeared in SBJ’s Sept. 17 free e-news Daily Update. Click here to register.