State files complaint against Guaranty Title

The Missouri Department of Insurance has filed a formal complaint against a Nixa-based title company shut down by its underwriter in June when evidence of an alleged check-kiting scheme surfaced.

In the complaint – filed Thursday – Douglas Ommen, director of the Department of Insurance, Financial Institutions and Professional Registration, asked an administrative hearing commission to find that cause exists for disciplinary action against Guaranty Title Co. owners Rick Burton, Kathy Allen and Stephanie Gray.

The complaint contains five counts, including the owners’ alleged failure to uphold their fiduciary responsibility to Virginia-based underwriter LandAmerica Financial Group and their alleged disbursal of money from escrow accounts without corresponding deposits. Guaranty Title also improperly withheld premiums paid by Missouri consumers, according to the complaint.

Additionally, the state alleged that Guaranty Title’s owners used dishonest practices and demonstrated incompetence by failing to conduct “reasonable reconciliations of escrow and construction disbursement accounts to ensure solvency of those accounts.”

As of July 9, LandAmerica’s auditors had estimated that shortages in the agency’s accounts totaled about $5.1 million, according to the complaint.

“Although we have received information from LandAmerica regarding lost escrow funds, we will continue to look for answers into what caused Guaranty to close its doors,” Ommen said in a news release. “This situation demonstrates the importance and need for the legislative reforms passed earlier this year. New laws will allow our department to take action against agencies that misuse or commingle escrow funds and underwriters that don’t actively oversee the work of their title agencies.”

One of the counts singled out Allen, also known as Kathy Stanton, for operating without an insurance producer license. Allen’s license was revoked in 2004 for failing to file state income tax returns, according to DOI records.

The commission will conduct a hearing on the complaint to determine if DOI has sufficient grounds to proceed with disciplinary action, which could include revoking the co-owners’ insurance producer licenses. The hearing date was unavailable.[[In-content Ad]]