Popular Links
Right Column
Notice to Potential Claimants of The Escrow Source
Update as of November 15, 2004
On November 1, 2004, Louisa A. Broudy, Conservator for The Escrow Source, Inc., (TES) and Escrow Agents' Fidelity Corporation, (EAFC) entered into a settlement agreement to resolve the TES claim for the sum of $450,000. A third and final distribution will be made during the week of November 15, 2004. Based on the additional funds available, the final distribution will represent an additional 15.2% of the approved claim amounts. The final distribution will bring the total of funds reimbursed to claimants to 95.2%.
If any claimant has moved since the last distribution was made in March of 2004 please notify the conservator in writing as soon as possible. Forward new addresses to:
Louisa A. Broudy, Conservator
320 W. 4th Street, Suite 750
Los Angeles, CA 90013
If further information is needed, please contact Louisa A. Broudy at (213) 576-7609 or by e-mailing to lbroudy@corp.ca.gov. You may also contact Frankie Hornick at (213) 576-7554.
Update as of September 2, 2004
On August 30, 2004, Louisa A. Broudy, Conservator for The Escrow Source, Inc., requested a hearing pursuant to California Financial Code sections 17345 and 17345.1 to appeal Escrow Agents' Fidelity Corporation's ("EAFC") decision on the proof of loss claim filed by the Conservator with EAFC. The appeal process will allow the conservator to argue before an administrative law judge that the claim should be approved.
EAFC determined, based on the information provided, to indemnify only a portion of the claim and denying the remainder of the claim. Additional information has been sent to EAFC so both parties can continue to review and discuss the claim.
Updated information will be provided as it becomes available. If further information is needed, please contact Louisa A. Broudy at (213) 576-7609 or by e-mailing to lbroudy@corp.ca.gov. You may also contact Frankie Hornick at (213) 576-7554.
Update as of August 5, 2004
On August 2, 2004, Escrow Agents' Fidelity Corporation (EAFC) acknowledged and responded to the Proof of Loss Claim filed by Louisa Broudy, Conservator of The Escrow Source, Inc. The Conservator will review EAFC's response and take appropriate action. At this time, the date and amount of a third distribution has not been determined. Updated information will be posted to the Department of Corporations' website as soon as it is available.
If further information is needed, please contact Louisa A. Broudy at (213) 576-7609 or by e-mailing to lbroudy@corp.ca.gov. You may also contact Frankie Hornick at (213) 576-7554.
Update as of March 4, 2004
Based on the conservator's review of submitted claims and records that have been recovered from The Escrow Source, Inc., the amount owed by The Escrow Source, Inc. to its customers is currently calculated to be approximately $4 million. However, the total funds available to customers in the trust fund previously administered by The Escrow Source, Inc. is $3.2 million, or 80% of the amount owed. A full recovery for customers with approved claims is, therefore, unlikely. The Department is continuing to investigate the reason for the shortage.
The conservator plans to distribute available funds to customers with approved claims in three phases:
- Since January 12, 2004, the conservator has distributed 60% of the amount of each approved claim to customers.
- The conservator will make a supplemental 20% distribution for each approved claim by March 19, 2004.
- Finally, the conservator will make a third distribution if the Department's claim to the Escrow Agents Fidelity Corporation (EAFC), which insures certain losses incurred by independent escrow agents, is approved. It is anticipated the Department will file a claim with EAFC on or before April 30th. EAFC has up to ninety days after the Department submits its claim to decide whether the insurance covers the deficiency in the trust funds administered by The Escrow Source.
Again, the Department will announce this third distribution, if any, once a final determination has been made.
The Department continues its investigation into the circumstances involved in The Escrow Source, Inc. and will take any additional appropriate action.
If further information is needed, please contact Louisa A. Broudy at (213) 576-7609 or by e-mailing to lbroudy@corp.ca.gov. You may also contact Frankie Hornick at (213) 576-7554.
Update as of January 14, 2003
Based on the conservator's review of submitted claims and records that have been recovered from The Escrow Source, Inc., the amount owed by The Escrow Source, Inc. to its customers is currently calculated to be approximately $4 million. However, the total funds available to customers in the trust fund previously administered by The Escrow Source, Inc. is $3.2 million, or 80% of the amount owed. A full recovery for customers with approved claims is, therefore, unlikely. The Department is continuing to investigate the reason for the shortage.
The conservator plans to distribute available funds to customers with approved claims in three phases:
- First, the conservator will distribute approximately
60% of the amount of each approved claim beginning the
week of January 12, 2004.
If a claimant will not receive a check in the first distribution, the conservator will send a letter explaining why a check is not being issued at this time and, if necessary, ask for additional information. If additional information is requested, the claimant will be asked to respond within 15 business days.
- Second, the conservator will make supplemental distributions for each approved claim after resolving any unresolved claims and reviewing any newly submitted claims. The Department will announce this second distribution once a final determination has been made.
- Finally, the conservator will make a third distribution if the Department's claim to the Escrow Agents Fidelity Corporation (EAFC), which insures certain losses incurred by independent escrow agents, is approved. EAFC has up to ninety days after the Department submits its claim to decide whether the insurance covers the deficiency in the trust funds administered by The Escrow Source.
Again, the Department will announce this third distribution, if any, once a final determination has been made.
The Department continues its investigation into the circumstances involved in The Escrow Source, Inc. and will take any additional appropriate action.
If further information is needed, please contact Louisa A. Broudy at (213) 576-7609 or by e-mailing to lbroudy@corp.ca.gov. You may also contact Frankie Hornick at (213) 576-7554.
Update as of December 22, 2003
The Department has received 421 claims totaling $2,859,388 and is in the process of reviewing these claims. Claims received on or after December 18, 2003 will be accepted and reviewed but checks for these claims may not be included in the first partial distribution.
The Department will need to review all of the 421 pending claims prior to determining the amount of funds that can be distributed. At this time, the Department plans to make the first distributions beginning the week of January 12, 2004.
If you have a claim to file, please print the claim form from the Department's website or contact the Department at 1-866-ASK-CORP (1-866-275-3677) for assistance.
Update as of November 24, 2003
The Department has completed the initial phase of the claim process for The Escrow Source, (TES). On November 24, 2003 a letter explaining the claim process and a claim form was mailed to escrow parties and anyone holding a trust check from TES that was not accepted for payment. The claim letter and form is also available on the Department's website. If you did not receive a letter and have a claim to file, print the form from the Department's website or contact the Department at 1-866-ASK-CORP (1-866-275-2677) and request a form.
Please read the letter carefully and submit the claim form on or before December 15, 2003. A prompt response from the majority of claimants by this date will better enable the Department of Corporations to more quickly make distributions. Questions regarding the form are being handled by the Department of Corporations' Consumer Call Center at 1 866-ASK-CORP (1-866-275-2677).
Please continue to visit the Department of Corporations website for additional updates.
FREQUENTLY ASKED QUESTIONS:
- How much documentation is needed when I file my claim?
Submit a copy of escrow instructions, copy of the check that was not accepted for payment, copy of invoice for services not made, and/or any other documents to support the amount of money included on the claim.
- When will I receive a payment?
Depends on how quickly a majority of the claims are received by the Department. All claims will need to be reviewed before a distribution can be made.
- Will I receive all my money?
A 100% distribution will not be made at this time. Once all the claims are received and reviewed, the Department will calculate the percentage of money that each person will receive. (A second distribution will be necessary.)
Update as of November 5, 2003
The Department is currently in the process of developing the database to be used for the claim process. Names and addresses are being gathered for escrow parties who had open escrows at The Escrow Source, Inc., (TES), escrow parties who had funds remaining in closed escrows and anyone holding a trust check from TES that was not accepted for payment.
Files that were transferred and retained by Stewart Title of California, Inc. have been moved to the Department's Los Angeles office. For those individuals who received their original escrow file from Stewart Title, the Department has sent letters requesting a copy of the file. If you received a letter please respond as soon as possible. All closed escrow files will be moved to the Department's Los Angeles office in the near future.
At this time, the Department is also reviewing the remaining trust account transactions that required additional investigation.
Please continue to visit the Department of Corporations website for additional updates.
Update as of October 29, 2003
By an order dated October 21, 2003, California Corporations Commissioner substituted Louisa A. Broudy, Assistant Commissioner of the Financial Services Division of the California Department of Corporations, as Conservator in place and instead of Timothy J. Yoo.
Please direct all future correspondence to the new Conservator at:
Department of Corporations
Louisa A. Broudy, Conservator
320 W. Fourth Street, Suite 750
Los Angeles, CA 90013
Calls are being handled by the Department of Corporations' Consumer Call Center at 1-866-ASK-CORP (1-866-275-2677).
Update as of October 20, 2003
At State Senator Jim Battin's request, the Department of Corporations (Department) is providing the following update regarding the ongoing investigation of The Escrow Source.
Background
As you may know, the Department took over The Escrow Source on June 23, 2003, due to the company's grossly mismanaged books and accounting records. The Department immediately retained an independent certified public accountant (CPA) to reconstruct and reconcile this company's faulty escrow accounts. The reconstruction of these accounts has been more time-consuming than the Department and the CPA initially anticipated, due to undocumented and inappropriate disbursements, missing documents, bookkeeping entry failures, and other discrepancies.
The CPA reports that this is the most difficult escrow reconciliation that he has seen during his 24 years of experience in auditing escrow companies. After reviewing the results of the CPA's reconstruction and reconciliation to date, the Department has determined that, in the two years between regulatory examinations, The Escrow Source filed financial reports and audited financial statements with the Department that did not fully represent the condition of the company and its books and records. Therefore, it has been necessary for the CPA to review more than three years of records in an attempt to balance the books and determine the exact amounts owed to each of you.
Next Steps
The Department has discussed with Senator Battin a number of actions that will assist in the distribution of escrow trust funds held for potential claimants. To assist in establishing and confirming individual escrow account balances, the Department will begin a claim request process.
Accordingly, you will be receiving a written document in the future asking you to submit information about the amounts you believe are being held in escrow on your behalf. This information will be compared with the CPA's reconstructed records to verify the amounts owed. More specific information about this process (including projected time frames) will be forthcoming in updated notices. These notices will be posted on the websites, as noted below.
However, please understand that funds cannot be distributed to claimants until the balance in each escrow account of The Escrow Source is established and confirmed. To date, after reviewing more than 3500 transactions, about 40 transactions require additional investigation. Documents from outside parties such as lenders, title companies and the service bureaus have been requested to help the CPA sort out these transactions.
In addition to administering a claims process, the Department will file any appropriate claim of loss with the Escrow Agents' Fidelity Corporation, the private fidelity coverage fund for the independent escrow agent industry, including The Escrow Source, to seek reimbursement for any monies taken by misappropriation, embezzlement or theft.
The Department will also work alongside the Riverside District Attorney's Office in investigating and seeking prosecution of any criminal wrongdoers.
Contact Information
The Department is sensitive to the needs of claimants and is working diligently to identify all monies owed in order to return them to claimants. But please understand that the process of returning monies will take a few months and depends on being able to account for all of the funds deposited into the escrow trust fund and disbursed by The Escrow Source.
Continuing updates to this notice will be available at the Department's website, www.corp.ca.gov and at the Conservator's website, www.escrow-source.com.
If you have any questions regarding this letter please contact Department of Corporations' Consumer Call Center at 1-866-ASK-CORP (1-866-275-2677).