An attorney, closing loans out of his basement office , has defacated with more than $6.2 million from the trust account. His Underwriters – First American Title Insurance Co. lost the most — $2.65 million, other companies losing money are New Jersey Title Insurance Co., Fidelity National Title Insurance Co., Stewart Title Insurance Co. and Lawyers Title Insurance Co. The 50 year-old attorney is reportedly a diabetic who suffers from bipolar disorder, depression, and a serious gambling addiction, sometimes betting for days on end without sleeping, according to the NJ Star Ledger.
I see some red flags here – Five Underwriters? Bi-polar disorder? Health issues – depression? Gambling? Working out of his basement? Seems to be another example of a title agent not thoroughly checked out by any number of underwriters. Don’t get me wrong, I am certainly sorry for the attorney, no one wishes such a sad ending to an attorney’s career… and no one wants to have his privacy invaded… But doesn’t a title underwriter owe due diligence to its stockholders? Didn’t any of his five title underwriters ask HOW MANY underwriters this fellow had? What his financial condition was? Didn’t anyone know about his bipolar disorder? His depression? His gambling problem? That he was working out of his… basement?
Seems to me there was too little due diligence on this fellow… Is the number of underwriters he represents relevant? Is it an opportunity for check kiting? Are his social habits relevant – gambling? Is his health (diabetes / depression) relevant to a title underwriter? Might these be an indication of a need for money? What do you think? How far should an underwriter investigate?