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$1.8 Million Allegedly Missing From Sherwood Title Co.

7 min read

Mary O’Hanlon-Smith, owner of Global Title Co. Inc. of Sherwood, could quickly fire off excuses why her customer’s mortgages weren’t being paid.

“On four different occasions, we were told everything was paid for when it wasn’t,” said Jerry Terrell, pastor of Grace Baptist Church in Scott. “[O’Hanlon-Smith would say,] ‘We just sent [the check] off … here’s the check number.’ But different things kept happening to each one.”

Complaints about missing money from Global Title’s escrow accounts have poured into the Sherwood Police Department, which has turned its case file on Global Title and O’Hanlon-Smith over to the FBI. While the FBI wouldn’t comment on the case, or even confirm that it was investigating the title company, the list of alleged victims and the amount of missing money is growing.

As of Oct. 23, an auditor uncovered that 52 of Global Title’s client files appear to be missing a total of $1.84 million, according to court papers filed by Columbian National Title Insurance Co. of Topeka, Kan., which is suing Global Title and O’Hanlon-Smith, who is also known as Mary Nash.

Columbian’s relationship with Global Title dates back to April 1, 1996, when O’Hanlon-Smith signed an agreement to be an independent contractor for Columbian.

In addition to title insurance, Global offered escrow services. When refinancing clients would sign up for escrow services with Global, it was Global’s responsibility to pay off previous mortgages. But court filings allege that O’Hanlon-Smith kept the money rather than paying off the old mortgages, leaving clients with two loans to pay.

Some of Global’s clients paid an extra fee for a protection letter from Columbian insuring against escrow problems, leaving Columbian on the hook in some of the cases. And while Columbian has sued Global and O’Hanlon-Smith for losses associated with the protection letters, it hasn’t honored the letters in all cases.

For instance, Terrell said Columbian representatives told him that it was investigating his claim before paying off Grace Baptist Church’s first mortgage, but how long that would take is unknown.

Columbian didn’t return a call for comment.

On Oct. 15, Columbian received a temporary restraining order requiring Global to turn over all its files and financial statements to Columbian. Colum-bian also received an order appointing a receiver to take control of what is left of the business, which shut its doors Oct. 6.

O’Hanlon-Smith couldn’t be reached for comment. The phone at Global’s office has been disconnected and O’Hanlon-Smith’s home phone number wasn’t listed.

Her attorney, Hubert Alexander of Jacksonville, denied the allegations in court papers and didn’t return calls for comment.

One of Columbian’s attorneys, Kris-tine Baker of Quattlebaum Grooms Tull & Burrow PLLC of Little Rock, also declined to comment.

Complaints to the Attorney General

For about a year, the Arkansas attorney general’s office has received complaints from Global Title’s clients about mortgages not being paid.

The clients complained to the attorney general’s office that Global Title had failed to pay off first mortgages, leaving the clients with two mortgages and foreclosure notices, said Jim DePriest, senior assistant attorney general.

“We’d rattle their cage, rattle their cage and ultimately they’d make the payment and resolve the complaints,” DePriest said. “But it was all just a house of cards waiting to fall.”

For the first wave of complaints, the attorney general’s office received a number “of what we now understand to be bogus excuses” from O’Hanlon-Smith, DePriest said. The excuses would include forgetting to sign a check that was mailed or that checks got lost in the mail.

Although the responses seemed suspicious, DePriest said O’Hanlon-Smith was given the chance to correct the problems because her statements might have been true.

“In several cases, [she] did fix it,” he said.

But more and more complaints weren’t getting resolved. Of the 23 complaints the attorney general’s office received against Global Title, 17 are currently open.

“There’s a number of victims we don’t even know about yet,” DePriest said.

DePriest said the investigation by the attorney general’s office is at a standstill because of the potential for criminal charges.

He said O’Hanlon-Smith isn’t going to answer the consumer complaints from the attorney general’s office “because they’ve got bigger problems than our investigation right now.”

In the meantime, the attorney general’s office is trying to stall mortgage companies that are threatening to take action against Global Title customers “who have been left hanging out to dry,” DePriest said.

The Lawsuit

Early last month, Columbian National Title Insurance Co. started receiving complaints that O’Hanlon-Smith was misappropriating funds from her customers’ escrow funds, Colum-bian said in the lawsuit it filed Oct. 15 in Pulaski County Circuit Court.

On Oct. 8, Argent Mortgage Co. LLC called Columbian and said it couldn’t find a payoff check from Global Title for $98,624, the lawsuit said. Also that same day, Regions Bank called and said it didn’t receive a payoff from Global for $206,000.

About a week later, on Oct. 13, the Arkansas attorney general’s office called and said it had received a complaint that Countrywide Home Lending did not receive a payoff check from Global Title for about $67,000.

The attorney general’s office also mentioned that Wells Fargo Home Mortgage had the same complaint — it didn’t receive a payoff for about $84,000.

Leroy Brockinton, address unknown, did receive a sales proceeds check from Global Title. The check was returned unpaid because of insufficient funds, the lawsuit said. The lawsuit didn’t list the amount of the check.

“Columbian National is suffering immediate, irreparable harm each day that O’Hanlon-Smith is able to continue her conduct,” Columbian said in the lawsuit.

It is suing Global and O’Hanlon-Smith for breach of contract and wants to freeze all of Global and O’Hanlon-Smith’s accounts.

“O’Hanlon-Smith will have the power to remove the funds from the escrow accounts and place those funds in other accounts which may not be traceable by Columbian National or by the true owners of those funds,” Columbian said in court papers.

Columbian received the order appointing a receiver and granting the temporary restraining order less than an hour after it filed the lawsuit on Oct. 15.

“The Court finds that Columbian National is suffering an ongoing injury to its business and reputation as a title insurer by defendants’ failure to properly account for consumer escrow funds,” Pulaski County Circuit Judge Mackie Pierce said in the order.

Pierce also said there was an eminent danger of continuing harm to Colum-bian and to “innocent third parties in that escrowed funds will be used improperly or misappropriated by defendants.” Pierce said he entered the order without notice to O’Hanlon-Smith or Global Title so there wouldn’t be further misappropriation of funds.

Pierce ordered Global Title and O’Hanlon-Smith to turn over all of their books relating to real estate transactions. He also ordered their financial statements handed over as well.

Columbian said that after an auditor sifted through some of Global Title’s records, the auditor uncovered 52 files that appear to be short of funds as of Oct. 23.

“Global Title and O’Hanlon-Smith failed to maintain a systematic method of tracking and reconciling business transactions,” Columbian said. “The checks and other records show that O’Hanlon-Smith has taken ‘loans’ and made other questionable business transactions with Global Title escrow and operating accounts.”

Grace Baptist Church

Grace Baptist Church’s experience in August seems to be typical.

Pastor Jerry Terrell first worked with O’Hanlon-Smith about five years ago when the church bought a piece of property.

“We didn’t request her again, but the bank asked us who we last used and that was her,” Terrell said.

The 160-member church took out a new loan from Pulaski Bank for about $150,000. The money would have paid off a loan from One Bank and Trust, which was for more than $100,000, with enough left over to buy a couple of acres next to the church and repave the parking lot.

The transaction was scheduled to close on Aug. 16. But several weeks later, the church hadn’t seen its money. Neither had One Bank, according to Terrell’s affidavit filed in the Colum-bian National lawsuit.

In repeated phone calls, O’Hanlon-Smith assured Terrell that the loan was being paid, he said.

“But each time that we would check back with the bank, the bank would say, ‘No, it wasn’t paid,'” he said.

To make matters worse, the church is still responsible for the balance of the loan from One Bank in addition to payments on its new loan to Pulaski Bank.

“When we received a bill for additional payments [from the One Bank loan], we knew that there was trouble,” Terrell said.

Terrell said O’Hanlon-Smith stopped taking his phone calls on Oct. 6.

The next day, on Oct. 7, Terrell drove to Global’s office. A sign on the door said the office was closed due to a “family emergency.” Terrell then contacted Columbian, which had issued a protection letter to the church.

These days, the church is having trouble coming up with the double loan payments.

“The worst part of it is, this is money that’s been given to the Lord to be used in a proper manner, and it’s not being utilized the way it should be,” Terrell said.

While the church is not facing foreclosure, it is cutting back on expenses such as hiring additional help or buying items for its children’s Bible studies.

“Our church is praying for her,” Terrell said of O’Hanlon-Smith. “We hope and pray that she can get everything straightened out and she’ll take care of her obligations and put herself right with the Lord.”

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