July 28th, 2010
This article from the Long Island Business News is a perfect example of defalcation.
One of Long Island’s largest and most well-connected title companies has been sued by its insurers for allegedly embezzling money from escrow accounts.
Liberty Title, which had $50 billion in closings and about 60 employees, shut its doors on Monday, the same day the lawsuit was filed against it in New York Supreme Court by four separate title insurance companies: Commonwealth Land Title Insurance, First American Title Insurance Company of New York, Chicago Title Insurance and United General Title Insurance.
The companies charge Liberty owners Brian Madden, his wife Elizabeth Madden and attorney Albert Yorio, with breach of contract, fraud, and “unjust enrichment arising out of a fraudulent scheme … to embezzle funds placed in escrow.”
The easiest way to prevent fraud is to get RynohLive. This is not a software program but technology that works with your existing bank and system. This system includes daily three-way escrow account reconciliation and reporting combined with positive pay banking options. It keeps companies audit ready and is tamper proof. It eliminates accounting errors and check fraud. Call us today for more information 877-467-9664
Tags: Avoid Employee embezzlement of defalcatoin, title insurance issues and problems
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July 15th, 2010
• Reconcile and review all banking transactions on a daily basis.
• Initiate wire transfer payments only under dual control, with a transaction originator
and a separate transaction authorizer.
• Use tokens for all online transactions to provide an additional layer of authentication.
Computer systems best practices (including but not limited to):
• If possible, carry out all online banking activities from a stand-alone, hardened and completely locked down computer system from which e-mail and Web browsing (beyond the secure online banking site) is not possible.
• Be suspicious of e-mails purporting to be from a financial institution, government department or other agency requesting account information, account verification or banking access credentials such as usernames, passwords, PIN codes and similar information.
• Opening file attachments or clicking on web links in suspicious emails could expose the
system to malicious code that could hijack your computer.
• Install a dedicated, actively managed firewall, especially if they have a broadband or dedicated connection to the Internet, such as DSL or cable. A firewall limits the potential for unauthorized access to a network and computers.
• Limit administrative rights on users’ workstations to help prevent the inadvertent downloading of malware or other viruses.
• Install commercial anti-virus and desktop firewall software on all computer systems.
• Free software may not provide protection against the latest threats compared with an industry standard product.
• Ensure virus protection and security software are updated regularly.
• Ensure computers are updated regularly particularly the operating system and key applications with security updates. It may be possible to sign up for automatic updates for the operating system and many applications.
• Consider installing spyware detection programs.
• Recommend clearing the browser cache before starting an Online Banking session in order to eliminate copies of web pages that have been stored on the hard drive. How the cache is cleared will depend on the browser and version. This function is generally found in the browser’s preferences menu.
Online Best Practices (including but not limited to):
• Train staff with access to online accounts on best practices to be used online.
• Create a strong password with at least 10 characters that include a combination of mixed case letters, numbers and special characters and change that password regularly.
• Prohibit the use of “shared” user names and passwords for online banking systems.
• Use a different password for each website that is accessed.
• Never share username and password information for Online Services with third-party providers.
• Verify use of a secure session (https not http) in the browser for all online banking.
• Avoid using an automatic login features that save usernames and passwords for online banking.
• Never leave a computer unattended while using any online banking or investing service.
• Never access bank, brokerage or other financial services information at Internet cafes, public libraries, etc. Unauthorized software may have been installed to trap account number and sign on information leaving you vulnerable to possible fraud.
Tags: Fraud prevention, online bank account management
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July 14th, 2010
Step 1
Know that fraud can occur in several forms in the workplace. Bookkeepers, for example, may commit fraud by authorizing checks as “consultation” costs or authorizing personal expenses, or they may utilize phony company names that they secretly own.
Step 2
Remember that many types of fraud as classified as “occupational fraud.” Occupational fraud is clandestine activity that is used for personal financial gain. Your company will lose revenues or assets as a result of occupational fraud.
Step 3
Consider the facts. Small and mid-sized companies are especially vulnerable to fraud, because they usually don’t segregate duties. One person may be in charge of accounting records and cash receipts, making it easier to conceal fraud. And of course there is the issue of trust. People believe that if the employee has been with them for 20 years they couldn’t possibly betray them.
This is simply wrong.
Step 4 Get RynohLive
The easiest way to prevent fraud is to get RynohLive. This is not a software program but technology that works with your existing bank and system. This system includes daily three-way escrow account reconciliation and reporting combined with positive pay banking options. It keeps companies audit ready and is tamper proof. It eliminates accounting errors and check fraud. Call us today for more information 877-467-9664
Tags: bookkeeper fraud, stop bookkeeper fraud
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March 22nd, 2010
Everyone in the settlement industry has heard stories about the loyal and faithful bookkeeper/accountant who wrote themselves a few checks now and then and defrauded the company of hundreds/thousands/millions of dollars. Unfortunately, most of these stories are not urban legends, they’re true!
A recent Phoenix-Hecht study noted that “frequent reconcilement is often your last line of defense to prevent fraud.” Since the industry standard is monthly reconciliation, many agencies have only a dozen chances a year to discover fraud.
Sometimes fraud is detected by a ‘red flag’ that alerts agency management. Fraud investigator Rafael Toldeo, Jr. recalls a case involving a trusted manager in a multi-office title company who personally handled 50 to 60 closings a month for a major builder. “She added $100 to each HUD statement for prepaid taxes. She also did the monthly reconciliation eventually stole nearly $500,000.” The red flag in her case was that she was never absent from work and never took a vacation. She knew the theft might be noticed if anyone else looked at the accounts.
Peter Norden, a former First American Regional Vice President, says that check fraud is not limited to company employees. “Anyone with access to the company check stock, the cleaners for example, can lift a check and reproduce it. In a month, before the next reconciliation, they can easily clean out an account.”
AP Technology, a supplier of check stock and systems, offers four methods to help prevent check fraud:
• Use a high-security check printing system and, where possible, remote printing.
• Use high-security blank check stock which is devoid of all bank and company information.
• Create a Positive Pay partnership with your bank that validates each check it receives against a check issuance list you provide.
• Implement best practices for fraud prevention including daily account reconciliation.
Fortunately for the settlement industry there’s Rynoh, a complete settlement industry escrow account management system that includes daily three-way escrow account reconciliation and reporting combined with positive pay banking options.
Rynoh helps to:
• Immediately identify and eliminate defalcation and check fraud
• Eliminate disbursing errors
• Maintain accounts at an “audit ready” level every day
• Track revenue daily to prevent losses and increase profitability
Developed by a title company owner who understands the complex needs of the settlement industry it’s an affordable Web-based bridge application that integrates smoothly with all major settlement industry software including SoftPro. Rynoh is scaleable from small title firms with one or two escrow accounts to large multi-office firms with many escrow accounts and can grow with your business. Rynoh users are fully supported with customization, installation, training and ongoing support services.
For more information and to talk with current Rynoh users contact Dick Reass at 877-467-9664 or e-mail dick.reass @rynoh.com. Visit Rynoh at www.rynoh.com
RynohLive, 397 Little Neck Road, 3300 South Bldg, Suite 210, Virginia Beach, VA 23452
Tags: eliminate distributing errors maintain accounts audit ready level
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March 15th, 2010
“Defalcation and theft are epidemic in the title industry because it’s so profitable and so easy,” according to Rafael Toledo, Jr., President of IDSnetwork, Inc. in Sanford, FL. An insurance fraud investigator for over 20 years, he says that escrow account fraud perpetrators are more likely to be owners than employees. “Sometimes it simply starts when an owner cuts their commission check before the deal closes or they need funds to make the payroll. Or maybe an employee has an overdue credit card bill.”
One challenge is reconciling accounts often enough to recognize the theft or detect a pattern that would raise suspicion. The current standard is to reconcile escrow accounts monthly. All too often the person doing the reconciliation is the owner or a manager with the authority to disburse escrowed funds.
New York State, seeking to deter defalcations in the title industry recently formed a Mortgage and Title Unit within the State Insurance Department’s Fraud Bureau. The move was spurred by the increase in defalcations including two cases under investigation where title company owners allegedly misappropriated more than $6.7 million.
According to the NY Mortgage and Title Unit there are several steps settlement agents can take to deter defalcations and theft:
- Don’t insure behind a naked transaction.
- Submit accurate information on the HUD-1 form. Agents need to ensure that the HUD-1 form is accurate, truthful and in compliance with the lenders closing instructions.
- In purchase transactions, submit only the seller’s proceeds. In refinance transactions, transmit only the borrower’s loan proceeds.
- Send the payoff letter on the date of disbursement via certified mail or courier.
- Get an automated solution to monitor your escrow accounts through three-way and daily reconciliation of escrow accounts.
Looking for a solution?
More and more settlement companies are discovering the Rynoh solution.
Rynoh is a complete settlement industry escrow account management system that includes daily three-way escrow account reconciliation and reporting combined with positive pay banking options.
Rynoh helps to:
- Immediately identify and eliminate defalcation, embezzlement and check fraud
- Eliminate disbursing errors
- Maintain accounts at an “audit ready” level every day
- Track revenue daily to prevent losses and increase profitability
For more information and to talk with current Rynoh users contact Dick Reass at 877-467-9664 or e-mail dick.reass@rynoh.com. Visit Rynoh at www.rynoh.com.
Tags: employee fraud, escrow fraud, title fraud
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October 22nd, 2009
RynohLive recently entered the marketplace after successfully completing two years of beta testing. We have identified defalcation, embezzlement, eliminated fraud and disbursing errors and saved our clients tens of thousands of dollars. This patent pending, revolutionary automation of a time sensitive and demanding component of the real estate industry-escrow account management provides a solution for the entire escrow account management process. Our Escrow Matters Blog will focus on the life blood of every company-your money.
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