riLED O9FEB-9 PM 1:20 CHIEF FINANCIAL OFFICER STATE OF FLORIDA ‘ SiyiF I L E D OF- 0658 ne 51 a IN THE MATTER OF: Dockated by: dD LEGACY TITLE & ESCROW, INC. CASE NO.: 99194-08-AG a REPRESENTING ALEX SINK ADMINISTRATIVE COMPLAINT TO: LEGACY TITLE & ESCROW, INC. 3509 US Highway 17, Suite B Orange Park, Florida 32003-7122 You, LEGACY TITLE & ESCROW, INC., are hereby notified that the Chief Financial Officer of the State of Florida has caused to be made an investigation of your activities while licensed as a title insurance agency in this state, as a result of which it is alleged: GENERAL ALLEGATIONS 1. You, LEGACY TITLE & ESCROW, INC. are currently licensed in this state as a title insurance agency (04-12), license I.D. #E128659. 2. At all times pertinent to the dates and occurrences referred to herein, you, LEGACY TITLE & ESCROW, INC., were licensed in this state as a title insurance agency agent. 3. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Financial Services has jurisdiction over your insurance licenses and appointments. 4. In 2006, you, LEGACY TITLE & ESCROW, INC. acting by and through your president and owner, Cassie R. Clarkson and by and through your licensed title insurance agent, Joseph H. Gullett, entered into, participated and conducted a false and fraudulent scheme to defraud mortgage lenders, prepared and distributed incorrect HUD-1 Settlements Statements, made disbursements of closing funds without documents and records authorized or supporting , same and not in accordance with representations on your HUD-1! Settlement Statements, made excessive charges for title insurance premium services, failed to remit proper premiums to your insurer, and failed to maintain escrow monies in federally insured financial institutions, all as will hereinafter be more fully set forth. COUNT ONE 5. The above General Allegations numbered one through four are hereby realleged and fully incorporated herein by reference. 6. On or about May 25, 2006, you, LEGACY TITLE & ESCROW, INC., as a licensed title insurance agency, closed a real estate transaction, that being your file number L061962. Principals involved in that transaction were: you, LEGACY TITLE & ESCROW, INC.; Timothy Delapaz as Seller; Harry Michael McKever, as Buyer; Gary Price, as Mortgage Broker, as a title agency; and New Century Mortgage Corporation, as Mortgage Lender. 7. This transaction involved an inflated sales price to falsely cause the Mortgage Lender to commit and furnish to you excess loan proceeds sufficient to provide unwarranted and unjustified disbursements by you to the Seller and as he directed. 8. The scheme which you participated in and engaged upon in this transaction involved the following: the Seller contacted and enticed the Buyer to act and agree as same based upon representations that the Buyer would not be required to invest any sums whatsoever and with the Seller furnishing all required closing costs in his behalf. After closing, the property being ostensibly purchased would yield sufficient personal income to the Buyer to pay the mortgage indebtedness, maintain the property and yield a supplemental income to the Buyer. 9. You, LEGACY TITLE & ESCROW, INC., acting as a licensed title insurance agency, were then designated by the Seller to prepare documents and instruments necessary to close this sales transaction, including disbursements and receipt of mortgage loan proceeds as prepared on the HUD-1 Settlement Statement reflecting costs and disbursements, including cash received from the Buyer which was in fact furnished to you by the Seller and not the Buyer. 10. Upon closing you, LEGACY TITLE & ESCROW, INC., reflected on your HUD- 1 Settlement Statement a disbursement of $37,692.78, for an “assignment fee”, without any records whatsoever to substantiate that occurrence or the recipient thereof. 11. In addition, you, LEGACY TITLE & ESCROW, INC., reflected on such settlement statement unwarranted charges for yourself such as the recording fees, courier fees, and digital storage costs. IT IS THEREFORE CHARGED that you, LEGACY TITLE & ESCROW, INC., have violated or are accountable under the following provisions of the Florida Insurance Code and rules of the Department of Financial Services which constitute grounds for this suspension or revocation of your licenses and appointments: a. Demonstrated lack of fitness and trustworthiness to engage in the business of insurance. [Section 626.8437(4), Florida Statutes]; b. Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.8437(6), Florida Statutes]; c. Willful misrepresentation of any title insurance policy, guarantee of title, binder, or commitment, or willful deception with regard to any such policy, guarantee, binder, or commitment, done either in person or by any form of dissemination of information or advertising. [Section 626.8437(3), Florida Statutes]; d. Misappropriation, conversion, or unlawful withholdings of monies belonging to title insurers or insureds or others and received in conduct of business under the license or appointment. [Section 626.8437(7), Florida Statutes]; e. Willful failure to comply with, or willful violation of, any proper order or tule of the Department or willful violation of any provision of this act. [Section 626.8437(9), Florida Statutes]; f. Violation of any provision of this act in the course of dealing under the license or appointment. [Section 626.844(2), Florida Statutes]; g. Engaging in unfair methods of competition or in unfair deceptive acts or practices in the conduct of business, as prohibited under part IX of this chapter , or having otherwise shown himself or herself to be a source of injury or loss to the public or to be detrimental to the public interest. [Section 626.844(5), Florida Statutes]; h. No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to Section 626.951 or Section 626.9561 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance. [Section 626.9521(1), Florida Statutes]; i. Knowingly collecting any sum as a premium or charge for insurance, which is not then provided. [Section 626.9541(1)(o)1., Florida Statutes]. COUNT TWO 12. The above General Allegations numbered one through four are hereby realleged and fully incorporated herein by reference. 13. On or about March 1, 2006, you, LEGACY TITLE & ESCROW, INC., as a licensed title insurance agency, closed a real estate transaction that being your file number L061801. Principals involved in that transaction were: you, LEGACY TITLE & ESCROW, INC., as a title agency; Timothy W. Delapaz, as Seller, Thomas P. Nissen, as Buyer; Gary Price, Mortgage Broker; and Wells Fargo Bank NA, Mortgage Lender. 14. This transaction involved an inflated sales price to falsely cause the mortgage lender to commit and furnish excess loan proceeds sufficient to provide unwarranted and unjustified disbursements by you to the Seller or his designates. 15. The scheme which you engaged upon in this transaction involved the following: the Seller contacted and enticed the Buyer to act and agree to same, based upon representations that the Buyer would not be required to invest any sums of his own money whatsoever and with the Seller furnishing all closing costs in his behalf. Upon and after closing, the property would then yield to the Buyer a sufficient personal income to pay mortgage indebtedness, maintenance costs and yield a supplemental income to the buyer. 16. You, LEGACY TITLE & ESCROW, INC., acting as a licensed title insurance agency, were designated by the Seller to prepare documents and instruments to close this sales transaction including a disbursement and receipt of mortgage loans proceeds, preparation of HUD-1 Settlement Statement reflecting costs and disbursements involving cash from a buyer which was in fact furnished to you by the Seller and not the Buyer. 17. Upon closing you, LEGACY TITLE & ESCROW, INC. reflected on your HUD-1 Settlement Agreement a disbursement of $23,636.33 to Tim Delapaz but without any records whatsoever to substantiate such disbursements. 18. In addition, you, LEGACY TITLE & ESCROW, INC., reflected on such settlement statement unwarranted charges for document preparation fees, courier costs, and digital storage. IT IS THEREFORE CHARGED that you, LEGACY TITLE & ESCROW, INC., have violated or are accountable under the following provisions of the Florida Insurance Code and rules of the Department of Financial Services which constitute grounds for this suspension or revocation of your licenses and appointments: a. Demonstrated lack of fitness and trustworthiness to engage in the business of insurance. [Section 626.8437(4), Florida Statutes]; b.. Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.8437(6), Florida Statutes]; c. Willful misrepresentation of any title insurance policy, guarantee of title, binder, or commitment, or willful deception with regard to any such policy, guarantee, binder, or commitment, done either in person or by any form of dissemination of information or advertising. [Section 626.8437(3), Florida Statutes]; d. Misappropriation, conversion, or unlawful withholdings of monies belonging to title insurers or insureds or others and received in conduct of business under the license or appointment. [Section 626.8437(7), Florida Statutes]; e. Willful failure to comply with, or willful violation of, any proper order or ‘rule of the Department or willful violation of any provision of this act. [Section 626.8437(9), Florida Statutes]; f. Violation of any provision of this act in the course of dealing under the license or appointment. [Section 626.844(2), Florida Statutes]; g. Engaging in unfair methods of competition or in unfair deceptive acts. or practices in the conduct of business, as prohibited under part IX of this chapter , or having otherwise shown himself or herself to be a source of injury or loss to the public or to be detrimental to the public interest. [Section 626.844(5), Florida Statutes]; h. No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to Section 626.951 or Section 626.9561 to be, an unfair — method of competition or an unfair or deceptive act or practice involving the business of insurance. [Section 626.9521(1), Florida Statutes]; i. Knowingly collecting any sum as a premium or charge for insurance, which is not then provided. [Section 626.9541 (Xo)! ., Florida Statutes]. COUNT THREE 19. | The above General Allegations numbered one through four are hereby realleged and fully incorporated herein by reference. 20. During the years 2005 and 2006, you, LEGACY TITLE & ESCROW, INC., maintained escrow account number 1400073001 at the Prosperity Bank. You caused this escrow account to be subject to an automated Master Repurchase Agreement to earn interest on the consumers’ cash balances. Under this arrangement, your consumers’ escrow monies were invested in “Repurchase Agreements” involving risks including possible loss of the principal amounts invested which were not FDIC insured and not deposits or other obligations guaranteed by Prosperity Bank. Your actions and activities were without the knowledge or consent of your consumers and are not in compliance with statutory requirements regarding the deposits of escrow monies. IT IS THEREFORE CHARGED that you, LEGACY TITLE & ESCROW, INC., have violated or are accountable under the following provisions of the Florida Insurance Code and rules of the Department of Financial Services which constitute grounds for this suspension or revocation of your licenses and appointments: a. Misappropriation, conversion, or unlawful withholdings of monies belonging to title insurers or insureds or others and received in conduct of business under the license or appointment. [Section 626.8437(7), Florida Statutes]; b. Engaging in unfair methods of competition or in business, as prohibited under Part IX of this Chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public or to be detrimental to the public interest. [Section 626.844(5), Florida Statutes); . c. All funds received by a title insurance agent.... shall be trust funds received in a fiduciary capacity by the title insurance agent and shall be the property of the person or the persons entitle thereto. [Section 626.8473(2), Florida Statutes}; d. All funds received by a title insurance agency to be held in trust shall be immediately placed in a financial institution that is located within this State and is a member of the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund. [Section 626.8473(3), Florida Statutes]; e. Funds required to be maintained in escrow trust accounts pursuant to this section shall not be subject to any debts of the title insurance agent and shall be used only in accordance with the terms of the individual escrow, settlement or closing instructions under which the funds were accepted. [Section 626.8473(4), Florida Statutes]; f. A title insurance agent or title insurer may not use, endanger, or encumber money held in trust without the permission of the owner of such money, given full disclosure of the circumstances. [Rule 690-186.008(1), F.A.C.]; g. Willful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of this act. [Section 626.8473(9), Florida Statutes]; h. Violation of any lawful order or rule of the department. [Section 626.844(3), Florida Statutes]. WHEREFORE, you, LEGACY TITLE & ESCROW, INC., are hereby notified that the Chief Financial Officer intends to enter an Order suspending or revoking your licenses and appointments as an insurance agent or to impose such penalties as may be provided under the provisions of Sections 626.8437, 626.844, 626.8457, 626.846, and 626.9521, Florida Statutes, and under the other referenced Sections of the Florida Statutes as set out in this Administrative Complaint. NOTICE OF RIGHTS You have the right to request a proceeding to contest this action by the Department of Financial Services ("Department") pursuant to Sections 120.569 and 120.57, Florida Statutes, and Rule 28-106, Florida Administrative Code. The proceeding request must be in writing, signed by you, and must be filed with the Department within twenty-one (21) days of your receipt of this notice. Completion of the attached Election of Proceeding form and/or a petition for administrative hearing will suffice as a written request. The request must be filed with the General Counsel acting as Agency Clerk, at the Florida Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0333. Your written response must be received by the Department no later than 5:00 p.m. on the twenty-first day after your receipt of this notice. Mailing the response on the twenty-first day will not preserve your right to a hearing. YOUR FAILURE TO RESPOND IN WRITING WITHIN TWENTY-ONE (21) DAYS OF YOUR RECEIPT OF THIS NOTICE WILL CONSTITUTE A WAIVER OF YOUR RIGHT TO REQUEST A PROCEEDING ON THE MATTERS ALLEGED HEREIN AND AN ORDER OF SUSPENSION OR REVOCATION WILL BE ENTERED AGAINST YOU. If you request a proceeding, you must provide information that complies with the requirements of Rule 28-106.2015, Florida Administrative Code. As noted above, completion of the attached Election of Proceeding form conforms to these requirements, Specifically, your response must contain: (a) The name, address, and telephone number, and facsimile number (if any) of the respondent (for the purpose of requesting a hearing in this matter, you are the "respondent"). (b) The name, address, telephone number, facsimile number of the attorney or qualified representative of the respondent (if any) upon whom service of pleadings and other papers shall be made. (c) A statement requesting an administrative hearing identifying those material facts that are in dispute. If there are none, the petition must so indicate. (d) A statement of when the respondent received notice of the administrative complaint. (e) A statement including the file number to the administrative complaint. If a hearing of any type is requested, you have the right to be represented by counsel or other qualified representative at your expense, to present evidence and argument, to call and cross-examine witnesses, and to compel the attendance of witnesses and the production of documents by subpoena. 10 If a proceeding is requested and there is no dispute of material fact, the provisions of Section 120.57(2), Florida Statutes, apply. In this regard, you may submit oral or written evidence in opposition to the action taken by the Department or a written statement challenging the grounds upon which the Department has relied. While a hearing is normally not required in the absence of a dispute of fact, if you feel that a hearing is necessary, one will be conducted in Tallahassee, Florida, or by telephonic conference call upon your request. However; if you dispute material facts which are the basis for the Department’s action, you must request an adversarial proceeding pursuant to Sections 120.569 and 120.57(1), Florida Statutes. These proceedings are held before a State Administrative Law Judge of the Division of Administrative Hearings. Unless the majority of witnesses are located elsewhere, the Department will request that the hearing be conducted in Tallahassee, Florida. Failure to follow the procedure outlined with regard to your response to this notice may result in the request being denied. All prior oral communication or correspondence in this matter shall be considered freeform agency action, and no such oral communication or correspondence shall operate as a valid request for an administrative proceeding. Any request for an administrative proceeding received prior to the date of this notice shall be deemed abandoned unless timely renewed in compliance with the guidelines as set out above. Mediation of this matter pursuant to Section 120.573, Florida Statutes, is not available. No Department attorney will discuss this matter with you until the response has been received by the Department. ai st 2)s > DATED and SIGNED this ©/ ‘= day off boule) , 2008. TAMMY TON Deputy Chief Financial Officer ll CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and ELECTION OF PROCEEDING has been furnished to: LEGACY TITLE & ESCROW, INC., 3509 US Highway 17, Suite B, Orange Park, Florida; 32003-7122, by Certified Mail this A’ day of CO tena 2008. 12 Dean Andrews Division of Legal Services 200 East Gaines St. 612 Larson Building Tallahassee, Florida 32399-033 (850) 413-4242 Florida Bar Number 0001959

Docket for Case No: 09-000658