Tuesday, June 19, 2007
Scott Kinney, Director of Communications
PH 360.902.0517 firstname.lastname@example.org
FOR IMMEDIATE RELEASE:
DFI Orders Exceptional Escrow Corp. To Shut Down
Temporary Order to Cease and Desist Issued; Receiver Appointed to Protect Consumers
OLYMPIA, WA - Today, at the request of the Department of Financial Institutions (DFI), King County Superior Court appointed a receiver to take over Exceptional Escrow Corp. of Renton. The company’s owner, Catherine D. Wiseman, illegally used consumer's escrow funds for operating expenses.
DFI entered a Temporary Order to Cease and Desist within days of discovering the fraud and shut down the corporation. The Temporary Order prohibits Wiseman, Exceptional, and their employees and agents from transferring money out of the corporation's bank accounts. As a result, consumers and creditor escrow transactions and payments stop.
"By taking these actions we have preserved more than $2.5 million dollars of consumer's escrow funds that were at risk," said Scott Jarvis, Director of DFI. "We will be assisting the receiver in reconciling the bank and escrow accounts, and will do all we can to protect consumers and ensure claims against the corporation are resolved quickly."
During a routine examination, a financial examiner with the department uncovered a series of suspicious transactions. Further examination revealed the illegal transfer of more than $65,000 from an escrow account to the corporation's general operating account.
The examination also uncovered that the trust accounts at the Bonney Lake and North Bend branch offices had not been balanced for a number of months. For example, at the end of April 2007, the North Bend branch had more than $643,000 in unresolved accounting exceptions dating back to April, 2005.
"Agents and designated escrow officers in Washington need to know that failing to complete trust account reconciliations is a focus of our examinations,” said Deb Bortner, Director of DFI’s Division of Consumer Services. “Our enforcement unit will take immediate action when these violations are uncovered."
The department continues investigating this matter. Additional enforcement actions will be brought as new evidence is discovered.
Consumers suffering a financial loss as a result of the illegal activity can file a claim with the receiver. A claim process and form will be developed within the next two weeks. Updates to the receivership and copies of the Order to Cease and Desist and additional documents will be available on DFI’s website.
Who has been appointed receiver?
By order of the King County Superior Court, Attorney Brian L. Budsberg of the law firm of Brian Lowell Budsberg, PLLC in Olympia is the appointed receiver for Exceptional Escrow Corp.
How can consumers and creditors file claims?
Until a claims process and form has been developed, written claims may be filed by mail:
Brian L. Budsberg, Esq.
Brian Lowell Budsberg, PLLC
PO Box 1489
Olympia, WA 98507-1489
Before the claim process and forms are developed, consumers can file a signed statement detailing:
- the amount and reason for the claim
- the escrow account number
- copies of the escrow contract or agreement
- preliminary or final escrow instructions
- a settlement statement
- any other documents – including the front and back of any checks supporting the claim
Original documents should be retained by the consumer. Only copies of the requested information should be sent to the receiver.
Where was Exceptional Escrow Corp. located?
Exceptional Escrow is licensed by the department as an escrow agent located at 1123 Maple Avenue SW, Suite 250, in Renton. Catherine D. Wiseman is licensed as the designated escrow officer. Exceptional has two licensed branch offices:
- Bonney Lake at 18207 Sumner Highway, Suite 2
- North Bend at 114 Main Avenue South
On June 8th, 2007, the DFI issued the Temporary Order requiring all three locations to cease and desist from all escrow activity.
What is a single pooled trust account?
Escrow companies maintain a single "pooled" trust account for the benefit of escrow customers. The account must be balanced on a monthly basis to ensure that all deposits and distributions have been made correctly. When money is illegally taken from escrow, it impacts all escrow customers. Further withdrawals create more shortfalls. Under DFI’s regulatory authority, all account activity is stopped until account reconciliation can be completed.
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders, and securities brokers and dealers. The department has won numerous awards for its financial literacy and outreach programs developed to protect consumers from financial fraud. In addition to posting information about licensees and administrative actions, the department’s website features consumer tips on a variety of financial fraud-related topics.