Bulletin: NL000029

Dear Associates:

It has come to the attention of the National Legal Department in Houston that a series of fraudulent checks in excess of several hundreds of thousands of dollars have been submitted to various agents' escrow accounts for payment. These forgeries are being perpetrated across the country and have affected several national underwriters. The sequences of events are as follows:

• Exact replicas of checks have been produced from what appears to be a laser printer. The only noted differences in the checks were that the "type" on the check numbers on the top, right corner were not the same size and the borders around the check were not exactly identical. However, the color of the check and the check numbers appeared to be almost identical with the title agents' escrow account stock in most cases.
  
  
• The signers on the account are the names of actual individuals within the title agent's office and appear to be valid.
  
  
• The checks either do not reflect a GF number or else reflect a non-existent number.
  
  
• The checks have been drawn on a variety of banks throughout the United States and have a variety of payees. Therefore, it cannot be determined whether or not there is a nationwide fraudulent scheme or a series of different schemes throughout the country.

Our information is that the various title agents' who have been victimized by these schemes have not lost any monies because the fraudulent checks were covered by the banks who held their escrow accounts. However, the reason the banks have covered the losses is because those agents caught the fraudulent checks within the time limits set out in the account agreement with their banks. Most account agreements have limitations with thirty (30) days being the most common in the industry. Therefore, it is imperative that all title agents reconcile their escrow accounts immediately after receiving their statements.

Since this fraudulent scheme has already hit several areas of the country, you may want to visit with your banker about ways to protect your account. Recent innovations in the types of paper used and the printing of checks may be helpful in preventing these types of schemes in the future.

If you should have any questions, please contact the National Legal Department in Houston.