Fake a title insurance agency and ignore a real estate practice!
In the Matter of Samaha* is a South Carolina Supreme Court attorney disciplinary case that resulted in disbarment.
This lawyer was creative; you have to give him that!
For starters, he witnessed and notarized the signature of his client’s late wife, who had died seven years earlier. He typed, witnessed and notarized a revocation of a durable power of attorney for an 83 year old retired paralegal with cognitive and physical limitations.
Perhaps the most interesting violations, however, had to do with the title insurance. (What? It’s tough to make title insurance interesting. Trust me. I try and fail on a daily basis. This stuff is only interesting to title nerds like me!)
A relationship with a title insurance company is essential to a real estate practice in South Carolina. The closing attorney must either be in a position to issue his own title insurance commitments and policies as an agent, or to certify to a title insurance company as an approved attorney to obtain those documents.
Consider the activities of Mr. Breckenridge, the lawyer who was publicly reprimanded this spring for allowing non-attorney entities to control his real estate practice.** During oral arguments, he stated that he preferred to handle closings in the customary manner in South Carolina, where the attorney acts as agent for a title insurance company as well as closing attorney. But he had been suspended by the Supreme Court for a short time and, as a result, had been canceled as an agent by his title insurance company. He said he was then forced to work for an entity that hires lawyers to attend closings only. When a problem arose with the disbursement of one of those closings, he found himself in front of the Supreme Court again.
Mr. Samaha had also been canceled by his title insurance companies. That did not stop him and his staff from proceeding full steam ahead with closings in the customary manner. Although he originally denied any knowledge that documents had been forged in his office, he ultimately admitted that closing protection letters had been forged and issued to lenders.
A mortgage lender later uncovered not only forged closing protection letters, but also forged title insurance commitments and policies. It was not possible for Mr. Samaha to obtain any of these documents legitimately during this timeframe, because his status had been canceled as an approved attorney as well as an agent. The Court commented that, absent the forgeries of these documents, the lawyer’s real estate practice could not have functioned.
(This is not the first disbarred lawyer in South Carolina to have included the forgery of title insurance documents in his repertoire of misdeeds.***)
The Court stated that Mr. Samaha allowed his staff to, in effect, run his office. He failed to supervise them and failed to supervise and review closing documents. He, in effect, completely ignored his real estate practice.
He also committed professional violations of a more mundane but equally scary nature. For example, he made false and misleading statements on the application for his professional liability insurance.
He failed to pay off four mortgages. By his own calculations, the loss was more than $200,000, but the Office of Disciplinary Counsel stated that his financial records and computers had been destroyed, making it impossible to prove the true extent of the financial mismanagement and misappropriation. Apparently, the money from new closings was used to fund prior closings, up until the date of Mr. Samaha’s suspension from the practice of law.
*In the Matter of Samaha, South Carolina Supreme Court Opinion 27660 (August 24, 2016)
** In the Matter of Breckenridge, South Carolina Supreme Court Opinion 27625 (April 20, 2016)
*** In the Matter of Davis, 411 S.C. 209, 768 S.E.2d 206 (2015)