A Certain Path to Disbarment:

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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!)

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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.

red card - suitHe 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)

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Attorney Fakes Title Insurance Documents and Gets Disbarred

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Think you’ve heard it all? Listen to this!

The South Carolina Supreme Court disbarred a lawyer last month for fraudulently producing title insurance commitments and policies.*

By way of background, the vast majority of real disciplinary actionestate lawyers in South Carolina are also licensed as title insurance company agents.  In other parts of the country, lenders receive title insurance documents directly from title companies’ direct operations.  In South Carolina, title companies run agency operations, supporting their networks of agents, almost all of whom are South Carolina licensed attorneys.

Lenders require closing protection letters for closings involving agents.  Stated simply, these letters inform lenders that the insurer may be responsible in the event a closing is handled improperly by the closing attorney.

Title insurance company agents also produce title insurance policies and commitments, following the guidelines of their insurance underwriters, and using software programs designed to support the production of these documents.

Some closing attorneys are not agents but instead act as approved attorneys for title insurance companies. Approved attorneys can obtain closing protection letters from their title companies, but they are not able to issue their own title insurance documents. Instead, they certify title to a title insurance company or to a title company’s agent.

If an attorney cannot provide lenders with closing protection letters, that attorney generally cannot close mortgage loans in South Carolina.

 red card - suitIn 2007, Mr. Davis was canceled as an agent by his title insurance company.**  After that cancelation, he was able to legitimately obtain title insurance commitments and policies through an agent. In 2011, however, Mr. Davis was canceled as an approved attorney.  He didn’t let that fact stop him though. He began to fraudulently produce title insurance documents, making it appear that the title insurance company was issuing closing protection letters, commitments and policies for his closings.  He also collected funds designated as title insurance premiums, but he never paid those premiums to the title insurance company.  He continued to handle closings using fraudulent title insurance documents until his actions were discovered and he was suspended from the practice of law by the South Carolina Supreme Court in 2013. In 2015, Mr. Davis was disbarred.

I suppose I should close by saying don’t do this!  Please!

* In the Matter of Davis, S.C. Supreme Court Opinion 27480 (January 21, 2015)

** In the interest of full disclosure, I work for that company.