The former president of Bay State Title Co. has pleaded guilty to misappropriating about $300,000 belonging to his company and to the Chicago Title Insurance Co. of Maryland.
Howard L. Perlow, 37, of Talton Court in Pikesville, entered the plea in Baltimore City Circuit Court yesterday. Sentencing is scheduled for Nov. 23.
Perlow had been charged with misappropriating more than $1.6 million, according to Assistant Attorney General Christopher J. Romano.
But Arnold Weiner, who is Perlow's lawyer, said that most of that amount was used for third-party loans, which he argued did not constitute a misappropriation of money.
Perlow is a lawyer and former part-owner of the Baltimore Blast soccer team. He has agreed to be disbarred from practicing law in Maryland.
Perlow operated the Bay State Title Co. for 10 years until its collapse last year. According to court documents, Bay State was the largest title company in Maryland.
Title companies bring property buyers and sellers together at settlement to transfer a clear property title. Bay State researched titles and issued insurance policies on behalf of Chicago Title.
The escrow funds in question had been placed in Bay State's settlement accounts between January 1986 and September 1988. No homebuyers nor sellers were harmed although the misappropriations did affect Bay State's underwriter, Chicago Title, said Romano.
Weiner said Perlow admitted that he used $300,000 for his personal gain, including buying clothing and spending on his homes in Maryland and Florida.
On June 29, 1987, for instance, Perlow diverted four checks worth more than $14,000 into an account he controlled at Harbor Bank. With part of that money, he bought $8,000 worth of clothing at Bernard Hill in Baltimore and made a $5,000 payment to Wallbrook Mill/Lumber for work on his Pikesville home, court documents show.
Romano said that the money Perlow used to make loans was given to friends and real estate developers. Sometimes the loans were not secured and interest was not charged, he said. In return, Perlow received an investment interest in the real estate deals.
Perlow spent at least $125,000 to buy stock in the Baltimore Blast. But that was not included in the $300,000 that Perlow admitted to misappropriating, Weiner said.
The state investigation into the case did not implicate Alleck Resnick and Jerry Sopher, Perlow's law partners who also owned interest in the title company, and no additional charges are expected, Romano said.
The assistant attorney general said Perlow obtained the escrow funds by falsifying certain charges on real estate settlements. Because the escrow fund had several million dollars in it, he was able to keep up the scam for two years.
But in 1988, the escrow account became depleted. Checks to the institutions making the home loans and checks to government agencies for documentations began to bounce.
Chicago Title, the underwriter for Bay State, made good on the checks, but canceled Bay State's authority to issue title policies on Jan. 15, 1989. Within weeks, Bay State ceased operation.
Romano said the state is recommending that Perlow receive a five-year prison sentence with half of that time suspended. The state also is asking that Perlow do 300 hours of community service.