In a highly unusual action, the state insurance commissioner has shut down an Ellicott City settlement company after investigators determined that at least $500,000 in mortgage money was missing from company accounts.
In addition, a federal judge has ordered the bank accounts of the company, Land Title Research of Maryland, and its president, Joseph E. Goldberg Sr., frozen so that investigators can unravel the company's financial records.
"It's a lot of money to be missing," said Joy Hatchette, an assistant attorney general who represents the Maryland Insurance Administration. The insurance commissioner rarely pulls the licenses of settlement companies and has done so only "a couple of times" in the last several years, said Ms. Hatchette.
Land Title and Mr. Goldberg also are the targets of at least two lawsuits filed in U.S. District Court in Baltimore.
The state's emergency action, dated Nov. 1, included suspending the license of Mr. Goldberg and his company to operate as a title insurance and settlement agents.
The insurance commissioner also suspended the title insurance agent's license of M. Gary Rybczynski, an employee of Land Title.
Patricia A. Horak, another employee, is barred by the order from soliciting or procuring any insurance contracts.
Charles Lamasa, a Baltimore lawyer who represented Mr. Goldberg at a hearing Monday in federal court, said, "Mr. Goldberg intends to fully cooperate with the state insurance commissioner."
Ms. Hatchette said the insurance commissioner's office began investigating Land Title and Mr. Goldberg, of Clear Springs, Oct. 24 after receiving complaints from numerous banks and people who paid the company to handle real estate closings.
Most complained that checks the company had issued for settlements were bouncing. she said the investigation of the company, which has about 15 employees, is continuing.
In the most recent lawsuit against Land Title, United General Title, a Louisiana-based title insurance company, alleges that Land Title failed to properly disburse settlement funds and appears to have misappropriated more than $1 million in settlement money, leaving United General liable for unpaid loans.
Land Title has not filed a response to that Oct. 14 action.
"It's a real mess. We are trying to figure out where all the money went," said Andrew Levy, a Baltimore lawyer for United General.
United General had an agreement with Land Title and Mr. Goldberg to act as its local agent for selling title insurance.