$1.1 million in insurance fraud alleged Former Howard agent charged with stealing, misappropriating funds

Case among largest in Md.

Joseph Goldberg Sr.'s Ellicott City firm seized by state in 1994

September 07, 1996|By Mark Guidera | Mark Guidera,SUN STAFF

A former Ellicott City property title insurance agent was charged yesterday with stealing and misappropriating more than million entrusted to his business by clients, one of the largest insurance fraud schemes in Maryland history.

An eight-count grand jury indictment also charges Joseph E. Goldberg Sr., 43, with filing a false Maryland income tax return in 1992 and not filing state tax returns in 1993 and 1994.

Michael DiPietro, an assistant attorney general for the Maryland Insurance Commission, called the case "one of the largest insurance theft and fraud cases ever" in Maryland. An arrest warrant has been issued for Goldberg, who lives in Elkridge.

"It's also one of the larger white-collar crime cases we've seen in quite a while," DiPietro said.

Michael Zwaig, a Towson attorney representing Goldberg, declined to comment.

The indictment is the latest development in a nearly two-year investigation, which began after the collapse of Land Title of Maryland, Goldberg's Ellicott City firm. The Maryland attorney general's office and the fraud division of the Maryland Insurance Commission investigated for 21 months.

Land Title of Maryland conducted property settlements and sold title insurance, which protects properties against bad titles and fraud.

The state Insurance Commission seized the company in October 1994 after investigators discovered that mortgage money wasn't being disbursed properly and important land records weren't being filed with the court.

In the indictment, filed in Howard County Circuit Court, Goldberg is charged with stealing $639,218 during an eight-year period between April 1986 and September 1994.

He also is charged with misappropriating $552,368 in property settlement funds entrusted to his business.

DiPietro said investigators found that Goldberg wrote checks from the company's escrow account, set up to hold client money given to Land Title to settle property transactions and title insurance policies. He wrote the checks either directly to himself or to pay for personal expenses, investigators said.

Prosecutors did not reveal in court papers how they believe Goldberg used the money. But they hinted yesterday that they haven't found evidence of any flashy items that were bought.

"You hear of someone taking this much money, and your first thought is, 'Well, there must be something at the end to show for it. Boats and cars and nice things,' " DiPietro said. "But that is almost never the case. It's consumed a little bit at a time until it's gone."

Goldberg, who says he is unemployed, has declared bankruptcy and said last week he is penniless.

James Gordon, a Baltimore attorney appointed by the state insurance commissioner to clear up Land Title's records and untangle its maze of land and financial records, has said he found Goldberg used client money to make payments on personal expenses that include a lawn tractor, his car and a sport utility vehicle, credit card bills, and to buy life and car insurance plans.

Gordon also said he found Goldberg used money in the company escrow account to pay his own premiums on company health and disability insurance plans.

At the same time, Gordon said he found from his investigation that Land Title used new client money coming into the escrow account to pay old real estate transaction obligations -- a scheme the real estate industry calls "lapping."

The state's largest title insurance fraud case was in 1989 against Howard L. Perlow, a lawyer who operated a Baltimore company known as Bay State Title. In 1989, investigators found that $1.6 million was missing from an escrow account; Perlow later pleaded guilty and was stripped of his license to practice law.

Pub Date: 9/07/96

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