Fmr. head of Chicago escrow company facing federal fraud charges - New York News

Fmr. head of Chicago escrow company facing federal fraud charges

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CHICAGO (Sun-Times Media Wire) -

The co-founder and former president of a defunct Chicago escrow company was charged in federal court Wednesday with misusing $5 million of his customers' money.

The indictment, filed Wednesday in U.S. District Court, claims Derek Lurie misused customer escrow funds from his Chicago-based company, American Escrow, to pay off business and personal expenses such as renovations at his Miami condominium.

Even though the company was in debt, Lurie claimed from Jan. 2003 to March 2009 that American Escrow would keep customers' escrow funds secure and make timely tax and insurance payments, the indictment claims.

The company allegedly made "Ponzi-type" payments and paid out earlier customers' fees with new customers' escrow funds, the indictment says.

Lurie used funds totaling $5 million to pay bills for American Escrow and for his own expenses, including $554,000 for parking tickets, car payments and the Miami condo renovation, the indictment says.

To convince customers that all was well, Lurie authorized false account statements to be mailed to customers, the indictment claims.

Lurie is facing five counts of fraud, according to the indictment.

The charges come almost five years after Illinois Attorney General Lisa Madigan named Lurie, his father and the company's co-executive, Steven Lurie, in a civil suit.

Filed in June 2009, the civil suit claimed American Escrow failed to make property tax payments for at least 69 homeowners in Illinois, the Sun-Times reported previously.

Lurie's attorney, Thomas A. Durkin, said Wednesday he was "quite surprised" to hear about the criminal charges.

"This is a very stale investigation," Durkin said. "American Escrow was a victim of fraud as much as anyone else."

In 2004, former American Escrow employee Karen Dietz embezzled the company of $2.3 million and pleaded guilty to federal wire fraud charges that year, the newspaper reported.

And earlier this month, another former American Escrow employee Jacqueline Cruz was indicted for writing 122 company checks to herself, totaling $412,000, according to federal court documents.

Like Lurie, the Feb. 5 indictment against Cruz also claims she mailed false escrow account activity to customers.

Cruz pleaded not guilty to all three counts of fraud at her arraignment Feb. 19. She will next appear in court April 18, court records show.

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