For Immediate Release: Thursday, April 8, 2010
Alleged fraud involves at least 42 real estate transactions
(ST. PAUL, MN) The Minnesota Department of Commerce has charged Forest Lake real estate closer Cynthia Strand with withholding and misappropriating more than $1.1 million in at least 42 real estate transactions and converting the funds for her own personal use. The department has suspended Strand's title insurance producer, real estate closer and notary licenses and may assess a civil penalty in the case. A hearing on the case will be held Friday, May 7 at the Office of Administrative Hearings in St. Paul.
The case is the latest in a string of actions taken by the department in the mortgage and real estate industries. "Minnesota has a significant advantage over other states in combating real estate fraud," said Commerce Commissioner Glenn Wilson. "We regulate all the disciplines in a real estate transaction — from mortgage originators and real estate agents to appraisers and closers — giving us the ability to see the many facets of a fraud scheme."
According to an investigation by the department, Cynthia Strand allegedly withheld, misappropriated and converted for personal use funds received during the course of her business. The money remitted to her company, Strand Closing Services (SCS) in Forest Lake, was intended to pay off previous mortgages on numerous properties, mostly in the Twin Cities. But the department is alleging that between January 2007 and September 2009, almost $1.1 million in payments were made from SCS's general account to Strand personally or to businesses controlled by Strand and her husband.
The department is also charging Strand with allegedly failing to record change of title in several cases, failing to remit title insurance premiums and using fraudulent, coercive or dishonest practices or demonstrating incompetence, untrustworthiness or financial irresponsibility.
The department initiated an investigation into Strand's business practices in October 2009 after receiving a complaint from an attorney representing a bank that claimed funds given to SCS at a closing in 2007 were allegedly not used to pay off the first mortgage on the property as the funds were intended to do. Shortly after the department started its investigation, investigators received numerous other complaints. Among the transactions reviewed by the department in its investigation are two involving the city of Forest Lake, which alleged that funds brought to real estate closings at SCS had not been used to pay off previous mortgages and fees associated with the transactions.
In November 2009, the department's enforcement unit and Division of Insurance Fraud Prevention, and the Forest Lake Police Department worked together to execute search warrants at the Strand Closing Services' business office and the home of Cindy and Steve Strand in Forest Lake. The search warrant was issued after it became apparent that Strand might have been destroying business documents.
Also in November, Strand was reported as missing by her husband in Lee County, Florida, where the couple had a home. She returned unharmed hours later.
Strand's company, SCS, filed for Chapter 7 bankruptcy in March.
Similar actions taken:
In October, the department charged Scenic Title & Abstract of Duluth with withholding insurance premiums from clients.
In November, Commerce charged Morris Abstract & Title of New Prague with forgery and failure to remit title insurance premiums on numerous loans dating back to 2004.
In February, the department charged Real Source Title of Mahtomedi with misappropriating funds and failure to pay off at least eleven prior liens for which the company or its affiliates received closing funds.
About the Minnesota Department of Commerce
The Minnesota Department of Commerce licenses and regulates mortgage originators, brokers, servicers and multiple other individuals and companies in the real estate industry.
In 2009, the department took action against 71 individuals and companies in the mortgage industry and 45 actions against individuals and companies in the real estate sector. The department is increasingly referring its cases to criminal authorities for prosecution.
Consumers with complaints or questions may call the Minnesota Department of Commerce at (651) 296-2488 or toll free, 800-657-3602.