The mother-daughter owners of a pair of shuttered Cherry Creek title insurance companies were to be arraigned Monday on more than a dozen felonies — including racketeering charges of running a criminal enterprise — that allege they pocketed more than $733,000 from policyholder escrow accounts.
The women — Elizabeth Newell-Williams, 65, and her daughter, Michelle Hernandez, 45 — were indicted by a state grand jury in June and have been free on bond awaiting their arraignment in Denver District Court before Judge William Robbins.
They face lengthy prison terms if convicted on charges ranging from theft and computer crimes, to failure to pay taxes and racketeering conspiracy. The women nor their attorneys responded to messages from The Denver Post.
The Colorado Division of Insurance revoked the licenses of both women shortly after it began its investigation in early 2016 into transactions between more than a dozen different bank accounts the pair had used to run Foresight Title and Williams Title and Escrow Company.
Along the way, investigators say the found alleged unemployment benefits fraud and various tax irregularities, prompting them to flag the state’s departments of revenue and labor.
Impacted consumers were able to recover their losses from Alliant National Title Insurance Company, which stepped in to help, state officials said.
The Post previously reported how the two businesses for months maneuvered millions of dollars between the various bank accounts in order to give the appearance that all was well. In reality, however, the bank handling the accounts flagged as many as 30 different real estate transactions that couldn’t be properly closed because of insufficient funds in the accounts, The Post reported.
“Trouble pops up in all professions from time to time, and insurance is no different,” Interim Insurance Commissioner Michael Conway said in a press release issued Monday. “Not only were we able to stop these people in the world of title insurance, but we built a solid case of facts and information that the other departments and the Attorney General’s office could pursue to get these indictments returned.”
Title companies typically hold millions of dollars in escrow. The money is used to pay for final water and utility bills or other costs after closing, including paying mortgage balances.
State regulators first learned of the money problems when an employee at Williams Title told them of the irregularities.
The employee told investigators she was aware of at least two instances where escrow accounts didn’t have enough money to pay off a mortgage the company was closing the sale on. Mortgage payoffs can often run into the hundreds of thousands of dollars, or much higher for pricey homes, such as those near Cherry Creek.
State incorporation records show Foresight was formed in 2014 by Hernandez, who also was chief operating officer at Williams Title under the name Michelle McCollum, according to that company’s website.
Hernandez and her mother co-founded Williams Title in 2004 in the basement of Williams’ home.
At the time they closed, Williams Title announced on its website that the principals were retiring and offered no explanation for the closing.
Both women had filed for personal bankruptcy at one time, federal bankruptcy record show, but neither company nor its ownership appeared to have any history of financial troubles at the time of the investigation.
Title companies can quickly run into financial trouble with millions of dollars floating between dozens of transactions. In one example, in 2014, American Title Services was forced into bankruptcy when its owner, Richard Talley of Aurora, committed suicide with a nail gun after years of misappropriating more than $2.8 million of company funds was discovered.