July 2, 2010
The State of Ohio is accusing an Illinois-based company of defrauding its citizens out of thousands of dollars. Ohio Attorney General Richard Cordray has filed suit, seeking restitution and civil penalties.

Cordray said the company -- American Escrow -- and its owners, Derek C. Lurie and Steven Lurie, claimed that they would provide "escrow" services for their customers to pay property taxes or homeowner insurance but collected the money from consumers and never made the payments on their behalf.

"Ohioans who contracted with this company lost thousands of dollars that they had set aside to pay taxes and insurance premiums," said Cordray. "In the end, not only were their taxes and premiums not paid, but they had to come up with additional money out-of-pocket."

According to the lawsuit, American Escrow entered into contracts with consumers to provide escrow services and to pay for property taxes and/or homeowner's insurance each year. Normally that service is provided by your mortgage lender. However, if you don't have a mortgage on your home, you must pay the taxes in one lump sum.

Homeowners in this circumstance would have been much better off making payments into a savings account each month, then paying their annual taxes. That's essentially what American Escrow was supposed to do.

They divided the approximate annual amount by 12 payments, which they then collected each month from consumers. Consumers were charged a one-time set up fee of up to $250 and a monthly service charge up to $6.50. The lawsuit alleges that the company stopped making payments for some customers in the fall of 2008 but continued to collect money through March 2009.

The attorney general's office has received 89 complaints to date against American Escrow from Ohioans who said they lost money.

Cordray charged American Escrow and its principals with multiple violations of Ohio's Consumer Sales Practices Act, including failure to deliver and unfair and deceptive consumer sales practices. He is also seeking permanent injunctive relief, restitution and civil penalties.