Title Company With Ties to Ponzi Schemer Files Chapter 7 Bankruptcy
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Title Company With Ties to Ponzi Schemer Files Chapter 7 Bankruptcy

October 19, 2012

By: John Clark

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US Title LLC, a New Mexico-based title company with strong ties to a convicted Ponzi scheme artist, is filing for Chapter 7 bankruptcy, according to a report from the Albuquerque Journal.

Sources say the company stopped operating this August, but disgruntled investors who believe it is closely linked to Doug Vaughan, the convicted Ponzi schemer, filed a civil lawsuit against the company, which filed for bankruptcy a week later.

By seeking bankruptcy protection, the company has given itself some time to sort out its finances while the lawsuit is stuck in judicial limbo, at least temporarily. In recent months, US Title has taken several measures to distance its operations from those of Vaughan, who founded the company in 2002, but saw his role diminish in recent years.

Vaughan himself filed for bankruptcy in February 2010, just weeks before he was arrested in the parking lot of US Title’s office. Earlier this year, Vaughan was sentenced to 12 years in prison for operating a Ponzi scheme that bilked $75 million of dollars out of at least 600 unsuspecting investors.

These investors have turned around and filed a lawsuit against US Title, in which they allege that the company is guilty of acting negligently, committing civil conspiracy, and unjustly enriching its executives.

Before the bankruptcy process started, the primary question for the court was whether Vaughan’s Ponzi scheme was tied to the seemingly legitimate operations of US Title. And this still remains something of a mystery.

According to the chairman of the company’s board, Judson McCollum, US Title was "the most efficiently run title company in town," but it was forced to close due to rumors stemming from Vaughan’s involvement with the company.

In 2010, when Vaughan himself filed for bankruptcy, he remained on the US Title payroll, and served as chairman of the company’s board. Which is to say Vaughan was very closely tied to the everyday operations of the company.

The company, however, listed only $777,134 worth of assets in its bankruptcy filing. So if Vaughan was acting in concert with US Title, the company doesn’t seem to have received a very good deal.

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