For Immediate Release: Tuesday, March 29, 2011
(ST. PAUL, MN) The Minnesota Department of Commerce has ordered a Forest Lake real estate closer and insurance agent to pay a $420,000 civil penalty after an investigation showed that she misappropriated $1.3 million in client funds for her own personal use. The fine is one of the largest assessed on an individual by the department in recent memory. The department also revoked her insurance producer, real estate closer and notary commissioner licenses.
According to an investigation by the department's enforcement unit, Cynthia Strand allegedly withheld, misappropriated and converted for personal use funds that were received during the course of her business. The money remitted to her company, Strand Closing Services, was intended to pay off previous mortgages on numerous properties, mostly in the Twin Cities, as well as other transaction fees. But the department found that between January 2007 and September 2009, almost $1.3 million in payments were made from SCS's general account to Strand personally or to businesses controlled by Strand and her husband.
The department also charged 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.
Strand was charged last summer in Washington County with theft by swindle, insurance fraud, aggravated forgery, concealing criminal proceeds and racketeering.
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.
Strand's company, SCS, filed for Chapter 7 bankruptcy in March 2010, but the proceedings were subsequently halted.