By The Times-Picayune
January 14, 2010, 6:40PM
Hubert Ellzey Jr. secretly bilked clients out of $777,000 before Hurricane Katrina put an end to his scheme.
When the storm hit Aug. 29, 2005, all real estate closings in the New Orleans area halted for a time, upsetting the Metairie title agent’s practice of converting clients’ mortgage money to his personal use then covering the misappropriation with money from future mortgage payments.
As a result, he pleaded guilty Sept. 23 to wire fraud, and U.S. District Judge Eldon Fallon sentenced him Thursday to almost three years in prison.
Ellzey, 68, worked nine years as an independent agent for Commonwealth Land Title Insurance Co. His job called for using his escrow account and wire transfers to move money among financial institutions as they granted and paid off loans.
But sometime before June 2005, he started diverting money into his own accounts then covering his tracks with money from later mortgage payments, according to court records. That happened on six real estate closings in Avondale, Gretna, New Orleans and Metairie, involving lenders in Georgia, Illinois, New York and Texas.
“The scheme was discovered when, after Hurricane Katrina hit New Orleans … all closings came to a halt and Ellzey was unable to cover some of the funds converted to his own use and to close the pending mortgages,” said a statement from the U.S. attorney’s office.
The case was investigated by the FBI and prosecuted by Assistant U.S. Attorney Juan Masini.
Fallon, whom President Clinton nominated for the judgeship, sentenced Ellzey to 35 months in prison, followed by three years’ probation. He also ordered restitution to Commonwealth.
