A unit of Old Republic International Corp. must pay the city of San Francisco $15 million in punitive damages to settle a suit that alleges the insurer defrauded homebuyers.
According to a Reuters report, Judge Stuart Pollak ruled in favor of the city following a May 13 order that required the firm to pay $13.7 million to reimburse approximately 200,000 homebuyers who never obtained interest on escrow accounts managed by Old Republic.
In March of 1998, the city of San Francisco filed a “whistle-blower” lawsuit against Old Republic citing the title insurance company allegedly engaged in an illegal plan to collect interest payments on escrow accounts.
City officials allege that rather than paying the interest to homebuyers which is required by law, Old Republic used the money as income. The alleged scheme violated both state and federal laws, including transporting interest payments to the company through a shell corporation or an affiliate.
Old Republic allegedly moved more than $30 million from its customers and is accused of obtaining more than $17 million from inactive escrow accounts.
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