Neighbors applaud demolition of bank-owned drug house
By Linda Bentley | May 13, 2009
serving 2.5 years in state prison
CAVE CREEK – A house with a history of dodgy owners and tenants was demolished last Tuesday to the joy of the surrounding neighborhood.
Toby Danielson of Quality Cutting & Breaking showed up with his equipment and crew and was in the process of tearing the buildings down and sorting the rubble to be trucked off by type to different landfills.
M&I Bank ordered the house demolished, which Danielson said was basically just a shell without any interior drywall left.
Danielson said he had heard stories that a former Cave Creek councilwoman once owned the house, along with tales of her drug problems.
The strong chemical smells inside the house after she was evicted, indicated it might have been a meth lab as well.
Life began to spiral downward in 1998 for Ellen Sands, who was councilwoman at the time, when she was arrested in Yavapai County for smoking marijuana in a casino parking lot.
Sands also owned the Tree House Restaurant, a popular eatery in town that used to be just west of the Flat Tire Bike Shop and since converted to office condos.
When Sands filed for bankruptcy in 2005, she requested a stay of the foreclosure on her Sunset Trail home, which she described as her residence, triplex and rental property, providing income of $4,024 month from renting out rooms and the guest house.
However, on January 12, 2006, U.S. Bankruptcy Judge Eileen W. Hollowell, after a hearing on the trustee’s motion, dismissed the case with prejudice and directed the clerk of the court not to accept any new petitions from Sands.
Hollowell stated the debtor had failed to appear or oppose the motion and after considering the motion of the trustee detailing Sands had filed four prior cases, which she did not list on her petition, and failed to prosecute any case to completion.
After requesting reinstatement of the case after failure to appear twice, Sands failed to appear for the third scheduled hearing and had not made any payment plans in the case.
In her dismissal order, Hollowell prohibited Sands from filing any new cases in the district for a period of 180 days.
Lisa Gorney, who was employed by Premier Title Group, a division of Title Security Agency of Arizona (TSA), as an escrow officer, purchased the Sunset Trail property for $450,000 in 2006.
In March 2007, Premier discovered a defalcation (embezzlement of assets) by Gorney after receiving a phone call from a customer saying her mortgage had not been paid off as expected upon close of escrow.
Following an initial investigation to determine why payoff funds had not been transferred to the lender as required, Premier discovered Gorney was signing checks and authorizing fund transfers to unrelated escrow files and diverting funds to parties unrelated to loan transactions.
Premier initiated an internal audit of Gorney’s entire inventory of escrow files from the date her employment began in 2005.
The investigation and audit revealed a complex fraudulent scheme in which Gorney failed to pay off mortgage loans as required and diverted monies to parties unrelated to the escrow transactions.
The investigation and audit revealed Gorney diverted and misappropriated $995,952.83.
Premier terminated Gorney on April 6, 2007 and brought the defalcation to the attention of the Arizona Department of Financial Institutions, resulting in a hearing before Administrative Law Judge Michael Wales.
Wales stated the documentary evidence “clearly and unequivocally” established Gorney diverted funds from escrow accounts to individuals for which she had no authorization to pay funds to, causing loan funds to be unavailable to pay off existing mortgages; she diverted funds from one escrow account to another to cover shortfalls; and, in the course of misappropriating and diverting funds, caused Premier a loss of $995,952.83.
For example, TSA Director of Internal Affairs Patty Freeman testified that during her audit of a specific escrow account, she found the borrower used Premier to refinance his home on north 48th Street in Phoenix for $171,700.20 with Wells Fargo Bank. The monies from Wells Fargo were wired to Premier on Nov. 30, 2006. Shortly thereafter, the customer’s original lender, HomEq Servicing, called for $139,835.85 for the payoff amount on the original loan.
Rather than fund the payoff to HomEq Servicing as required, Gorney distributed most of the $139,835.85, through a number of check and wire transactions to Robert Arrowsmith and Eduardo Nicholson, later determined to be co-conspirators of Gorney.
Gorney issued a $20,000 check payable to Premier, deposited the funds into another customer’s escrow account and thereafter wired the money to Nicholson.
She also made a $1,265.50 payment to HomeEq Servicing for the January payment to avoid detection and issued another check in the amount of $1,672.20 payable to Premier to deposit into another escrow account to make up a shortage in that file.
A default judgment was entered against Gorney in the amount of $995,952.83 along with treble damages and attorney’s fees.
The Department ordered Gorney’s “removal and prohibition from further participation in any manner in the conduct of the affairs of any financial institution or enterprise.”
Gorney, who was subsequently criminally charged, pled guilty in October 2008 to an amended count of theft, a class 4 felony, and an amended count of facilitation to commit fraudulent schemes and artifices, a class 6 undesignated felony.
Currently serving a 2.5-year sentence at the Arizona Department of Corrections, Gorney was also ordered to pay restitution of $1,032,904.52 jointly with Nicholson, who is serving a five-year sentence for theft and money laundering with charges for dangerous drugs, narcotics and drug paraphernalia dismissed in a plea agreement.
Sands, on the other hand, appears is doing well and working for Jim Langan at his Full Circle Ranch Bed and Breakfast Inn.
TOP PHOTO: By the time former Cave Creek Councilwoman Ellen Sands lost her home in 2005, it was long suspected of being a drug house. Lisa Gorney, a subsequent owner, is currently serving 2.5 years in prison for felony theft and fraud. The current owner, M&I Bank, ordered the buildings demolished.
Photo by Linda Bentley