Apr.19, 2010, 11:44 AM CDT

SPRINGFIELD, Mo. – The co-owner of Guaranty Title, formerly headquartered in Nixa, pleaded guilty in federal court on Monday for her role in a $2.7 million wire fraud conspiracy and money laundering. Kathy Cyrena Allen, also known as Kathy Stanton, 52, of Sarcoxie, pleaded guilty to conspiracy to commit wire fraud, conspiracy to commit bank fraud and conspiracy to commit money laundering.

Her co-defendant, Richard “Rick” Burton, 59, (who is not her husband as previously reported by the U.S. attorney's office) pleaded guilty on April 13 to conspiracy to commit wire fraud and conspiracy to commit money laundering. A grand jury indicted Allen and Burton last Nov. 17.

Allen and Burton each admitted their participation in a scheme to defraud financial institutions of more than $2.7 million through a series of illegal financial transfers related to stolen escrow payments. They attempted to conceal their criminal activities through a substantial check-kiting scheme.

Burton was the president and majority owner of Guaranty Title Company of Southwest Missouri, Guaranty Title and Closing Company, and Guaranty Properties. The companies, referred to collectively as Guaranty, provided real estate title and closing services. Allen, who had a 42 percent ownership interest in Guaranty, was the vice president during the time of the conspiracy. Guaranty’s main office was in Nixa, with at least 10 branch offices in Aurora, Branson, Mount Vernon, Ozark, Springfield and Republic.

Allen and Burton each admitted they defrauded mortgage companies and individual customers of escrow money that had been wired to Guaranty to pay real estate closing costs from May 12, 2005, to June 18, 2007.

When real estate buyers and sellers hired Guaranty to facilitate the closing of real estate contracts, Guaranty agreed to hold buyers’ money for closing costs in an escrow funds account separate from funds that Guaranty owned. Guaranty was prohibited from commingling that escrow money with the firm’s business operations money, because it did not own the escrow money that it received.

Allen and Burton admitted they took a portion of the escrow money that had been transferred into these escrow accounts. In violation of Guaranty’s promise not to do so, they caused $2,040,937 of stolen escrow funds to be diverted into the firm’s business operations account and used the money for the day-to-day business operations of Guaranty.

In order to conceal the source of those deposits into the operations account, they instructed Guaranty’s in-house bookkeeper to record deposits of stolen escrow money into Guaranty’s business operations account as loans, including loans from a fictitious company called “K & S Investments.”

By April 2007, deposits into Guaranty’s main escrow account no longer covered shortages caused by the theft of escrow funds. Allen and Burton concealed this shortage by causing checks to be written and deposited between various accounts held by Guaranty at Great Southern Bank and Ozark Mountain Bank that did not contain sufficient funds to cover the checks.

This check-kiting scheme continued until June 18, 2007, when Old Missouri Bank discovered the fraud and closed the bank account. As a result of this check kiting, they caused Ozark Mountain Bank to lose approximately $682,954.

Allen and Burton admitted they participated in a conspiracy to commit money laundering from May 12, 2005, to June 18, 2007. They conducted financial transactions that involved the proceeds of the wire fraud and bank fraud conspiracies, in order to promote that criminal activity and to conceal the source of the proceeds of the unlawful activity.

Allen could face a sentence of up to 70 years in federal prison without parole, plus a fine up to $1,250,000 and an order of restitution. Burton could face sentence of up to 40 years in federal prison without parole, plus a fine up to $1,250,000 and an order of restitution. Sentencing hearings wi! ll be scheduled after the completion of presentence investigations by the United States Probation Office.

The FBI and the Missouri Department of Insurance, Financial Institutions and Professional Registration investigated the case.