A former city councilman and attorney is at the center of a federal investigation after he was accused of embezzling millions of dollars from hundreds of victims who never saw it coming.
Garry Christopher Forsythe, 40, of Hendersonville, TN, is charged with six counts of wire fraud and three counts of bank fraud in the alleged embezzlement scheme over the course of about eight years.
Forsythe is the former owner and operator of Forsythe Title and Escrow Services Inc., a real estate closing company and title insurance agent located in Hendersonville.
According to the indictment, between December 2000 and January 2008, Forsythe received money from buyers of real properties and from mortgage lenders financing the purchase of the properties for the purpose of closing real estate transactions.
Forsythe Title acted as the settlement agent and the money received by Forsythe Title was supposed to be deposited into an escrow account and used to pay only the expenses of closing real estate transactions.
However, Forsythe is accused of transferring, or causing the funds from the Forsythe Title escrow accounts to be transferred to the Forsythe Title operating account.
These funds exceeded the fee income that Forsythe Title legitimately earned from the real estate transactions and were used to cover the operating expenses of Forsythe Title and to pay compensation to Forsythe.
"A lot of transactions were happening where he would take more money out than he was entitled, and he was using that money to run his business and for personal expenses. And then more money was coming in, which was covering the money he was taking out fraudulently," said U.S. attorney Jerry Martin.
The indictment further alleges that Forsythe knew that the total funds in the escrow account were insufficient to cover the total amount of the checks.
Forsythe is also accused of failing to disclose to employees of Forsythe Title and to the parties involved that there was a shortage of funds in the company's escrow account.
When the market was hot, investigators said Forsythe was averaging 250 transactions a month.
"That's money that was sucked out of the local economy in Middle Tennessee and went to fund the lavish lifestyles of fraudsters," Martin said.
Prosecutors claim Forsythe bought a mansion in Hendersonville, bought a boat, overpaid his employees and even paid for them to have all-inclusive trips to the Bahamas.
Forsythe, however, maintains his innocence and blames bank errors and accidents during closings.
In a statement, his attorney said:
"It is an extremely complicated case, and we feel confident that once all of the evidence comes out Mr. Forsythe will be acquitted."
According to the U.S. Attorney's Office, checks issued to pay the expenses of closing the real estate transactions would be returned by the bank because the escrow account contained insufficient funds to cover all of the checks issued.
According to the indictment, Forsythe's scheme caused losses of more than $2.2 million.
If convicted, Forsythe faces up to 30 years in prison and a $1 million fine.
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