More on Millennium Title Seizure: 1031 Investor May Lose $1 Million

Scott Gordon had more on the Millennium Title mess over in Southlake, where more than $3 million is missing from an escrow account, on Tuesday’s late night news. The owner of a Keller real estate investment company, Scott Schambacher, told Scott his company, Avondale Development Group, wired $1 million to Nancy Carroll, the now nowhere to be found owner of Millennium Title Company. As is custom in a 1031 Exchange, the money was supposed to be held temporarily in escrow until Schambacher and his investors found and completed another property sale. 1031 Exchanges are a way to legally avoid capital gains taxes if certain rules are followed, those rules designed to spur real estate re-investment. Scott says his proceeds were one million dollars to the penny.

Schambacher said he stopped by the title office in December to set up a closing date and realized there was a big problem when he overheard the receptionist talking.

“I hear, ‘Oh, we don’t know where she’s at. It appears worse than what we thought. Let me email you something, bla-bla-bla,’ and hangs up,” he said. “And I’m thinking that doesn’t sound good.”

No, those are not the words you want to hear when an escrow officer is holding you and your partner’s million dollars. It only took a few days for Schambacher to learn that the Texas Department of Insurance had seized the company.

In court papers, regulators said the owner, Nancy Carroll, had disappeared and that $3 million was missing from the company’s escrow account. Another investor, John Herlihy, filed a lawsuit accusing Carroll of fleeing the country after absconding with $1 million of his money.

“I was blown away,” Schambacher said. “I’ve been doing this 24 years and have never seen anything like this.”

Schambacher said he can’t get any answers about what happened to his money, because the state generally does not insure funds in 1031 Exchanges.

In emails to NBC 5, Carroll denied the accusations against her and said Schambacher was an investor in Millennium, a claim he denied.

She did not answer specific questions about what happened to the money.

Carroll also referred NBC 5 to her attorney, Michael McCue of Dallas, who did not return phone calls or emails.

So can Schambacher kiss that million goodbye?

I talked to another 1031 investor this week who fears he may lose about $50,000. He chose Millennium Title over a local bank to save $1000. This investor, who wished to remain anonymous, is a hard-working guy who invested in real estate to save for retirement.

“We bought our first home, and then we bought another but we kept the first one, renting it out,” he told me, adding that he and his wife often scrimped and saved to manage the properties. “I know it’s not several million, but we worked hard over many years to acquire that money.”

He told me the state offers little financial protection for 1031 Exchanges. He is hoping to find restitution through the Texas Bar Association, since the owner of Millennium Title, Nancy Carroll, is a licensed Texas attorney.

“I don’t know if this was a red flag or not,” said my source, “but Nancy had re-married recently, to a much younger man.”

This source also said state investigators are telling him Carroll may have absconded with as much as $20 million.

Also this week, I was alerted to the fact that Nancy Carroll did the title work for Juan Jesus Guerrero Chapa, the Mexican drug cartel lawyer who was gunned down in Southlake Town Square in May, 2013.

Maybe it is just a coincidence, but her name appears in the story Scott Gordon did in 2014 as a follow up to that crime.

The lawyer, Juan Jesus Guerrero Chapa, was ambushed last May and was shot once in the chest and nine times in the back, according to his autopsy. NBC 5 obtained Guerrero’s autopsy report and learned other key details in one of the most high-profile unsolved murders in North Texas.

Among those key details: Guerreros may have had a drug problem, had cocaine in his system at the time of death, had been arrested in Miami Beach before moving to Southlake where his girlfriend accused him of assaulting her, and had formed a couple of Texas corporations that one expert speculated may have been created to launder money.

Tax records show the home Guerrero and his family were living in was purchased July 15, 2011, in the name of Ma G Alheli Dias Teixeira.  
Public records searches show no record of anyone with that name.
The five-bedroom, 5.5-bathroom house has a spacious living room, a wine room, a media room, a game room and a large swimming pool.
A YouTube video showcasing the house before Guerrero bought it said the asking price was $1.35 million.
The previous owner said the buyer paid cash.

Realtor Sharon Hodnett, who sold the house, said she could not recall the sale.

Nancy Carroll, whose company handled the title transfer, said she handles a large number of transactions and could not comment because of privacy laws.