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For nearly two years, a young real estate attorney in Douglasville, Ga., siphoned funds intended to pay off his clients’ home mortgages from his firm escrow account. As a real estate closing attorney, R. Kenneth “Kenny” Capps, 33, stole more than $1 million that should have been used to satisfy outstanding mortgages after his clients’ homes were sold, said Douglas County District Attorney J. David McDade. Earlier this month, Capps pleaded guilty to multiple counts of theft and agreed to a negotiated 50-year prison sentence — 20 years in confinement and 30 more on probation — McDade said. Once on probation, Capps also will be required to make full restitution to his victims. “This is a lawyer stealing money from clients, using mortgage closings,” McDade said. “Instead of using a gun, he used a briefcase and a sharp pencil. And that’s why he earned every day of the 20-year sentence.” On May 25, as the State Bar of Georgia was opening its own investigation, Capps surrendered his law license, said the bar’s assistant general counsel, Kellyn O. McGee. “It’s a pretty hefty sentence,” Capps’ lawyer, Douglasville attorney Kenneth W. Krontz, acknowledged Wednesday. “But he’s pled guilty to multiple counts” involving at least $1 million in losses. Capps will remain free on bond until December, during which time he has agreed to assist a county real estate lawyer in combing through hundreds of files to determine how much money Capps illegally siphoned, what happened to those funds and which people or businesses never received the money owed to them, Krontz said. Those documents include three or four years worth of real estate closing records, averaging 30 to 40 closings a month, the defense lawyer said. Depending on the level of his cooperation, Capps could then be eligible for a reduction in his anticipated sentence, according to Krontz. “That’s going to be up to the judge,” he said. “Mr. McDade is going to make his recommendation based on the extent of Mr. Capps’ cooperation.” McDade said that if lawyers uncover more fraud, “I’m not going to be surprised. � That’s why we’re researching all the records.” WHERE DID THE MONEY GO? Both McDade and Krontz said Capps never has told them what happened to the misappropriated funds. He seems unable to account for how the money was spent, they said. “That’s going to be the second chapter of the book he never writes,” said McDade. Except for a $400,000 home in Douglas County that county prosecutors have seized, Capps has no assets, McDade added. Instead, the district attorney said he suspects that Capps stole the money in increments of $15,000-$20,000 and spent it to support a lavish lifestyle well beyond his means. Krontz said he has “received no indication” that his client established an off-shore banking account where he stashed the stolen funds or that he buried “a mayonnaise jar” full of cash in his backyard. “There is no indication of any assets floating around out there,” he said. Krontz said that he suspects Capps simply “tried to put on an air of success that he didn’t quite earn,” including leasing a more expensive office than he could afford and utilizing “some very expensive marketing tools beyond the means of the office to carry.” After Capps began spending his escrow funds, Krontz said, he started stealing more money to make good on earlier loans that should have been paid after real estate sales were closed. “He was robbing Peter to pay Paul, and the pyramid collapsed on him,” Krontz explained. HOW ATTORNEY STOLE $1M According to McDade, Capps’ theft scheme worked this way. As a closing attorney on real estate transactions, Capps would be the recipient of loan funds from lenders. But after closing a deal, instead of paying off any outstanding liens on the sale properties with those escrowed funds, Capps would transfer the money to his firm’s operating account, McDade said. In some cases, where individuals were refinancing first and second mortgages, Capps might pay off the first mortgage, but not the second, McDade said. Eventually, clients would discover that loans they thought had been satisfied were still outstanding. Capps also was acting as a title company agent for Old Republic Title Co. and issuing title insurance policies at some closings, said McDade. In those cases, McDade said, the title company has settled the outstanding mortgages. But in other cases, where no title insurance was purchased, victims have been left with outstanding loans that should have been paid, leaving it to the lenders and mortgagees to sort out the resulting financial mess, the DA said. “He had a long list of excuses for clients,” McDade said. “Ultimately, enough people had enough problems not having loans paid off � that word got out.” Douglasville resident Heather Ormiston said that Capps stole “$93,000 and change” from her and her husband, Jeremy Ormiston, when they sold their home. Instead of paying off the balance of the Ormistons’ mortgage after the sale, Capps kept the money, Heather Ormiston said. She said that, eventually, she and her husband began getting calls from their old lender, saying that the loan, still in their names, was never paid. Ormiston said she and her husband called Capps several times. First, the attorney claimed there had been a mistake in wiring the money from his account to the lender. Later, when the bank called again about the unpaid loan, Capps had gone out of business, she said. She said that their buyer’s lender eventually paid off the mortgage a second time. “It took about six months to be resolved,” she said. “I would love to know, where did the money go?” Dade said that some of Capps’ clients were not as fortunate. “When I’m in Douglasville with my family, people are coming up to me and telling me how their lives have been ruined by this man,” the district attorney said. “He took advantage of people when they were most vulnerable. They went to a lawyer for help, and he took advantage of them. That’s why we hammered him, and I hope he feels like he was hammered.”

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