ALJDEC - Licensing

25A-024-FIN · Department of Insurance and Financial Institutions - Financial · 2025-11-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

BENNINGTON INSURANCE SERVICES LLC DBA BENNINGTON TITLE AND ESCROW AGENCY, License No. 1024237

AND

FAUSTO ORDONEZ,

Respondents.

No. 25A-024-FIN

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 20, 2025 at 9:00am

APPEARANCES: Assistant Attorney General Zachary Howard appeared on behalf of the Department of Insurance and Financial Institutions with Tawnya Webel as witness. No appearance(s) by or on behalf of Respondent Fausto Ordonez and Bennington Insurance Services, LLC dba Bennington Title and Escrow Agency.

ADMINISTRATIVE LAW JUDGE: Nicole Robinson

EXHIBITS ADMITTED INTO EVIDENCE: Department of Insurance and Financial Institutions Exhibits: 1 through 71, Exhibit A (Joint Pre-Hearing Stipulation of Material Facts), Notice of Hearing Packet (“Packet”), and the Amended Notice of Hearing and Complaint (“Amended NOH”).

Having heard the evidence and testimony and having considered the record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Order to the Director of the Department.

FINDINGS OF FACT

Background and Procedure

The Department of Insurance and Financial Institutions (“Department”) was created and enabled by the State of Arizona to administer enumerated State laws by protecting the public interest through licensure and regulation of the escrow agent profession.

Bennington Insurance Services LLC dba Bennington Title and Escrow Agency (“Bennington”) a licensed Arizona escrow agent and the holder of escrow agent license number 1024237. The license was most recently renewed on October 1, 2024, and it is set to expire on December 31, 2025.

Fausto Ordonez (“Respondent”) is the primary owner and operator of Bennington.

Between August 14, 2023 and September 30, 2024, the Department conducted an examination of Bennington. The Department’s exam revealed the following:

Bennington disbursed funds from its escrow account in violation of escrow instructions by issuing duplicate escrow fee payments. Bennington charged the escrow fees by initiating a bank transfer and then issuing a check from the escrow account for the same or similar fee amounts. The Departments found three instances where this occurred including:

On August 18, 2023, Bennington initiated a bank transfer for the amount of $3,220.56 to its operating account ending in XXXX9497, and then on August 21, 2023, Bennington issued a check for the same amount to Bennington Title & Escrow Agency.

On October 10, 2023, Respondent initiated a bank transfer for the amount of $2,548.20 to its operating account XXXX9497, and on October 13, 2023, Respondent issued a check for the same amount to Bennington Title & Escrow Agency.

Also, on October 10, 2023, Bennington initiated a second bank transfer for the amount of $2,523.20 to its operating account ending in XXXX9497, and on October 17, 2023, Bennington issued a check for the amount of $2,548.20 to Bennington Title & Escrow Agency.

The escrow fee overcharges totaled $8,291.96.

In June and July of 2023, Bennington disbursed funds totaling $8,746.48 from an escrow file closed in February 2022. Bennington entered an unrealized deposit in their accounting system to offset the disbursement.

In January 2024, Bennington disbursed funds totaling $4,378.20 from an escrow file canceled in November 2022 to Ordonez's personal residence property management company MYND. These funds were disbursed in two checks and then record of the checks were deleted to balance the escrow files to zero.

The Department observed six additional unauthorized withdrawals totaling $32,521.96 between March 2023 and January 2024.

Overall, the Department initially observed unlawfully distributed escrow funds totaling $53,938.60. Of that total, the Department determined $18,123.97 had been reimbursed by Bennington to the escrow account.

Additional Department exam findings:

Respondent was found guilty of fraud with the Arizona Department of Revenue on June 21, 2022, under Ariz. Rev. Stat. § 42-1127(B)(4) (Misdemeanor 1), but failed to notify the Department of the conviction.

Bennington failed to provide written notice to the Department of a change in the location of the escrow agent’s business. Bennington’s location was moved to 2550 W. Union Hills Dr. Suite 350-8691, Phoenix, Arizona, 85027 on November 1, 2023.

That Bennington failed to provide authorization to their bank to notify the Department of any overdraft or check returned for insufficient funds in the escrow bank account prior to July 2023. This error was corrected by Bennington during the examination.

Bennington failed to submit its annual audit report in 2021 and 2022.

Bennington failed to timely file its semi-annual report on five occasions between August 2021 and February 2024. Specifically, the reports were due August 15, 2021, August 15, 2022, February 14, 2023, August 15, 2023, and February 14, 2024 but were not received by the Department until August 23, 2021, August 18, 2022, March 8, 2023, August 29, 2023 and October 4, 2024.

Bennington failed to provide any records to demonstrate reconciliation for trust account activity since August 2023. As such, the Department's examiner was unable to confirm the amount of funds that should be held in trust.

Bennington failed to provide all records and supporting documentation for each receipt and disbursement made through the escrow account.

Bennington failed to provide timely disclosure to each depositing buyer or seller of his/her right to earn interest on all deposited money in twenty-seven (27) of the forty (40) files reviewed.

Bennington failed to timely provide disclosure to each buyer and seller that monies deposited in an escrow account does not insure against loss from fraud or theft by this state or the United States government in twenty-seven (27) of the forty (40) files reviewed.

In thirty-three (33) instances Bennington charged the consumers for unfiled and unapproved E-Recording fees.

In ninety-two (92) instances, between December 2021 and February 2023, Bennington deviated from its filed and approved rates with the Director leading to overcharges totaling $8,109.00.

Cease and Desist Order

Following the Department’s examination of Bennington, on November 26, 2024, the Department issued a Cease and Desist Order (“C & D”) against Bennington based on the Department’s findings regarding the unlawful disbursement of funds from the escrow account. The C & D Order was sent to Bennington’s address on file 2550 W. Union Hills Dr. Suite 350-8691 Phoenix, AZ 85027 and Respondent’s e-mail [email redacted]. The C & D Order required the following:

That Bennington immediately cease and desist from accepting monies for deposit into the escrow account.

That Bennington immediately cease and desist from accepting new escrow business in Arizona.

The C & D Order specified that it became effective upon service and shall remain enforceable until such time as, or except to the extent that, it shall be stayed, modified, terminated, or set aside by a court of competent jurisdiction or by the Director.

In January 2025, the Department confirmed Bennington’s continued operations of its escrow business despite the C & D Order. The Department re-sent the C & D Order along with the Department’s examination findings via mail and e-mail.

On February 10, 2025, Respondent provided his response to the Report of Examination and C & D Order. In the response, Respondent disputed the findings of the examination and C & D Order and asserted the following:

In his response to the examination findings, Respondent disputed all of the findings made during the examination and rejected paying the examination fee, rate deviation penalty, and semi-annual report late fee.

With respect to the C & D Order, Respondent asserted that steps had been taken to correct or end any violations, specifically by removing a previous shareholder, Katy Ordonez (Respondent's ex-spouse, “Mrs. Ordonez”), from access to company banking info, title software, etc. Respondent acknowledges that the actions of Mrs. Ordonez may have caused the reasons at issue. He also claimed he was not provided with enough specific information or evidence to properly respond to the C & D Order's factual findings and requested that the C & D Order to be terminated.

State Action Against Bennington

Following the C & D order, the Department initiated action for Immediate Possession under Ariz. Rev. Stat. § 6-833 and Temporary Restraining Order (“TRO”) against Bennington in the Superior Court of Maricopa County on March 10, 2025. The Department’s purpose of the action was to gain access to Bennington’s financial records including bank accounts, bank records, etc., in order to allow the Department Director to make an inventory of assets and liabilities to determine what deficiency was present in Bennington’s escrow account due to improper disbursements of escrow funds and to set up a possible received for Bennington should the deficiency not be cured.

The TRO and Preliminary Injunction was entered against Bennington on March 18, 2025 (CV2025-008661), after which Bennington provided the Department with its escrow records to conduct the inventory.

At the conclusion of the Department’s review, it was determined that the deficiency in Bennington’s escrow trust account was $39,867.83.

Bennington fully reimbursed the $39,867.83 in the escrow account on May 5, 2025.

Hearing Evidence

The Department called Tawnya Webel, Supervisor Examiner, as a witness. Ms. Webel testified that the examination was triggered through a regular, routine examination to primarily ensure that consumer funds were safe. Ms. Webel testified that the examination took approximately two years. Ms. Webel detailed particular escrow accounts where transactions did not “line up” and movement in escrow accounts that had long been closed. Ms. Webel testified that although Respondent reimbursed improper disbursements does not negate the laws that were violated.

Respondent failed to appear per the August 28, 2025, Order Granting Continuance: New Hearing Dates. After multiple continuances and delays, Respondent requested an additional continuance on October 6, 2025. On October 7, 2025, this Administrative Law Judge issued a Third Order Denying Respondent’s Continuance Request. On October 20, 2025, the day of the hearing, Respondent filed a document in the Office of Administrative Hearings portal that said “Statement,” however, nothing was attached. At the hearing, the Tribunal waited fifteen minutes prior to the commencement of the hearing, no representative appeared on behalf of Bennington or Respondent and did not present any evidence to defend its license.

Closing Argument

In closing, the Department argued that the escrow license held by Bennington be immediately revoked. That Bennington remit a penalty to the Director in an amount equal to the total rate deviations of $8,109.00. Additionally, the Department requested that Bennington refund the overcharges of $5.00 or more to the appropriate escrow parties. That Bennington remit to the Director fees totaling $7,000.00 for late submission of semi-annual reports in 2021, 2022, 2023, and 2024 pursuant to Ariz. Rev. Stat. § 6-816(B). That Bennington remit to the Director the examination fee of $6,890.00 and a late fee of $6,890.00 as required pursuant to Ariz. Rev. Stat. § 6-125. Lastly, that Respondent be immediately prohibited from participating in any of the affairs of any financial institution or enterprise in Arizona.

CONCLUSIONS OF LAW

The Office of Administrative Hearings has subject matter and personal jurisdiction over the named parties in this Notice under Ariz. Rev. Stat. § 6-138, Ariz. Rev. Stat. § 6-161, Ariz. Rev. Stat. § 6-817, and Ariz. Rev. Stat. §§ 41-1092 et seq.

The Director of the Department is vested with the authority to regulate all persons engaged in the escrow agent business and has the duty to enforce statutes, rules, and regulations relating to escrow agents pursuant to Ariz. Rev. Stat. §§ 6-801 et seq.

The August 28, 2025, Order Granting Continuance: New Hearing Dates that the Office of Administrative Hearings emailed to Respondent’s email addresses of record was sufficient, and Respondent was deemed to have received notice of the hearing in this matter. Because the Department mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is deemed to have received all correspondence regarding this matter from the Department and the Office of Administrative Hearings, as well.

The Department bears the burden of proof to establish that cause to sanction Respondent’s license by a preponderance of the evidence. Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

Ariz. Rev. Stat. § 6-132 provides that the Department may assess a civil penalty of no more than $5,000.00 against a licensee for any knowing violation of any provision of a statute or adopted rule.

Ariz. Rev. Stat. § 6-817(A)(2) provides that an escrow agent has not conducted the agent’s business in accordance with law or has violated this chapter or the rules relating to this chapter.

Ariz. Rev. Stat § 6-817(A)(4) provides that an escrow agent has been found guilty of fraud in a legal or administrative proceeding in this jurisdiction or any other jurisdiction and ARIZ. Rev. Stat § 6-817 (A)(9) has been convicted of any criminal offense involving moral turpitude within the last fifteen years.

Ariz. Rev. Stat. § 6-817(A)(10) provides that an escrow agent does not have the financial resources, experience or competence to adequately serve the public or to warrant the belief that the business will be operated lawfully, honestly, fairly and efficiently pursuant to this chapter and Ariz. Rev. Stat. § 6-817(A)(11) provides that an escrow agent has disbursed monies in violation of escrow instructions.

Ariz. Rev. Stat. § 6-817(A)(14) provides that an escrow agent has failed to authorize each financial institution with which it has deposited trust or fiduciary funds to notify the deputy director of any overdraft or check returned for insufficient funds on any trust or fiduciary accounts of the escrow agent.

Ariz. Rev. Stat. § 6-832(A) provides that the records of each escrow agent shall be audited at least once each fiscal year by a certified public accountant. The audit shall include an audit of the escrow, account servicing and subdivision trust activities of the escrow agent and shall follow generally accepted accounting principles. A copy of the audit report shall be filed with the deputy director not more than one hundred twenty days after the end of the escrow agent's fiscal year. The audit requirement may be satisfied by filing a copy of the audit report, which is prepared by a certified public accountant, of the parent of the escrow agent including an audit of the escrow, account servicing and subdivision trust activities of the escrow agent within the prescribed time period. The deputy director may extend the time period in this subsection up to ninety days for good cause shown.

Ariz. Rev. Stat. § 6-832(B) provides that at the time required by the deputy director, every escrow agent shall make and file in the office of the deputy director a true and correct report, in the form and containing the data the deputy director may require, of the business of the agent, including the agent's escrow, account servicing and subdivision trust activities. Every agent shall reply promptly in writing to an inquiry from the deputy director concerning the escrow agent's business.

Ariz. Rev. Stat. § 6-834(D) provides that not later than three (3) business days after receipt of any escrow monies, the escrow agent shall provide to each depositing buyer or seller adequate notice of the buyer’s or seller’s right to earn interest on all deposited monies.

Ariz. Rev. Stat. § 6-841.03 provides that when an escrow is established and not later than three business days after an escrow agent receives any escrow monies, the escrow agent shall provide a complete and accurate disclosure to each buyer and seller of a residential dwelling as defined in § 6-841.02 that monies deposited in an escrow account were not insured against loss from fraud or theft by this state or the United States government.

Ariz. Rev. Stat. § 6-841(A) provides that an escrow agent shall adopt a systematic internal control structure to ensure that persons employed by or associated with the escrow agent’s business do not make significant errors or perpetuate significant irregularities or fraud without timely detection. Pursuant to Ariz. Rev. Stat. § 6-841(A)(12) provides grounds for discipline when an escrow agent failed to adopt a systematic internal control structure.

The failure of an escrow agent to submit a notice of change of address in the location of the escrow agent’s business at least five (5) business days before the escrow agent conducts business at the new location is a violation of Ariz. Admin. Code R20-4-701.

The failure of an escrow agent to submit records and supporting documentation for each receipt and disbursement made through the escrow account is a violation of Ariz. Admin. Code R20-4-702.

Ariz. Rev. Stat. § 6-846.01(A) provides that every escrow agent who is required to make escrow rates under § 6-846 shall file with the deputy director the escrow agent's schedules of fees, every manual of classifications, the rules and plans pertaining to the manual and every modification of any of the foregoing. The filing shall state the proposed effective date and shall indicate the character and extent of the contemplated service. In addition, pursuant to Ariz. Rev. Stat. § 6-846.04(A) an escrow agent may not deviate from his escrow rates that were in effect.

Ariz. Rev. Stat. § 6-161(A) provides that the deputy director may remove or suspend from office or prohibit from participating in any of the affairs of a financial institution or enterprise any director, officer, employee, agent or other person participating in the conduct of the affairs of the financial institution or enterprise if he finds that the director, officer, employee, agent or other person participating in the conduct of the affairs of the financial institution or enterprise has engaged in any of the following Ariz. Rev. Stat. § 6-161(A) (1) any act, omission or practice in any business transaction which demonstrates personal dishonesty or unfitness to continue in office or participate in the conduct of the affairs of the financial institution or enterprise and Ariz. Rev. Stat. § 6-161(A) (7) any act, practice or transaction that in any way would jeopardize the safety and soundness of the financial institution.

In this case, the Department established by a preponderance of the evidence that Respondent committed violations pursuant to Ariz. Rev. Stat. § 6-817(A)(2) and clearly showed that Respondent in his role as an escrow agent did not conduct his business in accordance with law or the rules relating to this chapter and aforementioned statutes and rules above. Furthermore, the Department established grounds to levy a civil penalty and discipline against Respondent. However, based on the credible evidence of record and given the totality of the circumstances, the Tribunal is not in agreement with the amount of the Department’s proposed civil penalties in this matter.

Recommended Order

Based on the foregoing,

IT IS RECOMMENDED that on the effective date of the Final Order in this matter, Respondents Bennington Insurance Services, LLC dba Bennington Title and Escrow Agency, License No. 1024237, be revoked.

IT IS FURTHER RECOMMENDED that Respondent Fausto Ordonez is immediately prohibited from participating in any of the affairs of any Arizona financial institution or enterprise.

IT IS FURTHER RECOMMENDED that on the effective date of the Final Order in this matter, Respondents Bennington Insurance Services, LLC dba Bennington Title and Escrow Agency, License No. 1024237 and Fausto Ordonez be assessed a $5,000.00 civil penalty by the Department.

IT IS FURTHER RECOMMENDED that if the assessed civil penalty is not paid in full within thirty (30) days of effective date of the Final Order in this matter, the Arizona Attorney General, on request of the Deputy Director, shall bring an action in Superior Court, Maricopa County against Respondents for the recoupment of the assessment.

Pursuant to Ariz. Rev. Stat. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be forty (40) days from the date of that certification.

Done this day, November 12, 2025.

/s/ Nicole Robinson

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Fausto Ordonez

Bennington Insurance Services LLC

dba Bennington Title and Escrow Agency Attn: Fausto Ordonez (Owner)

2550 W. Union Hills Dr. Suite 350-8691

Phoenix, AZ 85027

[email redacted]

Zachary Howard

Office of the Attorney General

2005 N. Central Ave.

Phoenix, AZ 85004

[email redacted]

Maria Ailor, Interim Director

Department of Insurance and Financial Institutions - Insurance

100 North 15th Avenue, Suite 261

Phoenix, AZ 85007-2630

[email redacted]

By: OAH Staff