Former LPS Executive Pleads Guilty in Robo-Signing Case

by devteam November 21st, 2012 | Share

A former executive of Lender ProcessingrnServices, Inc. (LPS) pled guilty Tuesday to mail and wire fraud charges, admittingrnher participation in a six-year scheme to prepare and file more than 1 millionrnimproper mortgage documents as part of the so-called robo-signing scandal.  Lorraine Brown, former CEO of DocX LLC, arnsubsidiary of LPS, faces a maximum penalty of five years in prison and arn$250,000 fine, or twice the gross gain or loss from the crime.  The date for her sentencing has not been set.</p

Thernguilty plea, entered in Jacksonville, Florida federal court where LPSrnheadquarters are located, was announced by Assistant U.S. Attorney GeneralrnLanny A. Breuer who said, “LorrainernBrown participated in a scheme to fabricate mortgage-related documents at thernheight of the financial crisis.  She wasrnresponsible for more than a million fraudulent documents entering the system,rndirecting company employees to forge and falsify documents relied on byrnproperty recorders, title insurers and others.  Appropriately, she nowrnfaces the prospect of prison time.”</p

DocX’s clients were residential mortgagernservicers.  They hired DocX to, amongrnother things, assist in creating and executing mortgage-rated documents to bernfiled with recorders’ offices.  Thernservicers authorized specific DocX personnel to sign the documents on theirrnbehalf.  According to Brown’s plearndocuments, she directed employees to forge and falsify signatures on theserndocuments and, unbeknownst to the servicers, allowed employees who were not sornauthorized to sign the documents and have them notarized as if actuallyrnexecuted by the properly designated personnel.</p

The government charges that Brownrnimplemented the signing practices to enable DocX and Brown to generate greaterrnprofit by creating, executing and filing larger volumes of documents.  To further increase profits the company alsornhired temporary workers to act as authorized signers.  These temporaries worked for lower wages andrnwithout the quality control Brown represented to her servicer clients asrncompany practice.  Some of the temporaryrnworkers signed thousands of mortgage-related documents each day and betweenrn2003 and 2009 Doc X generated approximately $60 million in gross revenues.</p

The falsely signed and fraudulentlyrnnotarized documents were filed and recorded with local country property recordsrnoffices throughout the country on Browns authority.  Many of the documents, particularly mortgagernassignments, lost note affidavits and lost assignment affidavits were laterrnrelied upon in court proceedings including foreclosures and bankruptcyrnactions.  Brownrnadmitted she understood that property recorders, courts, title insurers andrnhomeowners relied upon the documents and considered them genuine.</p

Brown admitted that she and othersrnalso took various steps to conceal their actions from clients, LPS corporaternheadquarters, law enforcement authorities and others.  These actionsrnincluded testing new employees to ensure they could mimic signatures, lying tornLPS internal audit personnel during reviews of the operation in 2009, makingrnfalse exculpatory statements after being confronted by LPS corporate officialsrnabout the acts and lying to the FBI during its investigation.  </p

DocX was acquired by an LPSrnpredecessor company, and was part of LPS’s business when LPS was formed as arnstand-alone company in 2008.  At that time, DocX was rebranded as “LPSrnDocument Solutions, a Division of LPS.”  Brown was the president andrnsenior managing director of LPS Document Solutions, which constituted DocX’srnoperations. LPS, a publicly traded company, closed DocX in early 2010.</p

Brown’s case was investigated by thernFBI and is among efforts underway under the umbrella of President Obama’srnFinancial Fraud Enforcement Task Force which includes more than 20 federalrnagencies, 94 U.S. attorney’s offices, and state and local partners. 

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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