A former executive of Lender Processing
Services, Inc. (LPS) pled guilty Tuesday to mail and wire fraud charges, admitting
her participation in a six-year scheme to prepare and file more than 1 million
improper mortgage documents as part of the so-called robo-signing scandal. Lorraine Brown, former CEO of DocX LLC, a
subsidiary of LPS, faces a maximum penalty of five years in prison and a
$250,000 fine, or twice the gross gain or loss from the crime. The date for her sentencing has not been set.
guilty plea, entered in Jacksonville, Florida federal court where LPS
headquarters are located, was announced by Assistant U.S. Attorney General
Lanny A. Breuer who said, "Lorraine
Brown participated in a scheme to fabricate mortgage-related documents at the
height of the financial crisis. She was
responsible for more than a million fraudulent documents entering the system,
directing company employees to forge and falsify documents relied on by
property recorders, title insurers and others. Appropriately, she now
faces the prospect of prison time."
DocX's clients were residential mortgage
servicers. They hired DocX to, among
other things, assist in creating and executing mortgage-rated documents to be
filed with recorders' offices. The
servicers authorized specific DocX personnel to sign the documents on their
behalf. According to Brown's plea
documents, she directed employees to forge and falsify signatures on these
documents and, unbeknownst to the servicers, allowed employees who were not so
authorized to sign the documents and have them notarized as if actually
executed by the properly designated personnel.
The government charges that Brown
implemented the signing practices to enable DocX and Brown to generate greater
profit by creating, executing and filing larger volumes of documents. To further increase profits the company also
hired temporary workers to act as authorized signers. These temporaries worked for lower wages and
without the quality control Brown represented to her servicer clients as
company practice. Some of the temporary
workers signed thousands of mortgage-related documents each day and between
2003 and 2009 Doc X generated approximately $60 million in gross revenues.
The falsely signed and fraudulently
notarized documents were filed and recorded with local country property records
offices throughout the country on Browns authority. Many of the documents, particularly mortgage
assignments, lost note affidavits and lost assignment affidavits were later
relied upon in court proceedings including foreclosures and bankruptcy
admitted she understood that property recorders, courts, title insurers and
homeowners relied upon the documents and considered them genuine.
Brown admitted that she and others
also took various steps to conceal their actions from clients, LPS corporate
headquarters, law enforcement authorities and others. These actions
included testing new employees to ensure they could mimic signatures, lying to
LPS internal audit personnel during reviews of the operation in 2009, making
false exculpatory statements after being confronted by LPS corporate officials
about the acts and lying to the FBI during its investigation.
DocX was acquired by an LPS
predecessor company, and was part of LPS's business when LPS was formed as a
stand-alone company in 2008. At that time, DocX was rebranded as "LPS
Document Solutions, a Division of LPS." Brown was the president and
senior managing director of LPS Document Solutions, which constituted DocX's
operations. LPS, a publicly traded company, closed DocX in early 2010.
Brown's case was investigated by the
FBI and is among efforts underway under the umbrella of President Obama's
Financial Fraud Enforcement Task Force which includes more than 20 federal
agencies, 94 U.S. attorney's offices, and state and local partners.