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.

The 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 actions.  Brown 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.