1/10/2014

USDOJ: Florida-Based Lender Processing Services Inc. to Pay $35 Million in Agreement to Resolve Criminal Fraud Violations Following Guilty Plea fro

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Department of Justice
Office of Public Affairs FOR IMMEDIATE RELEASE Friday , February 1 5, 201 3

Florida-Based Lender Processing Services Inc. to Pay $35 Million in Agreement to Resolve Criminal Fraud Violations Following Guilty Plea from Subsidiary CEO
Agreement Also Follow s Closure of Subsidiary DocX Operations Lender Processing Serv ices Inc. (LPS), a publicly traded mortgage serv icing company based in Jacksonv ille, Fla., has agreed to pay $35 million in criminal penalties and forfeiture to address its participation in a six -y ear scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents with property recorders offices throughout the United States. The settlement, which follows a felony guilty plea from the chief ex ecutiv e officer of wholly owned LPS subsidiary DocX LLC, was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Departments Criminal Div ision and U.S. Attorney for the Middle District of Florida Robert E. ONeill. The non-prosecution agreement, which LPS entered into today with the U.S. Department of Justice and the U.S. Attorney s Office for the Middle District of Florida, requires the company to make the pay ment and meet a series of other conditions. Lorraine Brown, the former CEO of DocX LLC, pleaded guilty on Nov . 20, 201 2, in federal court in Jacksonv ille to conspiracy to commit mail and wire fraud. During her guilty plea, Brown admitted to her leadership role in the scheme. LPS has taken a number of remedial actions to address the misconduct at DocX. Among other things, LPS has wound down all of DocXs operations, re-ex ecuted and re-filed mortgage assignments as appropriate and terminated Brown and others. LPS has also demonstrated changes in its compliance, training and ov erall approach to ensuring its adherence to the law, and has retained an independent consultant to rev iew and report on LPSs document ex ecution practices; assess related operational, compliance, legal and reputational risks; and establish a plan for reimbursing any financial injuries to mortgage serv icers or borrowers. According to the statement of facts accompany ing the agreement, before its wind-down, DocX was in the business of assisting residential mortgage serv icers with creating and ex ecuting mortgage-related documents to be filed with property recorders offices throughout the United States. Employ ees of DocX, at the direction of Brown and others, falsified signatures on the documents. Through this scheme and unbeknownst to the clients, Brown and subordinates at DocX directed authorized signers to allow other, unauthorized personnel to sign and to hav e documents notarized as if they were ex ecuted by authorized signers. These signing practices were used at DocX from at least March 2003 until late 2009, and were implemented to increase profits. Also to increase profits, Brown hired temporary workers to sign as authorized signers. These temporary employ ees would sign mortgage-related documents at a much lower cost and without the quality controls represented to clients. These documents were then falsely notarized by employ ees at DocX, allowing the fraud scheme to remain undetected. After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employ ees to file and record them with local county property records offices across the country . Many of these documents particularly mortgage assignments, lost note affidav its and lost assignment affidav its were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions. In entering into the non-prosecution agreement with LPS, the Justice Department took sev eral factors into consideration. Soon after discov ering the misconduct at DocX, LPS conducted a thorough internal inv estigation, reported all of its findings to the gov ernment, cooperated with Report Waste, Fraud, Abuse or Misconduct to the Inspector General Find Sales of Seized Property Find Help and Information for Crime V ictims Register, Apply for Permits, or Request Records Identify Our Most Wanted Fugitiv es Find a Form Report and Identify Missing Persons Contact Us

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1/10/2014

USDOJ: Florida-Based Lender Processing Services Inc. to Pay $35 Million in Agreement to Resolve Criminal Fraud Violations Following Guilty Plea fro

thorough internal inv estigation, reported all of its findings to the gov ernment, cooperated with the gov ernments inv estigation and effectiv ely remediated any problems it discov ered. The gov ernments inv estigation also rev ealed that Brown and others at DocX took v arious steps to activ ely conceal the misconduct from detection, including from LPS senior management and auditors. Brown, 51 , of Alpharetta, Ga., faces a max imum potential penalty of fiv e y ears in prison and a $250,000 fine, or twice the gross gain or loss from the offense. She is scheduled to be sentenced on April 23, 201 3, before U.S. District Judge Henry Lee Adams Jr. in Jacksonv ille. This case is being handled by Trial Attorney Ry an Rohlfsen and Assistant Chief Glenn S. Leon of the Justice Departments Criminal Div ision Fraud Section and Assistant U.S. Attorney Mark B. Dev ereaux of the U.S. Attorney s Office for the Middle District of Florida. The case is being inv estigated by the FBI, with assistance from the state of Floridas Department of Financial Serv ices. Today s disposition is part of efforts underway by President Obamas Financial Fraud Enforcement Task Force (FFETF). The task force was established to wage an aggressiv e, coordinated and proactiv e effort to inv estigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney s offices and state and local partners, its the broadest coalition of law enforcement, inv estigatory and regulatory agencies ev er assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased inv estigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, v ictims, financial institutions and other organizations. Ov er the past three fiscal y ears, the Justice Department has filed nearly 1 0,000 financial fraud cases against nearly 1 5,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please v isit www.StopFraud.gov . Related Material: LPS Non-Prosecution Agreement LPS Statement of Facts 1 3-206 Criminal Div ision

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