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Feds charge ‘robo-signer’ boss
The founder of a Florida-based mortgage servicing firm pled guilty Tuesday to a federal criminal charge stemming from complaints she directed employees to forge signatures on foreclosure-related documents.
Lorraine Brown launched the company DocX, which later became Jacksonville-based LPS Document Solutions. She hired cheap, temporary workers who were trained to mimic other people’s signatures so that mortgage paperwork could be processed faster, according to the complaint filed in U.S. District Court in Jacksonville.
More documents meant more money for the firm, which generated about $60 million in gross revenue between 2003 and 2009 as the real estate bubble burst and banks pushed to repossess homes. More than 1 million fraudulent documents were likely filed nationwide, the complaint states.
This is the first time a senior officer of a major mortgage servicer has been federally charged for producing fraudulent documents used in foreclosure cases, said Lynn Szymoniak, a Palm Beach Gardens attorney who has worked with law enforcement to ferret out mortgage-related offenses.
“This finally confirms what foreclosure defense lawyers have argued for the last several years — that this is pervasive fraud that must be exposed,” said Szymoniak, who was featured on the news show “60 Minutes” in 2011 after uncovering robo-signing practices at DocX. “Homeowners lost their life savings in court cases where fraudulent documents were presented by the banks.”
The federal charge against Brown of conspiracy to commit mail and wire fraud carries a maximum sentence of five years in prison and a fine of up to $250,000. Brown’s attorney Mark Rosenblum of Jacksonville said a sentencing date has not been set.
“Without doubt this is a difficult day for Lori, but it’s also a good day,” Rosenblum said. “By negotiating a settlement to her situation and entering her guilty plea, Lori has started the process of getting on with the rest of her life.”
Lorraine Brown launched the company DocX, which later became Jacksonville-based LPS Document Solutions. She hired cheap, temporary workers who were trained to mimic other people’s signatures so that mortgage paperwork could be processed faster, according to the complaint filed in U.S. District Court in Jacksonville.
More documents meant more money for the firm, which generated about $60 million in gross revenue between 2003 and 2009 as the real estate bubble burst and banks pushed to repossess homes. More than 1 million fraudulent documents were likely filed nationwide, the complaint states.
This is the first time a senior officer of a major mortgage servicer has been federally charged for producing fraudulent documents used in foreclosure cases, said Lynn Szymoniak, a Palm Beach Gardens attorney who has worked with law enforcement to ferret out mortgage-related offenses.
“This finally confirms what foreclosure defense lawyers have argued for the last several years — that this is pervasive fraud that must be exposed,” said Szymoniak, who was featured on the news show “60 Minutes” in 2011 after uncovering robo-signing practices at DocX. “Homeowners lost their life savings in court cases where fraudulent documents were presented by the banks.”
The federal charge against Brown of conspiracy to commit mail and wire fraud carries a maximum sentence of five years in prison and a fine of up to $250,000. Brown’s attorney Mark Rosenblum of Jacksonville said a sentencing date has not been set.
“Without doubt this is a difficult day for Lori, but it’s also a good day,” Rosenblum said. “By negotiating a settlement to her situation and entering her guilty plea, Lori has started the process of getting on with the rest of her life.”
According to the complaint, Brown and others tried to conceal their actions from the detection of clients, LPS corporate headquarters, and law enforcement.
On Tuesday, LPS spokeswoman Michelle Kersch said when the company discovered the surrogate signing practices at DocX, it fired Brown and shut down DocX operations.
“LPS also remediated documents executed under the surrogate signing process and has fully cooperated with all government investigations into these matters,” Kersch said.
Whether the acknowledgment of the fraudulent documents will have an impact on foreclosure cases is unclear.
St. Petersburg foreclosure defense attorney Matt Weidner said he plans to bring the issue up in his cases, but doesn’t think it will make a difference.
“Normally, you’d ask for a do-over if something like this happened, but because our courts are so afraid to hold the banking system accountable, it will have no effect,” he said.
http://www.palmbeachpost.com/news/business/real-estate/feds-charge-robo-signer-boss/nTB23/
On Tuesday, LPS spokeswoman Michelle Kersch said when the company discovered the surrogate signing practices at DocX, it fired Brown and shut down DocX operations.
“LPS also remediated documents executed under the surrogate signing process and has fully cooperated with all government investigations into these matters,” Kersch said.
Whether the acknowledgment of the fraudulent documents will have an impact on foreclosure cases is unclear.
St. Petersburg foreclosure defense attorney Matt Weidner said he plans to bring the issue up in his cases, but doesn’t think it will make a difference.
“Normally, you’d ask for a do-over if something like this happened, but because our courts are so afraid to hold the banking system accountable, it will have no effect,” he said.
http://www.palmbeachpost.com/news/business/real-estate/feds-charge-robo-signer-boss/nTB23/
The charge pleased former assistant state attorneys general June Clarkson and Theresa Edwards, who were fired in 2011 while investigating Florida’s large foreclosure law firms and LPS or Lender Processing Services.
LPS officials had complained to the state about Clarkson and Edwards and their use of the word “forgery” in a 2010 presentation that included DocX and LPS documents. The Florida inspector general cleared Attorney General Pam Bondi’s office of wrongdoing in the firings.
While banks did issue special corporate resolutions delegating signing authority to specific, specially trained DocX employees, Tuesday’s charge document said other employees were also signing the names of the authorized signers.
“To assist in the scheme, samples of the actual authorized signers’ signatures were taped to the signing tables,” the complaint said.
The practice was called “surrogate signing,” according to the complaint.
In the Florida inspector general’s report, the state’s top economic crimes boss Richard Lawson said the practice of “surrogate signing” is not forgery because it was approved by the company and forgery requires an intent to defraud.
Bondi press secretary John Lucas said the office is still investigating LPS and is part of a multi-state effort pursuing the case as a civil matter.
“We think this is vindication that our investigation was right on target and the problem was that Bondi’s office wouldn’t let us pursue it,” Edwards said about the federal charge. “We’ve tried not to get our hopes up on any of these investigations going anywhere, but we’re very pleased to see that this really documents the things that we’ve seen.”
But Clarkson said going after Brown for offenses allegedly carried out between 2003 and 2009 lets parent-company LPS off the hook.
“From the information we had, there were not a lot of innocent parties in this,” she said.
LPS officials had complained to the state about Clarkson and Edwards and their use of the word “forgery” in a 2010 presentation that included DocX and LPS documents. The Florida inspector general cleared Attorney General Pam Bondi’s office of wrongdoing in the firings.
While banks did issue special corporate resolutions delegating signing authority to specific, specially trained DocX employees, Tuesday’s charge document said other employees were also signing the names of the authorized signers.
“To assist in the scheme, samples of the actual authorized signers’ signatures were taped to the signing tables,” the complaint said.
The practice was called “surrogate signing,” according to the complaint.
In the Florida inspector general’s report, the state’s top economic crimes boss Richard Lawson said the practice of “surrogate signing” is not forgery because it was approved by the company and forgery requires an intent to defraud.
Bondi press secretary John Lucas said the office is still investigating LPS and is part of a multi-state effort pursuing the case as a civil matter.
“We think this is vindication that our investigation was right on target and the problem was that Bondi’s office wouldn’t let us pursue it,” Edwards said about the federal charge. “We’ve tried not to get our hopes up on any of these investigations going anywhere, but we’re very pleased to see that this really documents the things that we’ve seen.”
But Clarkson said going after Brown for offenses allegedly carried out between 2003 and 2009 lets parent-company LPS off the hook.
“From the information we had, there were not a lot of innocent parties in this,” she said.
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