Thursday, May 24, 2018
Business

Former Florida mortgage executive pleads guilty to widespread robo-signing

In a landmark robo-signing case, a former executive of a Jacksonville mortgage-processing giant faces up to five years in prison after pleading guilty to orchestrating years of fraudulent foreclosure documents, according to a plea deal filed Tuesday in Jacksonville federal court.

Lorraine Brown, who headed a Georgia processing firm, DocX, that earned tens of millions of dollars off the foreclosure crisis, admitted to coaching employees to falsify signatures in order to speed up foreclosures and boost the firm's profits.

DocX, a subsidiary of Jacksonville-based Lender Processing Services, was closed in 2010 after evidence of the fraudulent practices came to light.

But the firm's filings, which prosecutors said totaled more than 1 million forms between 2003 and 2009, still serve as the official backbone for bankruptcies, court proceedings and foreclosures in Tampa Bay and across the country.

Brown, who was charged with conspiracy to commit mail and wire fraud, was one of the first executives hit with a criminal indictment tied to the robo-signing scandal.

She faces a maximum sentence of up to five years in prison and a fine of up to $250,000. Her sentencing date has not been set.

Banks and loan servicers paid DocX to create and record forms such as lien releases and mortgage assignments, which are submitted to property appraisers as public records of ownership.

Brown, prosecutors wrote, attracted clients to DocX by touting the firm's "robust quality control" of forms, which are relied upon by courts and insurers for accuracy.

When the housing crisis led foreclosures to skyrocket, the firm's business boomed. Clients paid DocX $5 to $15 per form, attorneys wrote. Between 2003 and 2009 the firm earned revenues of about $60 million.

To speed up turnaround, prosecutors said, Brown directed DocX employees to forge signatures on mortgage papers and enlist unauthorized employees to falsify signatures. The firm also hired lower-wage temporary workers to fraudulently sign forms, with some workers signing thousands of documents a day, attorneys wrote.

One of Brown's senior management team, attorneys wrote, sent an e-mail to a colleague stating she "had no intention of ever signing a single document."

Brown and co-conspirators tried to hide the fraud by training employees to mimic authorized signatures taped to signing tables, according to government documents. Later, after DocX workers questioned the practice's legality, Brown crafted an official-looking policy form that authorized so-called "surrogate signing."

In 2009, when a tipster alerted Lender Processing Services to the fraud, Brown blamed the conduct on a pair of "rogue" employees, attorneys wrote.

Brown was fired soon after. But in 2010, Brown repeated her ignorance of the "surrogate signing" practice, attorneys wrote, in an interview with the FBI.

In a statement Tuesday, Lender Processing Services further distanced itself from Brown, whom the firm said "actively concealed" the fraudulent signing.

The firm, according to the statement, "is committed to ensuring that all employees operate with integrity and compliance in everything they do on behalf of the company."

In August, Lender Processing Services settled a forgery case in Missouri, where fraudulent forms were discovered, by agreeing to pay the state and prosecutors $2 million and cooperate in the criminal investigation against Brown.

On Tuesday, Missouri Attorney General Chris Koster announced Brown had also agreed to plead guilty under similar charges in that state, with Koster calling the firm's robo-signing practices the "worst in the country."

A civil investigation into Lender Processing Services led by Florida Attorney General Pam Bondi remains ongoing, a spokeswoman said Tuesday.

Mark Rosenblum, Brown's attorney, emailed a statement to the Times that Brown "didn't expect to be in this position, but now that she is, she's facing it with grace and dignity."

"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."

Contact Drew Harwell at (727) 893-8252 or [email protected]

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