By: James W. Kraus
DOJ has announced that Lender Processing Services Inc. (LPS) has agreed to pay $35 million in criminal penalties and forfeiture to address its participation in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents. The settlement follows the November 2012 felony guilty plea by Lorraine Brown, the former CEO of wholly owned LPS subsidiary DocX LLC. Brown admitted to her leadership role in the scheme.
The take home points from the LPS settlement ring familiar…Soon after discovering the misconduct at DocX, LPS conducted a thorough internal investigation, reported all of its findings to the government, cooperated with the government’s investigation and effectively remediated any problems it discovered.
The NPA requires the company to make the payment and meet a series of other conditions. The LPS deal demonstrates the value of companies taking a proactive approach when pursuing NPAs. The company has already taken a number of remedial actions to address the misconduct at DocX. According to DOJ, LPS has wound down all of DocX’s operations, re-executed and re-filed mortgage assignments as appropriate and terminated Brown and others. LPS has also demonstrated changes in its compliance, training and overall approach to ensuring its adherence to the law, and has retained an independent consultant to review and report on LPS’s document execution practices; assess related operational, compliance, legal and reputational risks; and establish a plan for reimbursing any financial injuries to mortgage servicers or borrowers.
According to the statement of facts accompanying the agreement, employees of DocX, at the direction of Brown and others, falsified signatures on mortgage related 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 have documents notarized as if they were executed by authorized signers.
DOJ further indicated that Brown hired temporary workers to sign as authorized signers. These temporary employees 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 employees at DocX, allowing the fraud scheme to remain undetected. After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employees to file and record them with local county property records offices across the country.
The take home points from the LPS settlement ring familiar but are nonetheless instructive. DOJ announced that its decision to enter into the NPA was based on several factors. Soon after discovering the misconduct at DocX, LPS conducted a thorough internal investigation, reported all of its findings to the government, cooperated with the government’s investigation and effectively remediated any problems it discovered.
James W. Kraus, of Pietragallo Gordon Alfano Bosick & Raspanti, LLP, has been selected as the recipient of the DRI’s Albert H. Parnell Outstanding Program Chair Award which will be presented during the DRI Annual Meeting on October 17 in Chicago, Illinois. This award honors a program chair who created a dynamic educational program enhancing… Read more »Read More
James W. Kraus has been appointed to serve as the Chair of the Directors and Officers Coverage Subcommittee of the Defense Research Institute’s (DRI) Government Enforcement and Corporate Compliance Committee (GECC). DRI is the largest international membership organization of attorneys defending the interests of business and individuals in civil litigation. The GECC provides opportunities for education… Read more »Read More
The Pietragallo Law Firm and S-E-A Limited are co-hosting an event on Wednesday, February 19, 2020 titled, “Defending Trucking and Vehicle Cases in the 21st Century.” During this dynamic event which begins at 11:30am, industry leaders will review a variety of topics unique to the trucking industry including: “Accident Reconstruction through 21st Century Visualization” and… Read more »Read More
On Thursday, February 20, Pietragallo Partner Jim Marrion will sit on a panel about the Pennsylvania Unfair Trade Practices and Consumer Protection Law. During this three-hour CLE, offered through the Allegheny County Bar Association, panelists will discuss, in-depth, the issues under the Unfair Trade Practices and Consumer Protection Law that attorneys need to be aware… Read more »Read More