Former DocX exec pleads guilty in robo-signing probe

Inman News

The former president of DocX LLC, a now-defunct subsidiary of Lender Processing Services (LPS), is expected to do prison time after pleading guilty to state and federal criminal charges related to the "robo-signing" scandal.

In pleading guilty to a federal criminal charge, Lorraine Brown, 56, of Alpharetta, Ga., admitted her role in a six-year scheme involving more than 1 million fraudulently signed mortgage documents, prosecutors said.

Brown pleaded guilty last week in a federal court in Jacksonville, Fla., where LPS is based, to one count of conspiracy to commit mail and wire fraud, the U.S. Department of Justice said. She faces up to five years in prison and a $250,000 fine, or twice the gross gain or loss from the crime, prosecutors said. Sentencing in that case has been scheduled for Feb. 19.

Brown also reached a plea deal with the Missouri officials, who have been investigating DocX's alleged robo-signing practices. Brown agreed to plead guilty to one felony count of forgery, one felony count of perjury, and one misdemeanor count of making a false declaration, the Missouri state attorney general's office said.

Missouri Attorney General Chris Koster said in a statement that Brown "will be sentenced to a term of imprisonment of not less than two years and not to exceed three years in the Missouri Department of Corrections."

Koster called DocX's robo-signing practices "the worst in the country. Surrogate-signing crosses the threshold into criminal activity. This agreement brings to justice the person most responsible for these activities and upholds the principle that when you sign your name to a legal document, it matters."  

U.S. Assistant Attorney General Breuer in a statement that Brown "participated in a scheme to fabricate mortgage-related documents at the height of the financial crisis," directing company employees to forge and falsify documents relied on by property recorders, title insurers and others.

According to federal plea documents, beginning in or around 2003 and continuing through November 2009, employees at DocX, under the direction of Brown and others, began forging and falsifying signatures on the mortgage-related documents residential mortgage servicers had hired them to prepare and file with property recorders' offices throughout the U.S.

When hiring DocX, the servicers had given certain specific, trained DocX employees the authority to execute documents as authorized signers. However, during that time, without clients' knowledge, Brown instructed or authorized those specific signers to allow other DocX employees to sign and notarize the documents as if they were executed by the authorized signers.

DocX was paid on a per-document basis. Brown implemented these signing practices in order to generate more profit both for herself and the company by increasing the volume of documents the company handled, according to plea documents. DocX also hired temporary, low-cost workers to sign as authorized signers, some of whom signed thousands of mortgage documents a day. DocX generated about $60 million in gross revenue between 2003 and 2009, prosecutors said.

"Many of these documents -- particularly mortgage assignments, lost note affidavits and lost assignment affidavits -- were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions," federal prosecutors said. Brown admitted that "she understood that property recorders, courts, title insurers and homeowners relied upon the documents as genuine."

Brown also admitted that she and others made various efforts to hide their actions from clients, LPS corporate headquarters, and law enforcement, prosecutors said.

"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," prosecutors said. 

Brown founded DocX in the 1990s. LPS predecessor Fidelity National Financial Inc. purchased the company in mid-2005 from Brown and her partners for about $6 million.

In mid-2008 LPS spun off from Fidelity and became a publicly-traded company. DocX was rebranded as LPS Document Solutions and Brown was its president and senior managing director. LPS fired Brown in November 2009 after discovering DocX's fraudulent signing practices and closed DocX in May 2010.

In a statement provided to Inman News, LPS said Brown "actively concealed from LPS the surrogate signing practices that she implemented at DocX. When LPS discovered these practices in November 2009, it immediately discontinued the practices, terminated Ms. Brown and shut down the operations of DocX. LPS also remediated documents executed under the surrogate signing process and has fully cooperated with all government investigations into these matters."

LPS also said the company "is committed to ensuring that all employees operate with integrity and compliance in everything they do" on its behalf.

LPS has reached three separate robo-signing settlements with state attorneys general in the past few months. In an August settlement with the state of Missouri, LPS agreed to pay $2 million and cooperate with the state's criminal investigation of Brown. Last month, LPS agreed to pay $1.8 million and $250,000 in fines and legal fees in settlements with the states of Colorado and Delaware, respectively.

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