Yesterday I talked about how the failure to prosecute represented a fundamental decay at the heart of our politics, a symbol of the lack of accountability that has plagued this country for a decade. Yesterday, we began to get some accountability for foreclosure fraud in the unlikeliest of places: Missouri. From the New York Times Gretchen Morgenson:
One of the largest companies that provided home foreclosure services to lenders across the nation, DocX, has been indicted on forgery charges by a Missouri grand jury — one of the few criminal actions to follow reports of widespread improprieties against homeowners.
A grand jury in Boone County, Mo., handed up an indictment Friday accusing DocX of 136 counts of forgery in the preparation of documents used to evict financially strained borrowers from their homes. Lorraine O. Brown, the company’s founder and former president, was indicted on the same charges.
Employees of DocX, a unit of Lender Processing Services of Jacksonville, Fla., executed and notarized millions of mortgage documents for big banks and loan servicers over the years. Lender Processing closed the company in April 2010, after evidence emerged of apparent forgeries in these documents, a practice now called robo-signing.
Chris Koster, the Missouri attorney general, will prosecute the case. “The grand jury indictment alleges that mass-produced fraudulent signatures on notarized real estate documents constitutes forgery,” Mr. Koster said in a statement. “Today’s indictment reflects our firm conviction that when you sign your name to a legal document, it matters.”
Along with FDL’s Cynthia Kouril’s surprise, I can honestly say that this blindsided me. Koster, a former Republican who switched parties to the Democrats in 2007, has simply not been front and center in any of the foreclosure fraud issues. And yet here he comes with a criminal indictment of one of the worst document processors in the country. And the indictment goes all the way to the top of the company, to its founder, who faces seven years in prison.
It remains to be seen whether Koster is following the same strategy as Catherine Cortez Masto, the other AG with criminal indictments for document fraud. At one point it appeared she was starting with suits against the document processors to go up the chain to the bigger fish on Wall Street. We don’t know this with Koster. And we also don’t know if he has signed the settlement deal that would head off this investigation and confine it to DocX. For her part, Yves Smith doesn’t believe this will go that far:
DocX was a particularly bad actor; we’ve discussed in earlier posts how it had a price sheet for various services, including fabricating documents like mortgage note out of whole cloth. I’m surprised it has taken this long for someone to go after them. While this is clearly good news for borrowers and bad news for LPS, I doubt that anyone at the banks will feel threatened by this action. Unless this action leads to further prosecutions, it only scrapes the surface of bad conduct in the mortgage arena.
But as for a complaint against DocX, the indictment is quite effective. I have the complaint here. It basically accuses employees of DocX with 136 counts of Class C forgery (a felony) and false declarations (a misdeamenor). It states in pretty plain language that employees submitted documents they knew to be false to the Boone County recorder of deeds. Missouri is both a judicial and non-judicial foreclosure state, so the documents in this indictment are mainly the ones submitted to recorders.
Because this is a grand jury from just one county in Missouri, presumably it could be replicated all over the state. For all we know Koster has that in motion. He did say yesterday that the investigation was ongoing. It’s possible he’s trying to flip Lorraine Brown to go up the chain at DocX, and its parent company, Lender Processing Services (the subject of the lawsuit in Nevada).
The grand jury got to know a name that most of us following foreclosure fraud are acquainted with: Linda Green.
The Missouri grand jury found that the person whose name appeared on 68 documents executed on behalf of a lender — someone named Linda Green — was not the person who had signed the papers. The documents were submitted to the Boone County recorder of deeds as though they were genuine, Mr. Koster said.
Considering that we’re so starved for accountability in this country, this lawsuit comes as a nice surprise. DocX may have been a low-level offender, but they were a particularly notorious one. And they deserve everything they’re going to get.




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Popyeye, your state Attorney General has filed CRIMINAL charges.
Thank you for showing the rest of the states THE way to “go” forward, Missouri … do NOT compromise!
Thank you, DDay.
Pulitzer Prize for David Dayen.
Justice and the Rule of Law for everyone.
DW
I’d suggest a Nobel peace prize, but that award has been a bit tarnished lately. Not sure I’d want one.
Boxturtle (Actually, I want Obama’s. Gonna melt it down and ship it back)
The complaint lists 136 counts, involving 63 separate, and often sequential, “deed releases”.
The complaint describes a very clear pattern of “felony” fraud, 63 instances, and “misdemeanor” false declaration, 63 instances.
The main value of this action is that it legally legitimizes the growing public impression that widespread and deliberate criminal fraud occurred … which, ultimately, was done in the service, and to the direct benefit of, the “too-big-to-fail” money-class.
DocX may simply be “small potatoes”, however, such tiny potatoes may well serve as the “base” for a real “stew” … that might raise a sweat on the noble brows of the self-selected elite.
One wonders what other little surprises state attorneys general might add to the “mix”?
Thank you, again, DDay.
DW
Masto and Koster appear to be using the “how to investigate organized crime” model. You go after the low hing fruit first, for 2 reasons:
1) you wan to start out with things that are easy to prove so you investigation agins momentum in the publics mind (and becasue easy is always good)
2) the conclusions made by the earlier convictions provide the factual underpinnings for the subsequent trickier cases.
In other words, once you establish that the documents are foregeries, you can then establish that the foreclosures were frauds and the securitizations were largely or completely empty.
The proving that the robo signed documents were both forgeries and false statements is the key to all the rest of the cases.
They are the smoking gun in these cases.
DOCX is hardly small potatoes, they were a pretty big document mill.
I’m so glad he’s going after someone personally on criminal charges. More of this please.
Sort of related, but since DocX is a unit of LPS,it reminded me of a concern I developed back in 2010 when I first learned about LPS. Someone (maybe at Yves’ site) noted that LPS also had a software unit (or a subsidiary) that sold software for land records to county clerks/recorders. This scared the hell out of me, because of the fear that the data on filed documents could be accessed by the software company (it’s not stand alone…the software company does software updates etc so I think it’s possible they could access the data) …. and with LPS involved in creating after the fact fraudulent documents, there could be incentive to ‘fix’ county records in the database. (It is my concern that there’s a risk; I’m not saying they have ever done this but in my opinion allowing anyone in any way connected to LPS to possibly have behind-the-scene access to land records doesn’t seem wise.)
Anyway, I was curious as to whether my (then) county clerk had bought the software, so I went to the software company’s website and under press releases, there is was. Indeed, she had bought this software and there were her quotes about how wonderful this was for the county.
While I think it’s great to be able to go to the court house and research the records on their computers (which I assume you can still do now that they’ve switched to this software) without having to pay a subscription to see them online, if I ever buy real estate in that county again, I plan to look at the chain of title — and if MERS appears anywhere, I’ll walk away — and I will want to confirm by looking at the actual filed documents or at least scanned copies showing the filing date and stamp.
All aspects of LPS need to be looked at very closely. Kudos to Missouri’s AG.
Ah, Cynthia, I agree with you, “small potatoes” is my “rendering” of DDay’s statement that DocX was a ” …low level offender”, which, in the big picture is true, yet their behavior is not inconsistent with what the VERY big Boyz and Gurlz wanted and helped to “create” …
BTW, your diary on this topic is superb and recommended.
;~DW
This is just great. I thought yesterday was gonna be a long day, but this is just wonderful. Little ol’ “Show Me State” trundles up and stomps DOCX with an indictment.
I’m a little puzzled by this:
I see no way the multi-state deal could “head off this investigation” of DOCX or even “confine it to DOCX” because the multi-state deal is silent about criminal investigations & prosecutions. At least every single story we have seen about it claims it excludes any criminal matters. Has that been changed overnight?
Is there some reason NY District Attorneys didn’t convene county grand juries to investigate MERS the way Missouri investigated DOCX? Does Schneiderman have good alliances with the Manhattan & Brooklyn DA’s offices?
Possibly important details in Gretchen Morgenson’s story in NYT:
I am worried that the criminal charges do not seem to involve forgeries of notarizations or assignments or “lost-note affidavits” filed in court cases to foreclose on specific homeowners. I want to see scores of indictments for forgery & perjury in legal filings in court. Those are the deadly deeds by which actual homes are stolen from actual humans.
When can we see indictments of MERS for forgery, fraud & perjury? Please?
BTW, Gretchen said the indictment was actually issued Friday, which could explain the sudden postponement of the deadline from Friday to Monday and could have created a bit of chaos in the multi-state negotiating team over the weekend.
Big round of applause to Chris Koster, so loud that it’ll reach the ears of other state AGs.
My bogus law firm was from St. Louis MS…he handled the foreclosures for GMAC (homecomings)…I saw on googled sites that many people had the same lawyer. He would not answer my calls or give me my payout when I was in foreclosure.
If Schneiderman is wondering just what he might “do” to reassure a somewhat skeptical public that he is serious, then, Fractal, you’ve just given him a substantial hint.
Two or three months, four at most, will “tell” …
DW
I second that request for more indictments on the lost note documents and other fraudulent documents filed in court. It might deter a few others from doing it in the future.
By the way, I left a comment a the end of yesterday’s Roundup thread with some questions about a story fatster linked to about some banks offering some selected homeowners (selection criteria unknown) $20,000 and more to sell their homes in a short sale rather than being foreclosed on. (The cash was supposed to be for moving expenses and rent deposit.)
The article said that some thought these homeowners were selected because the banks didn’t have the proper legal documents to foreclose. That makes sense to me (in terms of the bank’s motivation), but I was also curious if there were additional benefits to the banks. I was hoping to get your thoughts on that.
True on criminal matters, but I imagine the laws get a little tougher to prove once you’re removed from the actual forgers and the ones who authorized it. On civil grounds Koster signing the settlement would protect the banks.
I absolutely agree, Cynthia.
It would apply only in those judicial foreclosure states. I wouldn’t hold your breath to seeing something like this coming out of, say, Florida.
From the Gretchen Morgenson story, “A lawyer for Ms. (Lorraine O.) Brown said that she intends to enter a not guilty plea and that she had no criminal intent.”
Comments from an attorney, regarding “intent”, would be ever-so-much appreciated, Fractal.
DW
For example, it has been “understood” that, in criminal law, “intent” is the most important principle.
It is argued that a person’s behavior is only criminal if they intended to commit the crime with which they are charged.
Clarification and implication, as it applies to proving fraudulent behavior, would be very useful to understanding what the people of the nation and commenters, here, at FDL, might expect … moving “forward”.
DW
Wikipedia provides these perspectives:
http://en.wikipedia.org/wiki/Intention_%28criminal_law%29.
Hopefully, the fact of an active prosecution will cause some, if not most, of the reportedly “40 states’ AGs” to rethink their decision to join the White House sanctioned white-wash of the disaster they made of the nation’s fiscal standing and the lives of tens if not more than a hundred million Americans.
Breath not held….
Just as the Mortgagee is responsible for knowing what he is signing so is the mortgagor. She signed the document and is now liable for what the document contains. Her defense can only be someone else committed a fraud on her, isn’t that correct? The law sides against the drafter of the document when in doubt.
Does that array of Fs accompanying this article refer to “fraud” or “f***ed”?
Great news, but the charge should be “racketeering,” as in RICO.
Holding MY breath…but breathing through my nose. Just in case.
A journey of a thousand miles starts with a trip to the bathroom…
Go Missouri, Go Missouri, FIGHT, FIGHT, FIGHT.
A little cheerleading couldn’t hurt.
I left you a comment on MFDL thread about this. Missouri has pretty strict laws about title insurance and loan documents. I was wondering if he would expose them. He is a pretty decent AG from what I have read about him. Taking back Democracy one state at a time. :)
49 states to go……….
Missouri has a long and storied history of resentment against bankers. It goes back before the Civil War and continued long afterward with the James and Younger Gangs and on into the 30s. Banks were often seen as exploiters of the poor and heartless oppressors throwing people out of their homes and off their farms. Sound familiar?
The more things change, the more they stay the same.
If the AG’s work together to share their data leading to prosecutions, we might get to a better place than a deal to give banks immunity for chump change.
Ah, saw your comment and left you a reply, popyeye.
“Taking back Democracy one state at a time.”
The motto of today and tomorrow … for as long as it must needs be done …
DW
“Banks were often seen as exploiters of the poor and heartless oppressors throwing people out of their homes and off their farms. “
———
“Wow. That’s ‘de vu’ all over again.”
Yogi Berra
Let’s hope the rest of them do the same.:)
I believe that’s seven years per count. If my math is correct (big risk) the maximum possible sentence would be 952 years for Ms. Brown.
Here is LPS LLC home page seems they need to get over themselves.
http://www.lpsvcs.com/lpsCorporateInformation/AboutUs/pages/default.aspx
On edit: Here is their statement at the top of their page:
CONFIDENCE THAT DEFINES TOMORROW! BWAHAAAA
Intent should not be hard to prove. The purpose of the robosigning was, in part, to avoid filing with the county Registrar of Deeds every time the property “changed hands”, thus avoiding time consuming title searches and county filing fees. I don’t think Ms. Brown is going to find many sympathetic jurors in Missouri. I know, jurors are supposed to be impartial, but her lawyers are going to have a difficult time proving that the robosigning wasn’t a deliberate act.
Word.
that’s why I hate the robosigning deal so much. That arena is where fraud is most easily proven, I hear.