You may remember that there was one big criminal case in the foreclosure fraud scandal leading up to the settlement. Missouri Attorney General John Koster indicted Lorraine Brown, the founder and former President of the document processor DocX, for forgery and making false declarations on mortgage documents. The assumption here was that you could go up the chain from DocX, which has been shuttered since May 2010, to its corporate parent, Lender Processing Services, and then over to the big banks that hired LPS to falsify documents for them.
Well, that didn’t happen. It’s a rare event of not going up the chain, but going down the chain.
LPS settled their case with Missouri for a paltry $2 million. They also promised to assist in the ongoing criminal investigation of Lorraine Brown. Here’s LPS’ press release:
The terms of the settlement provide for, among other things, a voluntary contribution of $1.5 million to the State of Missouri, reimbursement of $500,000 to the Missouri Attorney General’s Office for its fees and costs of investigation, and a complete release of any potential liability of LPS and DocX in the State of Missouri.
“This settlement is an important milestone in our ongoing efforts to resolve legal and regulatory issues related to the operations of DocX, which we closed in 2010,” said Hugh Harris, president and chief executive officer of LPS. “LPS remains focused on resolving all remaining legal and regulatory challenges as expeditiously as possible and is committed to ensuring that we continue to operate with integrity and compliance in everything we do.”
The idea that Lorraine Brown acted alone, and that she wasn’t operating under orders from LPS, is frankly ludicrous. But LPS managed to convince Missouri that they should stop at Brown and DocX, paying off the state to nudge things along.
Attorney General Koster maintained that, since DocX earned $363,000 in revenue from executing documents in Missouri in the years affected, then the penalty to LPS is well in excess of that. I guess that’s how we’re doing accountability these days. The reality is that LPS will not even blink at the $2 million if it means getting out from under the legal exposure.
And the entire premise here is wrong. In the indictment, Missouri alleges that Brown directed DocX employees to sign false mortgage documents, falsify notarizations and forge signatures. Did she come up with this on her own? That’s the implication. Moreover, under the agreement, the Attorney General agreed not to prosecute either LPS or DocX, focusing entirely on Lorraine Brown, who I guess was a rogue founder and President of the company.
LPS still has to deal with the consent orders from OCC and the Federal Reserve, and I can’t finish the rest of this sentence without laughing.