The US Attorney in the Middle District of Florida, Robert O’Neill, has submitted an information, basically a criminal charge without the use of a grand jury for the indictment, of Lorraine Brown, the founder of DocX, for the fraudulent production of mortgage assignments, notarizations, and other documents used to foreclose on borrowers (h/t 4closure fraud).
Previously, Brown had been indicted by the state of Missouri for the same practices. However, in a settlement, Missouri sought to settle with the parent company of DocX, Lender Processing Services (LPS), in exchange for their assistance in the Brown investigation (LPS also settled with Colorado recently). This led to the odd circumstance of Missouri alleging criminal conspiracy charges against a single individual, a logical impossibility. You have to conspire with someone to have a conspiracy, after all. Somebody had to buy the documents from DocX. And the idea that Brown came up with the notion of getting her employees to sign false mortgage documents, falsify notarizations and forge signatures entirely on her own is pretty dubious. Much like the UBS rogue trader convictions, stringing up Brown for being a “rogue document processor” divorced from the parent company makes no sense.
Similarly, the short criminal charge against Brown in Florida alleges this conspiracy of one. Brown ran DocX operations, eventually under the title of President and Senior Managing Director of “LPS Document Solutions, a Division of LPS.” In this capacity, DocX created and executed mortgage-related documents for a variety of servicers. And during this time, DocX falsified mortgage assignments, lost note affidavits and just about every other kind of mortgage document out there, documents that eventually got used as evidence for foreclosure in state courts, with title insurers and with local recording clerks. DocX also used unauthorized “surrogate signers” to notarize and testify to the veracity of documents, forging the signatures of the authorized officer. The surrogate signers, usually temp workers, executed thousands of documents a day, without underlying knowledge of the information contained therein.
The information hints at the idea that Brown and DocX made representations to its clients, the mortgage servicers, that DocX “had robust quality control procedures in place to ensure a thorough and proper signing, notarization and recordation process.” But we know that DocX advertised a prescribed menu of $100 for a mortgage assignment, or $150 for a full loan file, and often processed documents that listed “Bogus Assignee” as the owner of the loan. It’s impossible to believe that servicers unknowingly entered into this arrangement with DocX without knowing they falsified loans, certainly after they got the first batch of bad documentation.
Lorraine Brown is accused of a conspiracy to commit mail and wire fraud, by falsifying signatures on the mortgage-related documents. But the information refers only to “co-conspirators, and others” without naming them in the suit. Who are they? It’s clear Brown didn’t act alone, yet years after the fact she stands accused as the only conspirator in a massive crime affecting the ownership documents on millions of properties.
It appears that Brown will cop a plea in this case, but I don’t quite have that information yet. More on this to come.
…as Fractal correctly puts it in the comments, it’s entirely possible that, as a condition of the plea agreement, Brown has agreed to talk about other co-conspirators as part of a wider-ranging investigation in the case. I would hope so.
UPDATE: OK, here’s the plea agreement. Brown pled guilty to mail and wire fraud, which carries a maximum sentence of five years in prison and a fine of up to $250,000. So Lorraine Brown will go to jail.
As part of the agreement, “Defendant agrees to cooperate fully with the United States in the investigation and prosecution of other persons or entities, and to testify, subject to a prosecution for perjury or making a false statement, fully and truthfully before any federal court proceeding or federal grand jury in connection with the charges in this case and other matters. Such cooperation includes a full and complete disclosure of all relevant information, including production of any and all books, papers, documents, and other objects in defendant’s possession or control, and to be reasonably available for interviews which the United States may require.”
So that’s pretty promising. Hallelujah!