1/10/2014 USDOJ: Florida-Based Lender Processing Services Inc. to Pay $35 Million in Agreement to Resolve Criminal Fraud Violations Following Guilty Plea fro…

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FOR IMMEDIATE RELEASE Friday , February 15, 2013

Department of Justice

Office of Public Affairs

Florida-Based Lender Processing Services Inc. to Pay$35 Million in Agreement to Resolve Criminal Fraud

Violations Following Guilty Plea from Subsidiary CEO

Agreement Also Follows Closure of Subsidiary DocX Operations

Lender Processing Serv ices Inc. (LPS), a publicly traded mortgage serv icing company based in

Jacksonville, Fla., has agreed to pay $35 million in criminal penalties and forfeiture to address

its participation in a six-y ear scheme to prepare and file more than 1 million fraudulently signed

and notarized mortgage-related documents with property recorders’ offices throughout the

United States. The settlement, which follows a felony guilty plea from the chief executive officer

of wholly owned LPS subsidiary DocX LLC, was announced today by Assistant Attorney General

Lanny A. Breuer of the Justice Department’s Criminal Div ision and U.S. Attorney for the Middle

District of Florida Robert E. O’Neill.

The non-prosecution agreement, which LPS entered into today with the U.S. Department of

Justice and the U.S. Attorney ’s Office for the Middle District of Florida, requires the company to

make the pay ment and meet a series of other conditions.

Lorraine Brown, the former CEO of DocX LLC, pleaded guilty on Nov. 20, 2012, in federal court

in Jacksonville to conspiracy to commit mail and wire fraud. During her guilty plea, Brown

admitted to her leadership role in the scheme.

LPS has taken a number of remedial actions to address the misconduct at DocX. Among other

things, 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 rev iew 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 serv icers or borrowers.

According to the statement of facts accompany ing the agreement, before its wind-down, DocX

was in the business of assisting residential mortgage serv icers with creating and executing

mortgage-related documents to be filed with property recorders’ offices throughout the United

States. Employ ees of DocX, at the direction of Brown and others, falsified signatures on the

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. These signing practices

were used at DocX from at least March 2003 until late 2009, and were implemented to increase

profits.

Also to increase profits, Brown hired temporary workers to sign as authorized signers. These

temporary employ ees 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 employ ees at DocX, allowing the fraud scheme to remain undetected.

After these documents were falsely signed and fraudulently notarized, Brown authorized DocX

employ ees to file and record them with local county property records offices across the

country . Many of these documents – particularly mortgage assignments, lost note affidav its

and lost assignment affidav its – were later relied upon in court proceedings, including property

foreclosures and federal bankruptcy actions.

In entering into the non-prosecution agreement with LPS, the Justice Department took several

factors into consideration. Soon after discovering the misconduct at DocX, LPS conducted a

thorough internal investigation, reported all of its findings to the government, cooperated with

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1/10/2014 USDOJ: Florida-Based Lender Processing Services Inc. to Pay $35 Million in Agreement to Resolve Criminal Fraud Violations Following Guilty Plea fro…

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13-206 Criminal Div ision

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

government’s investigation also revealed that Brown and others at DocX took various steps to

actively conceal the misconduct from detection, including from LPS senior management and

auditors.

Brown, 51 , of Alpharetta, Ga., faces a maximum potential penalty of five y ears in prison and a

$250,000 fine, or twice the gross gain or loss from the offense. She is scheduled to be

sentenced on April 23, 2013, before U.S. District Judge Henry Lee Adams Jr. in Jacksonville.

This case is being handled by Trial Attorney Ry an Rohlfsen and Assistant Chief Glenn S. Leon of

the Justice Department’s Criminal Div ision Fraud Section and Assistant U.S. Attorney Mark B.

Devereaux of the U.S. Attorney ’s Office for the Middle District of Florida. The case is being

investigated by the FBI, with assistance from the state of Florida’s Department of Financial

Serv ices.

Today ’s disposition is part of efforts underway by President Obama’s Financial Fraud

Enforcement Task Force (FFETF). The task force was established to wage an aggressive,

coordinated and proactive effort to investigate and prosecute financial crimes. With more than

20 federal agencies, 94 U.S. attorney s’ offices and state and local partners, it’s the broadest

coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat

fraud. Since its formation, the task force has made great strides in facilitating increased

investigation and prosecution of financial crimes; enhancing coordination and cooperation

among federal, state and local authorities; addressing discrimination in the lending and financial

markets and conducting outreach to the public, v ictims, financial institutions and other

organizations. Over the past three fiscal y ears, the Justice Department has filed nearly 10,000

financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage

fraud defendants. For more information on the task force, please v isit www.StopFraud.gov .

Related Material:

LPS Non-Prosecution Agreement

LPS Statement of Facts

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