By Anna Louie Sussman
Nov 20 (Reuters) - A former executive at a mortgage records
company pleaded guilty on Tuesday to a scheme to file fraudulent
documents used in foreclosures, a rare prosecution of a
top-level employee following the so-called robo-signing scandal.
Lorraine Brown, 56, the former president of LPS Document
Solutions, part of Lender Processing Services Inc, pleaded
guilty in U.S. District Court in Jacksonville, Florida, to
conspiracy to commit mail and wire fraud from 2003 to 2009.
LPS was not charged with wrongdoing. It said in a statement
that it fired Brown and shut down her unit's operations when it
discovered the fraudulent practices in November 2009. It said it
has fully cooperated with all government investigations into
The "robo-signing" scandal emerged in 2010 involving
allegations that banks pursued faulty foreclosures by using
defective or fraudulent documents. In February 2012, five big
U.S. banks agreed to a $25 billion deal with 49 state attorneys
general and the federal government to end an investigation into
foreclosure practices including robo-signing.
"Lorraine Brown participated in a scheme to fabricate
mortgage-related documents at the height of the financial
crisis," Assistant Attorney General Breuer said in a
statement. "She was responsible for more than a million
fraudulent documents entering the system, directing company
employees to forge and falsify documents relied on by property
recorders, title insurers and others."
Separately, Brown, of Alpharetta, Georgia, also has agreed
to plead guilty to Missouri state charges of forgery, perjury
and a misdemeanor count of making a false declaration, according
to the office of Missouri Attorney General Chris Koster.
Mark Rosenblum, Brown's attorney, said in a statement that
Tuesday was a "difficult day" for his client.
"By negotiating a settlement to her situation and entering
her guilty plea, Lori has started the process of getting on with
the rest of her life," he said.
Brown had been the president of DocX LLC, which was acquired
by an LPS predecessor company and was later rebranded when LPS
was formed as a stand-alone business in 2008.
According to Brown's plea agreement with the Justice
Department, she and unnamed co-conspirators directed DocX
employees to forge and falsify signatures on mortgage-related
documents that were then filed with property recorders' offices
and in courts.
The practice was known internally as "Facsimile Signature"
and later "Surrogate Signing," according to the federal court
According to the court papers, DocX charged mortgage
services about $5 to $15 per document, and hired temporary
workers to sign thousands per day. The firm grossed
approximately $60 million between 2003 and 2009, the court
"Robo-signing has been lightly defined as employees of
mortgage servicers signing too many documents too fast without
reading them," said Lisa Epstein, a foreclosure activist in
The federal charges against Brown carry a maximum potential
penalty of five years in prison and a fine of $250,000 or twice
the gross gain or loss from the crime. No sentencing date has
been set. As part of the plea agreement, Brown agreed to
cooperate with ongoing prosecutions of others in the case.
In the Missouri case, Brown will face a prison term of two
to three years, according to the state's attorney general.
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