JACKSONVILLE, Fla. – Lender Processing Services has reached an agreement with the Justice Department to pay $35 million to settle charges it participated in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the U.S.

The non-prosecution agreement of the robo-signing case follows a felony guilty plea from the chief executive officer of wholly owned LPS subsidiary DocX LLC. Lorraine Brown, the former CEO of DocX LLC, on Nov. 20 pleaded guilty to conspiracy to commit mail and wire fraud. During her guilty plea, Brown admitted to her leadership role in the scheme.

Brown, 51, is scheduled to be sentenced on April 23.

The company admitted that employees 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 employees would sign mortgage-related documents at a much lower cost and without the quality controls represented to clients. These documents then were falsely notarized by employees at DocX, allowing the fraud scheme to remain undetected.

After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employees to file and record them with local county property records offices across the country. Many of these documents – particularly mortgage assignments, lost note affidavits and lost assignment affidavits – were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions.

LPS said it has taken a number of remedial actions to address the misconduct at DocX. Among other steps, LPS said it has wound down all of DocX’s operations, re-executed and re-filed mortgage assignments as appropriate and terminated Brown and others.

LPS said it also has demonstrated changes in its compliance, training and overall approach to ensuring its adherence to the law, and has retained an independent consultant to review 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 servicers or borrowers.

 

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