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Mirabile Dictu! Missouri Attorney General Files Criminal Lawsuit on Robosigning

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“Linda Greene” has become a household word to those on the foreclosure fraud beat. And it turns out, for once, that the work of diligent investigators such as the foreclosure attorneys around Max Gardner, and investigators like Lynn Szymoniak and Lisa Epstein led to press coverage which in turn spurred prosecutors to act.

What is striking about the indictment by a Missouri grand jury is that the Missouri AG Chris Koster has decided to challenge the banks’ party line that robosigning and related abuses were mere “paperwork problems.” He’s called robosiging what it is: forgery. The 136 count indictment is for forgeries and false declarations, and the targets are LPS subsidiary and its founder and past president, Lorraine Brown. From a press release by Koster:

Today’s indictment reflects our firm conviction that when you sign your name to a legal document, it matters,” Koster said. “Mass-producing fraudulent signatures on millions of real estate documents across America constitutes forgery. When you file those documents in our state, you are committing a crime under Missouri law.

The forgery and false declaration counts each allege that the person whose name appears on 68 notarized deeds of release on behalf of the lender is not the person who actually signed the paperwork. The documents were then submitted to the Boone County Recorder of Deeds as though they were genuine…

DOCX’s role in the robo-signing process came to national attention when 60 Minutes reported that Linda Green, an employee of DOCX, purportedly signed thousands of mortgage-related documents on behalf of several different banks and in multiple handwritings. The 68 documents on which the indictments are based were purportedly signed by Linda Green, but were in fact allegedly signed by someone else.

Forgery is a Class C felony and False Declaration is a Class B misdemeanor. If convicted on the most serious count, Brown could face up to seven years in prison for each count. DOCX could be fined up to $10,000 for each forgery conviction and $2,000 for each false declaration conviction.

The open question is whether Koster intends to stop here or is using the mob prosecution strategy that Catherine Cortez Masto seems to be employing, that of going after LPS, which was the major outsourcing platform for servicers, and seeing where that trail leads.

Additional comments from Gretchen Morgenson of the New York Times:

One of the largest companies that provided home foreclosure services to lenders across the nation, DocX, has been indicted on forgery charges by a Missouri grand jury — one of the few criminal actions to follow reports of widespread improprieties against homeowners…

A grand jury in Boone County, Mo., handed up an indictment Friday accusing DocX of 136 counts of forgery in the preparation of documents used to evict financially strained borrowers from their homes. Lorraine O. Brown, the company’s founder and former president, was indicted on the same charges.

Employees of DocX, a unit of Lender Processing Services of Jacksonville, Fla., executed and notarized millions of mortgage documents for big banks and loan servicers over the years. Lender Processing closed the company in April 2010, after evidence emerged of apparent forgeries in these documents, a practice now called robo-signing.

DocX was a particularly bad actor; we’ve discussed in earlier posts how it had a price sheet for various services, including fabricating documents like mortgage note out of whole cloth. I’m surprised it has taken this long for someone to go after them. While this is clearly good news for borrowers and bad news for LPS, I doubt that anyone at the banks will feel threatened by this action. Unless this action leads to further prosecutions, it only scrapes the surface of bad conduct in the mortgage arena.

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39 comments

  1. zephyrum

    I hope there is something to this, but recent experience would indicate this is all part of some larger plan.

    ~~~~~~

    A pastor was giving the children’s message during church. For this part of the service, he would gather all the children around him and give a brief lesson before dismissing them for Sunday school.

    For this particular talk he was using squirrels for an object lesson on industry and preparation. He started out by saying, “I’m going to describe something, and I want you to raise your hand when you know what it is.” The children nodded eagerly.

    “This thing lives in trees (pause) and eats nuts (pause)…” No hands went up. “And it is gray (pause) and has a long bushy tail (pause)…” The children were looking at each other, but still no hands raised. “And it jumps from branch to branch (pause) and chatters and flips its tail when it’s excited (pause)…”

    Finally one little boy tentatively raised his hand. The pastor breathed a sigh of relief and called on him. “Well,” said the boy, “I *know* the answer must be Jesus … but it sure sounds like a squirrel to me!”

    ~~~~~~

    I *know* the answer is recapitalizing the banks but it sure sounds like justice to me.

    1. PL

      I’m hoping for more than symbolic justice and also question whether this is just part of a ploy related to the settlement, but there is some comfort in the Missouri AG calling a squirrel a squirrel.

      1. EH

        Has anybody seen any tracking of what statutes of limitations for what crimes are expiring when? Something like a Gantt chart?

  2. kravitz

    Let’s see…

    Banks are upset that New York is suing about MERS, and are balking at the settlement because they don’t want that lawsuit to proceed.

    Then a few more AG’s (9 if the ‘over 40′ headline is generously believed) are filing lawsuits on fraudulent documentation.

    Now, honestly, what AG would sign the settlement – DEADLINE PASSED AGAIN – knowing the banks are upset they’re not getting everything they want including immunity. And now yet another is in the mix?

    Did Yves, Dave, Lisa, Gretchen and the gang even get in a beer over the weekend with all the insanity of the last few days?

    Sounds like ‘over 40′ AGs did. Or at least a lot of spiked Kool-Aid.

    1. curlydan

      He was a Republican until 2007, then switched parties to the D’s. Might be an opportunist, but he’ll get credit from me for trying.

      1. EH

        I think they’re saying it’s flowing past us? Finally? Something like that, but I’m not sure who the implied target is in this case, the one that is further downhill from us.

      1. steelhead23

        No Yves, take the credit – its the blame you want to avoid. You do understand that this CRIMINAL INDICTMENT!!! is going to destroy the world, add to investor uncertainty, rock the boat, and other myriad horrors – all because of you. Well you, and that Missouri grand jury.

        P.S. You might wish to send the Missouri AG a nice card – Thanks for listening.

  3. Custerluck

    The U.S. has the best politicians that money can buy. Like Tom Miller, Iowa AG, many AG’s are anticipating bankster donations into their political warchests. Chances are, they have already been paid.

    Paying off the AGs is far cheaper than paying what they really owe.

  4. psychohistorian

    You keep posting this hopium kinda stuff and I think about the ongoing wave of moral/legal decadence crashing over the world.

    It is encouraging to read that not all AGs are bought actors in this game. But then you have to consider the story about our top AG Holder being part of the team that developed the MERS shell…..take all the pot smokers out of jail to make room for the deserving sort, IMO

  5. richard wilson

    I’m sorry, but this story stinks.

    Missouri AG Chris Koster’s actual indictment lists the defendant as “DOCX, LLC” — a Georgia company that was closed in April 2010. It makes no mention of any human individual, including Lorraine O. Brown. Nor does it mention Lender Processing Services of Florida.

    If there is a separate indictment against Ms. Brown or LPS, I have not seen it, and Gretchen Morgenson of the NYT does not mention it. Nor does any other media source.

    I strongly doubt that there is, in which case Ms. Morgenson of the NYT may possibly be LYING when she writes, “According to the indictment, Ms. Brown acted ‘knowingly in concert with DocX and its employees’ to mislead and defraud the Boone County recorder of deeds…” etc.

    Huh? As I said, the indictment makes no mention of Ms. Brown, or any other individual.

    Ms. Morgenson further writes, “DocX could be fined up to $10,000 for each forgery conviction.”

    Really? What HUMAN INDIVIDUALS would face such fines?

    It smells to me like this is empty grandstanding by AG Koster, who is currently running for re-election. He wants the public to think he is actually doing his job.

    If I am wrong, I welcome corrections.

    1. jim

      as proof of grandstanding, this indictment is against Docx, not LPS. and they could be fined $10,000 per violation! ok how are you going to collect on that? LPS already closed it so they could walk away from any judgement just like an underwater homeowner.

      the problem with all these LPS cases is the robosigning was perpetrated by small non-core subsidiaries that LPS could easily walk away from without so much as a dent in its very hefty profitability. the nevada AG complaint has a few charges relating to securities fraud and attorney invoicing that get to the headquarters, but those are clearly the parts least likely to survive their motion to dismiss. then the party to the suit is no longer LPS, it is Docx and a title sub, neither of which has any money to pay a judgement.

      as far as the mafia prosecution idea, it is highly unlikely to get one above the head of subsidiary level, unless you can prove these signing schemes were planned at headquarters. much more likely you can find evidence that headquarters asked them to do it fast, maybe with a wink and a nod, but you can’t get criminal intent from there. and even if you could indict the management they have all completely turned over from that time so you’d be indicting former rather than current employees.

      so i definitely see how you could send the head of Docx to jail, and that might be a measure of justice, but how you really get to the heart of LPS the corporation and change their business model in a significantly negative for them way, i just don’t see it. i think you could likely get more money out of them in a settlement, because a judgement is unlikely to be enforceable against any entity with any money to pay.

    2. Yves Smith Post author

      LPS is the parent of DocX. I would assume the AG will seek to obtain damages from them.

      1. jim

        yes but you’d need to somehow pierce the corporate veil to argue that LPS is liable for damages on behalf of a subsidiary. how do you do that? if you could demonstrate that the conduct was ordered or overseen by the parent, ok, but otherwise i’m not sure how you get there?

        1. Binky the Bear

          Just like a mob breakdown-you bust the little fish and get them to turn on the bigger fish until you get the boss. Who ordered Jim Bob Bubba Brougham to sign as Linda Green. Who ordered you to order JBBB to sign as VP Linda Green?
          Of course the wheels of justice grind slowly; they also grind finely. Have the popcorn ready over the next 12 year horizon it will take to wind this out if it actually starts for reals. Remember how long the S&L thing took?

          1. JamesW

            I seriously hope Binky the Bear is correct.

            Certainly with the Mo. state following the lead of Nevada’s wonderful AG, and Massachusetts wonderful AG, and NY’s wonderfuly AG, one sincerely hopes they make it happen.

            One of the few decent things to come out of Dodd-Frank was giving the states’ rights on these matters back to the states, as we are now witnessing.

            Let us not forget that it was the Bush Administration’s OCC, along with the colluding behavior of Standard & Poor (and perhaps the other rating agencies, but most definitely S&P), armed with the GLB Act and the CFMA Act from the Clinton administration, which circumvented this entire process by invoking that recondite clause from the National Bank Act of 1863.

            But the legal end is truly open-and-shut: mass felonies from the filing of false affidavits (“robosigning”), and while they violated civil law with their mass violations of the Uniform Commercial Code, it was done on such a massive level and so consistently that it constitutes a criminal conspiracy, therefore more felonious crimes committed (and probably the Law of Fraudulent Conveyance in NY and whatever other states has this on the books).

            And an outstanding refresher for those of us with poor memories, Nomi Prins’ timeline on this crap from Mother Jones back in Aug. 2008:

            http://motherjones.com/politics/2008/07/where-credit-due-timeline-mortgage-crisis

          2. jim

            according to the indictment lorraine brown did. i have no doubt you can convict her, however i think it will be very difficult if not impossible to get from the LLC Docx to the parent LPS with any civil or criminal liability from this. that seems to me why no one has pursued this seemingly obvious angle, that there isn’t any money there, and is convicting lorraine brown worth a resource constrained AGs time?

        2. f247

          Don’t know if this matters, but sounds relevant (from most recent LPS 10Q, see below). If you wanted to look at their corp chart of diff subs, I think it’s in the NY title stat filings.

          “LPS has no independent assets or operations and our subsidiaries’ guarantees are full and unconditional and joint and several. There are no significant
          restrictions on the ability of LPS or any of the subsidiary guarantors to obtain funds from any of our subsidiaries other than National Title Insurance of New
          York Inc.(“NTNY”), our title insurance underwriter subsidiary, by dividend or loan.”

          1. JamesW

            They always say that — that’s what offshore and off-balance-sheet translate to, court orders will be necessary.

  6. richard wilson

    I just read all 124 pages of the indictment again, and I stand by my assertions above. An indictment is not a trial, and even if the “defendant” (DOX LLC) is tried and convicted, it is an entirely separate matter to assign personal culpability to Ms. Lorraine O. Brown.

    Again, this smells like grandstanding on AG Koster’s part.

      1. richard wilson

        Yes I saw that link, but I am not able to open it. The idictment against DOCX is on Scribd, but not the (supposed) indictment against Lorraine O. Brown. I’d like to read it, if it actually exists.

  7. sleeper

    Grand standing or no, this is a grand jury indictment.

    The question ought to be it a County in Missouri can indict why can’t our vaunted Department of Justice ? Is justice unequal between DC and Missouri ?

    This puts to rest the excuses we’ve heard -

    Too complicated
    Too expensive
    Too difficult
    They didn’t break any laws ?

    Please Eric man up. !!!

  8. Praedor

    My problem with the developing deal or ANY deal is that it simply seeks to get money. Sure, that’s important but more important is CRIMINAL INDICTMENTS and PROSECUTION and JAIL TIME. Not just for little people in this mess but for top executives. Not only do they need to see prosecution and jail time, they also need to take HUGE hits in their personal fortunes gained by ripping real humans off.

    No deals without indictments, no indictments unless they also include top executives. No deal that is a slap on the wrist and just another stealth bailout for banks.

  9. Frederick Leatherman

    Our system of government will not survive unless we the people believe that it will respect, abide by, and enforce the Rule of Law, the Constitution and the Bill of Rights against all violators, regardless of race, ethnicity, gender, sexual preference, or class.

    We rely on the Department of Justice and our various state attorneys general to protect our inalienable rights to life, liberty, and the pursuit of happiness. They and the police departments they supervise and rely upon to investigate and prosecute crimes, are the law enforcement arms of our federal and state governments.

    At the expense of we the people who are victims of the biggest financial fraud committed in history, the Obama Administration’s proposed settlement of the real estate forfeiture crisis protects the banks that willfully and intentionally committed the crime. Moreover, the crime continues and there is no assurance that it will stop if the state attorneys general agree to the proposed settlement.

    This situation is upside down and all wrong because the proposed settlement protects and rewards the criminals who committed the biggest financial fraud in history. If this case settles, how can anyone who is not a member of the 1% have any faith that our government will enforce the Rule of Law, the Constitution and the Bill of Rights against all violators, regardless of race, ethnicity, gender, sexual preference, or class?

    The answer is self-evident.

    We have reached a critical turning point in our history. If the state attorneys general adopt this outrageous settlement proposal, what little faith people still have in our government will vanish like the morning dew as the Sun rises bringing massive civil unrest and increasingly violent revolution.

    1. ECON

      F. Leatherman comment is a bulls eye on target. America to continue sweeping away the truth of mortgage securitization will weaken the already tenuous faith in capitalism as it is practised.

    1. off_leash

      Doesn’t RICO allow for treble damages? I would think some jurisdiction could make some money on this.

  10. Diana Orclick

    The AGs can’t do much. They are already underfunded, understaffed to begin with. Look at conflicted corn-field Miller, 30 years as the state’s top business host. Women and children first? Maybe in a drone strike. ANYTHING GOES (PEACEFULLY) SUE THE AGs!!!

  11. brian

    as one famous son of Missouri, Harry Truman once said

    “Raise less corn and more hell”

    now someone show Kamala how to practice law and file a similar suit in California

  12. Susan the other

    WE have come to a crossroads with the law. It is a legal showdown. And it has to be done. It is the only way to establish how we will go forward in the future. The Law must take action. Simple. I (just me personally) think it was capricious of Congress to exempt homes from foreclosure protection. So this may take us back to a previous state of sanity. And all for the good. Every State AG who has the courage to step into this is a person of integrity in a world of fudging. No easy task.

Comments are closed.