|Attorneys in two states are accused of stealing proceeds intended to payoff their clients' mortgages -- with one pleading guilty. Meanwhile, the chief of the U.S. Department of Housing and Urban Development has new counsel.
Jimmie Ray Lawson II, a former Virginia lawyer, has pleaded guilty to wire fraud and charges he spent money that should have been used to pay off liens.
Federal court records show that losses from Lawson's scheme total as much as $5 million.
Lawson was a closing attorney who "diverted some or all of the loan proceeds to his personal benefit and did not pay off previous liens," according to federal prosecutors. He concealed facts, including how loan proceeds were disbursed and "caused the lender to unwittingly finance 100 percent of the transaction."
"Lawson avoided detection by paying the monthly payments on the first mortgage," according to court documents. "His conduct departed from the fundamental principles of honesty, moral uprightness, fair play and candid dealings."
In southern Illinois lawyer Patrick Cox stands accused of using a client's money from a mortgage transaction for his own use.
Susan Burger, a lawyer in Jonesboro representing Cox's clients, said Cox was handling a divorce that included the sale of a bar owned by the couple that was splitting up.
The bar was sold and money was placed into a trust controlled by Cox, Burger told MortgageDaily.com.
But the couple found there were not enough funds to cover the check they issued to pay off the mortgage on the bar, she said.
"When the court ordered the mortgage paid off the clients discovered that the money was missing," Burger said.
Cox could not be reached for comment. He is also being investigated by law enforcement and the Illinois Attorney General is also looking into the case.
Cox has a prominent background. He is a former public defender and former city attorney for Cairo, Ill., who once ran for state attorney general.
The former president of Ginnie Mae has become HUD's top lawyer.
Robert M. Couch has been sworn into office as chief legal officer and senior legal counsel to HUD secretary Alphonso Jackson.
Couch will head a legal team of 400 lawyers in 50 offices spread across the country.
Prior to his stint running Ginnie Mae Couch was president and CEO of New South Federal Savings Bank in Birmingham, Ala., and was a lawyer and CFO of First Commercial Bancshares, a bank holding company also in Birmingham.
Couch served as Chairman of the Mortgage Bankers Association, according to his bio on the Ginnie Mae Web site from 2003-2004. He also served on MBA's Blue Ribbon Task Force responsible for defining the proper role of Fannie Mae and Freddie Mac in the mortgage industry. In addition, he served as president of the Mortgage Bankers Association of Alabama, and as a member of the Federal Reserve's Thrift Industry Advisory Council.