A $2 million settlement has been reached between Missouri’s attorney general and Lender Processing Services Inc. over alleged criminal robo-signing activity at a subsidiary. State criminal charges against LPS will be dropped as part of the deal.
Missouri Attorney General Chris Koster announced Thursday the settlement with LPS.
The agreement calls for a $2 million payment to the state and cooperation with the attorney general in an ongoing criminal investigation. The Missouri state Treasury will receive $1.5 million, while the Merchandising Practices Revolving Fund of the Attorney General’s Office will receive $0.5 million as reimbursement for the costs of the investigation.
The agreement provides for “a complete release of any potential liability of LPS and DocX in the state of Missouri,” LPS said in a news release.
Quarterly reports back to the attorney general are required of LPS.
LPS previously agreed to a consent order with the Office of the Comptroller of the Currency in an agreement that requires LPS to utilize an independent, third-party consultant to conduct a review of document execution services provided by subsidiaries from 2008 to 2010. The review is intended to assess potential financial injury to borrowers.
At the center of the Missouri investigation is DOCX, an LPS subsidiary that was closed down in May 2010 with an “alleged role in the mortgage-document surrogate-signing scandal of 2010,” Missouri said.
“The 68 documents on which the indictments were based were purportedly signed by an employee of DOCX, Linda Green, in her role as a designated vice president for several of the nation’s leading banks, but were in fact signed by someone else, and subsequently notarized and filed in Missouri,” the state said.
Criminal indictments were obtained against DOCX in February 2012. However, Thursday’s agreement relieves LPS and DOCX of criminal prosecution in the state.
DOCX directed employees to falsely sign mortgage documents in the names of various bank vice presidents without proper authorization, the state alleges. The documents were then fraudulently notarized. Those documents were then used in courthouses across the state.
The settlement amount is far in excess of the $363,000 in Missouri revenues earned by DOCX from 2008 through 2010.
“I appreciate LPS taking responsibility for the actions of its subsidiary, and for their agreeing to cooperate in our continuing criminal investigation of this matter,” Koster stated.
The attorney general’s office is continuing a criminal investigation into DOCX founder and former president, Lorraine Brown — who was terminated by LPS in November 2009.
Brown’s indictment alleges forgery and making false declarations related to mortgage documents processed by DOCX in the state of Missouri.
The Missouri action follows the November 2011 indictment by Nevada’s Office of the Attorney General of LPS title agents Gary Trafford and Gerri Sheppard. A class action was filed in the same state the following month.
Criminal investigative subpoenas were issued by Michigan Attorney General Bill Schuette in June 2011, one month after California Attorney General Kamala D. Harris and Illinois Attorney General Lisa Madigan subpoenaed LPS.
“This settlement is an important milestone in our ongoing efforts to resolve legal and regulatory issues related to the operations of DocX, which we closed in 2010,” LPS president and chief executive officer, Hugh Harris, stated in the announcement. “LPS remains focused on resolving all remaining legal and regulatory challenges as expeditiously as possible and is committed to ensuring that we continue to operate with integrity and compliance in everything we do.”