DocX Founder pleads guilty to forgery and fraud, read below:
The founder and former president of DocX, once one of the nation’s largest foreclosure-processing companies, pleaded guilty on Tuesday to fraud in one of the few criminal cases to have arisen out of the housing crisis.
The executive, Lorraine O. Brown, 56, entered a guilty plea in federal court in Florida and a plea agreement in state court in Missouri related to DocX’s preparation of improper documents used to evict troubled borrowers from their homes. Ms. Brown’s guilty pleas will lead to a prison term of at least two years, the Missouri attorney general said.
Foreclosure abuses, like the routine filing of apparent forgeries with the nation’s courts, gained widespread notoriety in 2010. Ms. Brown admitted to directing DocX employees, beginning in 2005, to sign other peoples’ names on crucial mortgage documents. Many of the documents, like assignments of mortgages and affidavits claiming that a borrower’s i.o.u. had been lost, were used by banks and their representatives to foreclose on homeowners. DocX also filed falsely notarized documents with county clerks across the country. These practices are now known as robo-signing. In her plea, Ms. Brown admitted to participating in the falsification of more than a million documents.
“We are sending a signal to the financial industry that these mortgage documents have meaning, they are legal documents and if you are going to file them in the courthouses of this country then they had better be honestly drafted,” said Chris Koster, the Missouri attorney general.
In a statement, Mark Rosenblum, a lawyer for Ms. Brown in Jacksonville, Fla., said: “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.”
Ms. Brown entered her pleas Tuesday afternoon. She pleaded to one count of mail fraud in federal court in Jacksonville and agreed to one count each of forgery and perjury in Missouri. The Missouri pleas follow a settlement last summer in which DocX agreed to pay the state $2 million and to cooperate with its investigation.
DocX, founded by Ms. Brown and later purchased by Lender Processing Services of Jacksonville, has executed and notarized millions of mortgage documents for big banks and loan servicers. Lender Processing closed the company in April 2010 after evidence of problems emerged.
According to her plea in Missouri, Ms. Brown said that in 2009 she directed a DocX employee to develop a surrogate signers program at the company because there were “too many documents to sign and not enough people with signature authority.”
Mr. Koster said he was unsure when Ms. Brown would be sentenced. In the federal case, she could face a minimum of probation and a maximum of five years in prison. In the Missouri matter, she could receive a sentence of two to three years. But if she receives a federal sentence of probation or fewer than two years in prison, Mr. Koster said, she would be obligated to serve at least two years in Missouri.
“If citizens had filed these types of documents with a bank in an attempt to get a loan, the banks would have filed criminal cases against them,” Mr. Koster said. “The mortgage servicing industry has to be held to the same standard that the banks hold the rest of us to.”