LPS settles U.S. Justice investigation
Lender Processing Services Inc. announced an agreement Friday with the U.S. Justice Department to resolve a federal investigation of charges that an LPS subsidiary falsified documents used in foreclosure proceedings.
The non-prosecution agreement, which settles an investigation launched more than two years ago by the U.S. Attorney for the Middle District of Florida, calls for LPS to pay $20 million to the U.S. Marshals Service and $15 million to the U.S. Treasury.
This settlement follows agreements last month by Jacksonville-based LPS with the attorneys general of 46 states and the District of Columbia to pay $127 million in penalties.
LPS had previously settled with attorneys general in three other states, leaving only an investigation by the state of Nevada outstanding.
The settlements involve charges that an LPS subsidiary called DocX LLC falsified the documents. According to a Justice Department news release, former DocX CEO Lorraine Brown pleaded guilty in November to conspiracy to commit mail and wire fraud in the case.
LPS provides technology services for mortgage lenders through all phases of a home loan, from origination through foreclosure when a loan goes bad. Company officials have said that when they learned of misconduct at DocX, they closed down the subsidiary and took steps to address the problems in the foreclosure operations.
The Justice Department said in its release that there were several factors in its decision to enter into a non-prosecution agreement with LPS, including the company's efforts to correct the problems.
"Soon after discovering the misconduct at DocX, LPS conducted a thorough internal investigation, reported all of its findings to the government, cooperated with the government's investigation and effectively remediated any problems it discovered," it said.
"The government's investigation also revealed that Brown and others at DocX took various steps to actively conceal the misconduct from detection, including from LPS senior management and auditors," it said.
Brown, of Alpharetta, Ga., is scheduled to be sentenced on April 23 in federal court in Jacksonville. She faces a maximum penalty of five years in prison and a $250,000 fine, the Justice Department said.
LPS Chief Executive Officer Hugh Harris said in a news release that the settlement of the federal investigation is a positive step for the company.
"Coupled with recent settlements with multiple state attorneys general, as well as other litigation, LPS has effectively dealt with its legacy issues related to past business practices and is squarely focused on delivering leading technology-driven solutions to enable the mortgage industry to meet its new requirements," he said.