FBI Lender Processing Services, Inc

8/11/2019 FBI Lender Processing Services, Inc

1/7

U.S. Department of Justice

Criminal Division

Washington, D C 20530

February 14, 2013

Paul J. McNulty, Esq.Joan Meyer, Esq.Baker & McKenzie LLP815 Connecticut Ave, N WWashington, DC 20006-4078

Re: Lender Processing Services, Inc.

Dear Mr . McNul ty and Ms. Meyer:

On the understandings specifie d bel ow, the United States Department of Justice, CriminalDivision, Fraud Section and the United States Attorney's Office f or the Middle District o fFlorida (collectively, the "Government") w i l l no t criminally prosecute Lender ProcessingServices, Inc. and its subsidiaries and affiliates (collectively, " LPS "), for any crimes (except forcriminal tax violations, as to which the Government cannot and does not make any agreement)related to the prepara tion and recordati on of mortgage-related documents as described i n theattached Appendix A, which is incorporated in this Non-Prosecution Agreement ("Ag reement").

It is understood that LPS admits, accepts, and acknowledges re sponsibilit y fo r theconduct set forth i n Appen dix A , and agrees not to make any public statement contradictingAppendix A .

The Fraud Section enters into this Agreement based, in part, on its consideration of thefo l lowing factors:

(a) LPS has made a timely, voluntary , and complete disclosure o f t h e facts describedin A ppendix A .

(b) LPS conducted a thorough internal investigation o f t h e misconduct described in

Appendix A , reported its fin din gs to the Governmen t, cooperated with theGovernment's investigation of this matter, and sought to effectively remediate anyproblems it discovered.

1. Although LPS's self-disclosure and cooperation commenced after awhistleblower co mplain t brought the misconduct to the government'sattention, since the miscon duct described i n App end ix A was first


2/7

reported, LPS has taken substantial remedial actions, including:

a. With in approximately six months of discovering the misconduct,LPS w oun d down a ll operations of its wholl y-o wne d subsidiaryDocX, LLC ("DocX") in Alpharetta, Georgia, where the primary

miscond uct described i n Appe ndix A took place.

b. LPS took action to remediate certain o f the f i l ings made by DocXf rom Ma rch to October 2009, inc luding re-executing with propersignatures and notarizations, app roxima tely 30,000 mortgageassignments.

c. With in weeks o f the disclosure, LPS termina ted DocX 's president,Lorraine Brown. Later, after conducting its internal investigation,LPS terminated Ms. Brown's immediate supervisor at LP S for,among other reasons, fail ure to supervise M s. Brown and the DocX

operation.

2. The Government received substantial information f rom LPS, as well asf rom federal and state regulatory agencies, demonstrating LPS has recentlymade important and positive changes i n its compliance, tra ining, andoverall approach to ensuring its adherence to the law.

a. On Apr i l 13, 2011, LPS entered into a consent order (the 2011 "Consent Order") with the Board of Governors o f t h e FederalReserve System, the Office o f t h e Comptroller of the Currency, theFederal Deposit Insurance Corporation, and the Off ice o f Thrift

Supervision (collectively, the "Banking Agencies"). The 2011Consent Order has a number of conditions wi th which LPS isrequired to comply, including:

(i ) delineating a methodology for revi ewin g documentexecution practices and remediating identified issues;

(ii) establishing an acceptable compliance program andtimeline for implementation;

( i i i ) acceptably enhancing its risk management program;

(iv) acceptably enhancing its interna l audit prog ram ;

(v) retain ing an independent consultant to revie w and report onLPS's document execution practices, and assess relatedoperational, compliance, legal, and reputational risks; and

2


3/7

(vi) to the extent that the independent consultant iden tifi es anyfinancial harm stemming f rom the document executionpractices to mortgage servicers or borrowers, establish aplan for reimbursing any such financial injury.

To date, LPS has complied wi th the conditions of the 2011Consent Order. That work is ongoing and is subject to review andapproval by the Ba nkin g Agencies.

b. LPS has agreed i n a multi-s tate settlement wi th a number of stateattorneys general (the Multi-State Resolution") to undertakeadditional steps, including assisting homeowners w i th remediatingspecific documents as necessary and appropriate.

c. Including this Agreement, LPS has paid to date over $160 millionto state and federal authorities related to the DocX conduct.

This recent record is commendable, and partially mitigates the adverseimplications of the prior history of misconduct at the DocX subsidiary.

3. The prim ary miscond uct set for th in Append ix A to ok place at DocX, asubsidiary acquired by an LPS predecessor company in 2005, whichconstituted less than 1% of LPS's overall corporate revenue.

4. The Gove rnment's investigation has revealed, as set forth in Appendix A,that Lorraine Brown and others at DocX to ok various steps to activelyconceal the misconduct taking place at DocX f rom detection, includingf rom LPS senior management and auditors.

This Agreement does not provide any protection against prosecution for any crimesexcept as set forth above, and applies only to LPS and not to any other entities or to anyindividuals, including but not l imited to employees or officers o f LPS. The protections providedto LP S shall not apply to any acquirer or successor entities unless and unti l such acquirer orsuccessor formally adopts and executes this Agreement.

This Agreement shall have a term o f two years f rom the date of this Agreement, except asspecifically provide d below. It is understood that fo r the two-year term o f this Agreement, LPSshall: (a) comm it no crime whatsoever; (b) t ruthfully and completely disclose non-privile gedinformation with respect to the activities of LPS, its officers and employees, and othersconc ernin g all matters about which the Government inquires of it , which information can be usedfor any purpose, except as otherwise l imited in this Agreement; (c) bring to the Governm ent'sattention all poten tially criminal conduct by LPS or any of its employees that relates to violationsof U.S. laws ( i) concerning fra ud or (ii) concerning mortgage or foreclosure document executionservices; and (d) bring to the Government's attention all criminal or regulatory investigations,

3


4/7

administrative proceedings or civil actions brought by any governmental authority in the UnitedStates against LPS , its subsidiaries, or its employees that alleges f ra ud or violati ons o f the lawsgoverning mortgage or foreclosure document execution services.

Until the date upon which a ll investiga tions and prosecutions arising out o f the conductdescribed in this Agreement are concluded, whether or not they are finished wi th in the two-yearterm specif ied in the preceding paragraph, LPS shall, in connection wi th any investigation orprosec ution arising out o f t h e conduct described in this Agreement: (a) cooperate fu l ly wi th theGovernment, the Federal Bureau of Investigation, and any other law enforcement or governmentagency designated by the Government; (b) assist the Government in any investigation orprosecution by providing logistical and technical support fo r any meeting, interview , grand juryproceeding, or any trial or other court proceeding; (c) use its best efforts promptly to secure theattendance and truthful statements or testimo ny of any officer, agent or employee at any meetingor in ter vie w or before the grand j u ry or at any trial or other court proceeding; and (d) provide theGovernment, upon request, all non-privileged information, documents, records, or other tangibleevidence about which the Government or any designated law enforcement or governmen t agencyinquires.

It is understood that, i f the Government determines in its sole discretion that LPS hascommitted any crime subsequent to the date of this Agreement, or that LPS has given false,incomplete, or misleading testimony or information at any tim e, or that LPS has otherw iseviolated any provision of this Agreement, LPS shall thereafter be subject to prosecution for anyfederal violation o f which the Government has knowledge, including pe rjur y and obstruc tion of

ju st ice . Any such prosecution that is not time-barred by the applicable statute o f limitations onthe date o f t h e signing of this Agreement may be comm enced against LPS, notwiths tandin g theexpiration of the statute o f limitations between the signing of this Agreement and the expirationof the term of the Agreement plus one year. Thus, by signing this Agreement, LPS agrees that thestatute o f limitations wi th respect to any prosecution based on the facts set forth i n Appe ndix Athat is not time-barred on the date that this Agreement is signed shall be tolled for the term of thisAgreement plus one year.

It is understood that, i f the Government determines in its sole discretion that LPS hascommitted any crime afte r signing this Agreement, or that LPS has give n false, incomp lete , ormisleading testimony or information at any time, or that LPS has otherwise violated anyprovision of this Agreement: (a) all statements made by LPS or any of its employees to theGovernment or other designated law enforcement agents, including Appendix A, and anytestimony given by LPS or any of its employees before a grand j u ry or other tribunal, whetherprior or subsequent to the signing of this Agreement, and any leads derived f rom such statementsor testimony, shall be admissible in evidence in any criminal proceeding brought against LPS;and (b) LPS shall assert no claim under the United States Cons titu tion , any statute, Ru le 410 ofthe Federal Rules of Evidence, or any other federal rule that such statements or any leads derivedtherefrom are inadmissible or should be suppressed. By signing this Agreement, LPS waives allrights in the foregoing respects.

4


5/7

The decision whether any public statement, made prospectively by LPS, contradictsAppendix A and whether it shall be im puted to LPS fo r the purpose of dete rmin ing whether LPShas breached this Agreement shall be in the sole discretion o f t h e Government. I f theGov ernm ent determines that a publi c statement contradicts in who le or i n part a statementcontained i n Appe ndix A , the Governme nt shall so not i fy LPS, and LPS may avoid a breach ofthis Agreement by publicly repudiating such statement(s) within five business days afternotification. Th is paragraph is not intended to apply to any statement made by any form er LPSofficers, directors, or employees. Further, nothing in this paragraph precludes LPS f rom takinggood-faith positions in litigation involving a private party that are not inconsistent with AppendixA. In the event that the Government determines that LPS has breached this Agreement in anyother way, the Government agrees to provide LPS w i th written notice of such breach prior toinstituting any prosecution resulting f rom such breach. LPS shall, within 30 days o f receipt ofsuch notice, have the opportunity to respond to the Government i n writ ing to explain the natureand circumstances of such breach, as well as the actions LPS has taken to address and remediatethe situation, which explanation the Government shall consider in determining whether toinstitute a prosecution.

It is understood that LPS agrees to pay a total monetary penalty of $35,000,000. LPS mustpay $20 mi l l ion o f this sum to the United States Marshals Service, and $15 mill ion to the UnitedStates Treasury, both within ten days o f execution o f this Agreement. The United States hasprovided LPS separately wi th wir ing instructions to accomplish these payments.

LPS takes no position as to the disposition o f t h e funds after payment and waives anystatutory or procedural notice requirements wi th respect to the United States' disposition o f t h efunds. As a result of LPS's conduct, including the conduct set forth i n Appendix A, LPS agreesthat the United States is e ntitled to forfeit the proceeds of the conduct pursuant to Tit le 18,United States Code, Section 981(a)(1)(C). Without a dmitti ng that LPS and/or its predecessors i ninterest received $20 mil l ion n proceeds, LPS agrees that by executing this Non-ProsecutionAgreem ent i t is releasing all claims it may have to the funds, including the right to challenge thecivi l forfeiture o f t h e $20 million payment, as proceeds of such conduct. LPS furt her agrees tosign any additional documents necessary to complete civil forfeiture of the fund s, including butno t l imited to a consent to forfeiture.

The $35 mill ion t otal amount paid is f inal and shall not be refunded should theGovernment later determine that LPS has breached this Agreement and commence a prosecutionagainst LPS. The Government agrees that in the event of a subsequent breach and prosecution, itw i l l recommend to the Court that $20 mi l l ion be offset against whatever forfeiture the Courtshall impose as part of its judgment and $15 mil l ion be o ffs et against whatev er fine the Courtshall impose as part of its judg ment. LPS understands that such a recommendation w i l l not bebinding on the Court. LPS agrees that it shall not seek any tax deduction in connection wi th thesepayments, and shall not seek to have either o f t h e payments applied as a s et-o ff as to any otherregulatory fine or other debt owed to the United States as of the date that this Agreement isexecuted.

5


6/7

It is further understood that, as noted above, LPS has strengthened its compliance andinternal controls standards and procedures, and that it w i l l furt her strengthen them as required bythe Ba nki ng Agencies and any other regulatory or enforcement agencies that have addressed themisconduct set forth in Appendix A. In addition, i n light o f active investigations by va riousregulators o f t h e conduct described i n Ap pe ndi x A , and the role that regulators such as thoselisted above w i l l continue to play in reviewing LPS's compliance standards, the Government hasdetermined that adequate compliance measures have been and w i l l be established. I t is fur the runderstood that LPS w i l l report to the Gove rnment, upon request, regarding its reme diatio n andimplementation o f any compliance program and internal controls, polici es, and procedures thatrelate to its mortgage or foreclosure document execution services. M oreove r, LPS agrees that ithas no objection to any regulatory agencies providing to the Government any information orreports generated by such agencies or LPS reg arding this matter. Such information and reportsw i l l likely include proprietary, financial, confidential, and competitive business infonnation.Moreover, publ ic disclosure o f the information and reports could discourage cooperation, impedependin g or potential governmental investigations, and thus undermin e the objec tives of thereporting requirement. For these reasons, among others, the information and reports and thecontents there of are intended to rem ain and sh all rema in non-public , except as othe rwise agreedto by the parties in writing, or except to the extent that the Government determines n its solediscretion that disclosure would be in furtherance o f t h e Government's discharge of its duties andresponsibilities or is otherwise required by law .

It is further understood that this Agreem ent does not bind any federal, state, local, orforeign prosecuting authority other than the G overnment. The Governm ent w i l l , however, bringthe c ooperation o f LPS to the attention o f other prosecuting and investigative authorities, i frequested by LPS.

It is further understood that LPS and the Government may disclose this Agreement to thepublic.

6


7/7

With respect to. his matter, from the date of execution of tl s Agreement forward, thisAgreement supersedes all prior, i f any, understandings, promises and/or conditions between theGovernment and LPS. No additional promises, agreements, and conditions have been enteredinto other than those set forth in this Agreement, and none w ll be entered into unless in writingand signed by all parties.

Sincerely,

DENIS J . McINERNEY

Chief, Fraud SectionCriminal DivisionUnited StaJ pet>artonent of justice

Glenn S. Leon, Assistant Chief

Ryan Rohlfsen, Trial

Attorney

ROBERT E. O'NEILL

United States Attorney

MarkB Devereaux /Assistant United States Attorney

AGREED AND CONSENTED TO:

Lender Processing Services, Inc.

By:. (/ (K^ -C. Johnson / Dateo3ff

General CounselLender Processing Services, Inc.

APPROvVED:

2.-K-H3

J. McNulty, Esq. Dateoan Meyer, Esg,

Baker & McKenzie LLPAttorneys for Lender Processing Services, Inc.

7

FBI Lender Processing Services, Inc

Documents

Transcript of FBI Lender Processing Services, Inc