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Wednesday, December 15, 2010

Guilty plea in title insurance fraud case

Guilty plea in title insurance fraud case ; The Long Islander who cofounded the now defunct Liberty Title Agency pleaded guilty in federal court in Manhattan Tuesday to one count of wire fraud and one count of insurance fraud after embezzling more than $2 million from clients, said the office of U.S. Attorney Preet Bharara.

Starting in early 2008, Brian Madden of Greenlawn commingled and transferred millions of dollars between clients' accounts and funds entrusted to Jericho-based Liberty, one of the state's largest independently owned title insurance firms, and two of his other companies, Skyline Title and GNY Liberty, federal officials said. These companies set up escrow accounts for clients and collected money to pay taxes and other charges for them.

For example, Madden took $2 million from clients' accounts for his personal use between January 2008 and April 2009, when Liberty shut down, investigators found.

In a practice called "playing the float," Madden then used new funds from clients to pay off other clients' debts, the U.S. attorney's office said. Because of this, property changes were not recorded on time and taxes on dozens of mortgage and real estate transactions were not paid on time.

Madden and his attorney could not be reached for comment.
The wire fraud charge carries up to 20 years in prison and insurance fraud, up to 10 years. Madden has agreed to forfeit four properties and more than $2 million in various business and personal accounts and personal checks seized in searches. Sentencing has been set for March 29.

Bharara, the U.S. attorney for the Southern District in Manhattan, said Madden destroyed his own business: "Brian Madden brazenly stole millions of dollars from his clients, who included not only sophisticated commercial developers, but also not-for-profit organizations and Mom-and-Pop real estate owners. In the process, he not only breached his fiduciary and legal duties to his clients, he sunk his own business." For the latest updates PRESS CTR + D or visit Stock Market news Today

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