NY Times: Nation's Largest Title Underwriter Failed To Disclose Suits Accusing Two Subsidiaries Of Playing Roles In Mortgage Fraud Schemes

The New York Times reports:

• For years, Fidelity National Financial, the nation’s largest title insurance company, did not tell investors about dozens of lawsuits accusing two units and several employees of playing a role in an elaborate mortgage fraud scheme in San Diego. The first lawsuits by victims of the fraud were filed in 2006 and the architect of the scheme pleaded guilty in 2007, claiming in sworn depositions that Fidelity National employees helped concoct the paperwork for the sham home sales at the heart of the scheme. Fidelity National did not mention this litigation to its shareholders until October 2009 — a silence that speaks volumes about how tricky “full disclosure” can be in a world that increasingly demands it but rarely defines it.

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• But whether the company’s disclosure decision is relevant to the civil litigation, it may be relevant to the marketplace — Fidelity National is a public company, with 2008 revenue of $4.33 billion and shares that trade on the New York Stock Exchange. And while title insurance and escrow accounts do not seem like the stuff of white-knuckle drama, the legal adventures that gave rise to the San Diego cases would keep “Law & Order” rolling for months.

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• [Confessed criminal Rollo Norton II] and two associates, who also pleaded guilty, are cooperating with federal prosecutors, who say their criminal investigation is continuing. Several current and former Fidelity National employees are asserting their Fifth Amendment rights, seeking to avoid testifying in civil suits. The company has settled several dozen claims filed against the two subsidiaries, the Chicago Title Company and the Chicago Title Insurance Company, apart from the ones scheduled for trial at the end of the month.

• The company’s chairman has said the settled claims exceed $83 million, before insurance — a bit more than its latest quarter’s profits — and some of its insurers are balking at the legal bills and losses.

For more, see A Public Company Defends Staying Silent About a Legal Snarl.

See also, The Florida Times Union: Fidelity National Financial refutes claims that it violated disclosure laws (Fidelity dealing with numerous lawsuits from a mortgage fraud scheme in San Diego).

For the court documents in one of the lawsuits, see Miller, et al. v. Chicago Title Company, et al.