Title Insurance/Closing Agent Cops Guilty Plea For Swiping Million$ From R/E Escrow Accounts; Resorted To "Playing The Float" To Keep Racket Running

From the Office of the U.S. Attorney (NYC/Manhattan):

• PREET BHARARA, the United States Attorney for the Southern District of New York, announced [] that BRIAN H.MADDEN, the former president and co-founder of Liberty Title Agency, LLC ("Liberty Title"), one of the largest independently-owned title insurance agencies in New York State, pled guilty in Manhattan federal court to defrauding his clients by misappropriating and embezzling millions of dollars of escrow and other client funds entrusted to Liberty Title and two other entities controlled by MADDEN.(1)

For the U.S. Attorney press release, see Former President Of Title Insurance Agency Pleads Guilty In Manhattan Federal Court To Misappropriating Millions Of Dollars Of Client Funds.

(1) From the press release:

• According to the Indictment and Complaint and statements made during the plea proceeding:
  
  MADDEN’s company, Liberty Title, sold title insurance to purchasers of property or lenders financing the purchase of property. [...] MADDEN also controlled and operated two other title insurance agencies: Skyline Title, LLC, and GNY Liberty Abstract, LLC. [...] In addition to issuing title insurance policies, MADDEN’s three companies also provided escrow services to clients, and collected and paid taxes and fees.
  
  
  Beginning around early 2008, MADDEN misappropriated millions of dollars of escrow and other client funds by transferring and commingling those funds among various bank accounts held by Skyline Title, GNY Liberty, and Liberty Title. MADDEN then used the misappropriated funds to sustain Liberty Title’s operations and to make significant withdrawals of monies for his personal use. In particular, between January 2008 and April 2009, MADDEN took more than $2 million in cash draws from Liberty Title. [...] To sustain Liberty Title’s operations in the face of such withdrawals and to pay current client debts, MADDEN misappropriated escrow and client funds of other clients, essentially using new funds from clients to pay off debts on behalf of other clients -- a practice called "playing the float." In addition, because MADDEN misappropriated the funds of title insurance agencies, he failed to timely and properly record and pay taxes on dozens of mortgages and other real estate transactions, further exposing his clients to loss.