Nevada Attorney General Files Deceptive Practices Suit Against LPS
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Nevada Attorney General Files Deceptive Practices Suit Against LPS

December 16, 2011

Nevada Attorney General Catherine Cortez Masto has filed a lawsuit against Lender Processing Services Inc. (LPS), DOCX LLC, LPS Default Solutions Inc. and other subsidiaries of LPS (collectively known as "LPS") for engaging in deceptive practices against Nevada consumers. The lawsuit, filed in the 8th Judicial District of Nevada, follows an extensive investigation into LPS’ default servicing of residential mortgages in Nevada, specifically loans in foreclosure. The lawsuit includes allegations of widespread document execution fraud, deceptive statements made by LPS about efforts to correct document fraud, improper control over foreclosure attorneys and the foreclosure process, misrepresentations about LPS’ fees and services, and evidence of an overall press for speed and volume that prevented the necessary and proper focus on accuracy and integrity in the foreclosure process.
“The robo-signing crisis in Nevada has been fueled by two main problems: Chaos and speed,” said Attorney General Masto. “We will protect the integrity of the foreclosure process. This lawsuit is the next, logical step in holding the key players in the foreclosure fraud crisis accountable.”
The lawsuit alleges that LPS:
►Engaged in a pattern and practice of falsifying, forging and/or fraudulently executing foreclosure related documents, resulting in countless foreclosures that were predicated upon deficient documentation;
►Required employees to execute and/or notarize up to 4,000 foreclosure related documents every day;
►Fraudulently notarized documents without ensuring that the notary did so in the presence of the person signing the document;
►Implemented a widespread scheme to forge signatures on key documents, to ensure that volume and speed quotas were met;
►Concealed the scope and severity of the document execution fraud by misrepresenting that the problems were limited to clerical errors;
►Improperly directed and/or controlled the work of foreclosure attorneys by imposing inappropriate and arbitrary deadlines that forced attorneys to churn through foreclosures at a rate that sacrificed accuracy for speed;
►Improperly obstructed communication between foreclosure attorneys and their clients; and 
►Demanded a kickback/referral fee from foreclosure firms for each case referred to the firm by LPS and allowed this fee to be misrepresented as “attorney’s fees” on invoices passed on to Nevada consumers and/or submitted to Nevada courts.
LPS’ misconduct was confirmed through testimony of former employees, interviews of servicers and other industry players, and extensive review of more than one million pages of relevant documents. Former employees and industry players describe LPS as an assembly-line sweatshop, churning out documents and foreclosures as fast as new requests came in and punishing network attorneys who failed to keep up the pace.
"LPS has cooperated with the Attorney General's office for more than 14 months to resolve its inquiry in a manner which would benefit the citizens of Nevada," read a statement from LPS. "Unfortunately, the company's efforts to engage in meaningful discussions with the Nevada Attorney General's office have been frustrated by the Nevada Attorney General's decision to outsource its investigation to Cohen Milstein Sellers & Toll PLLC, a plaintiff's law firm located in Washington, D.C., in apparent violation of Nevada law. The complaint highlights misconceptions about LPS and seeks to sensationalize a variety of false allegations in a misleading manner."
In late November, the Office of the Nevada Attorney General recently indicted Gary Trafford and Gerri Sheppard as part of a separate, criminal investigation into the conduct of robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008. 
"As the company [LPS] has previously disclosed, it has discovered, during its own internal reviews, potential issues related to some of its past document execution practices. However, the company is not aware of any person who was wrongfully foreclosed upon as a result of a potential error in the processes used by our employees," continued LPS in their statement. "LPS will vigorously defend against the complaint filed by the Nevada Attorney General."

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