PRESIDENT OF TITLE INSURANCE AGENCY SENTENCED IN MANHATTAN FEDERAL COURT TO 20 MONTHS IN PRISON FOR MISAPPROPRIATING MILLIONS OF DOLLARS WORTH OF CLIENT FUNDS

United States Attorney
Southern District of New York

SEPTEMBER 20, 2011 ELLEN DAVIS,

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 a title insurance agency,
Liberty Title Agency, LLC (“Liberty Title”), was sentenced today
by U.S. District Judge ROBERT W. SWEET to 20 months in prison for
misappropriating and embezzling escrow and other client funds
from Liberty Title and two other insurance agencies he controlled
and operated in New York and Suffolk counties. MADDEN pled
guilty before U.S. Magistrate Judge Henry Pitman to wire fraud
and embezzlement of money held by an insurance agent on December
14, 2010.
Manhattan U.S. Attorney PREET BHARARA said: “Brian
Madden held himself out to be an honest insurance broker who gave
his clients a false sense of security by leading them to believe
their property was protected against potential loss. In reality,
he raided their accounts for his own personal gain and stole from
one client to pay another to cover his tracks. His crime spree
has come to a fitting conclusion.”
According to the Indictment, a Complaint previously
filed in this case, other court filings, and statements made
during the guilty plea and sentencing proceedings:
MADDEN was the president and co-founder of Liberty
Title, which had been one of the largest independently-owned
title insurance agencies in New York State. Title insurance is
sold to purchasers of property or lenders financing the purchase
of property, and is meant to protect the owner’s or lender’s
financial interest in real property against loss due to title
defects or liens. Liberty Title issued title insurance policies
on behalf of several title insurance underwriters in connection
with commercial and residential real estate transactions. MADDEN
also controlled and operated two other title insurance agencies:
Skyline Title, LLC, and GNY Liberty Abstract, LLC. Liberty Title
closed operations in April 2009.
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. Those cash draws, which at times amounted to hundreds of
thousands of dollars in a single month, far exceeded MADDEN’s
draws in prior years, and were taken despite the deteriorating
real estate market and Liberty Title’s increasingly precarious
financial position.
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. 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. Among the victims of MADDEN’s fraud was the
Watchtower Society, a charitable religious organization, which
provided Liberty Title with $500,000 to be held in escrow for the
purchase of a parcel of land.
* * *
In addition to his prison term, Judge SWEET sentenced
MADDEN, 57, of Greenlawn, New York, to two years of supervised
release.
Mr. BHARARA praised the investigative work of the
Federal Bureau of Investigation and the New York State Department
of Insurance.
This prosecution is being handled by the Office’s
Complex Frauds Unit. Assistant United States Attorney AVI
WEITZMAN is in charge of the prosecution.
11-284 ###
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