LawFuel.com – 20 August, 2009 – PREET BHARARA, the United States Attorney for the Southern District of New York, announced that BRIAN H. MADDEN was indicted today on charges that he misappropriated and embezzled over $4.7 million of escrow, client, and other operating funds
from three title insurance agencies that he controlled and
operated in New York. The three-count Indictment returned today
by the Grand Jury adds a money laundering charge to the wire
fraud and insurance fraud charges for which MADDEN was previously
charged in a Complaint and arrested on May 19, 2009.
According to the Indictment filed today in Manhattan
federal court and the previously-unsealed Complaint against
MADDEN:
MADDEN was the president and co-founder of Liberty
Title Agency, LLC (“Liberty Title”), 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, primarily in the northeastern United States.
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 between and among various bank accounts held by Skyline Title, GNY Liberty, and Liberty Title,
and into other accounts used by Liberty Title. MADDEN then used
the misappropriated funds to sustain Liberty Title’s operations
and permit significant withdrawals 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.
As a result of MADDEN’s illegal activities, Skyline
Title, GNY Liberty, several of their clients, various title
insurance underwriters, and various clients of Liberty Title have
sustained losses of at least approximately $4.7 million.
MADDEN, 55, of Greenlawn, New York, is charged with one
count each of wire fraud, money laundering, and insurance fraud.
If convicted, MADDEN faces a maximum penalty of 20 years in
prison on each of the wire fraud and money laundering counts, and
10 years in prison on the insurance fraud count. MADDEN also
faces a maximum fine of the greater of $500,000 or twice the
gross pecuniary gain or loss from the offense in connection with
the money laundering count, as well as $250,000 or twice the
gross pecuniary gain or loss from the offense on each of the wire
fraud and insurance fraud counts. He also faces forfeiture of
the proceeds of his crimes, including his interest in a variety
of properties and bank accounts, and approximately $108,000 in
cash and $400,000 in cashier’s checks seized during a courtauthorized
search.
The case has been assigned to United States District
Judge ROBERT W. SWEET.
Mr. BHARARA praised the investigative work of the
Federal Bureau of Investigation and the New York State Department of Insurance in this case. Assistant United States Attorneys AVI WEITZMAN and JEFFREY ALBERTS are in charge of the prosecution.
The charges contained in the Indictment are merely
accusations, and the defendant is presumed innocent unless and
until proven guilty.
