The former president of a now-defunct title agency faces 30 years in federal prison after pleading guilty to one count each of wire fraud and insurance fraud.
Brian Madden, the former president of Liberty Title Agency, admitted to misappropriating and embezzling millions of dollars of escrow and other client funds before Magistrate Judge Henry B. Pitman in the U.S. District Court for the Southern District of New York.
According to a press release from the office of the U.S. Attorney for the Southern District, Madden's scheme began in early 2008 when he started commingling and transferring funds between two other entities he controlled—Skyline Title LLC and GNY Liberty Abstract LLC—and Liberty Title to sustain the latter entity's business as well as take money for his personal use.
Between January 2008 and April 2009, Madden took over $2 million from Liberty Title's accounts, with monthly draws exceeding hundreds of thousands of dollars, the district attorney said. The withdrawals far exceeded what Madden had taken in previous years and they came during a time when Liberty Title was in an increasingly precarious financial condition.
To keep Liberty Title going, Madden "played the float"—using new funds from clients to pay off debts on behalf of other clients, said U.S. Attorney Preet Bharara.
He also failed to timely and properly record and pay taxes on dozens of mortgages and other real estate transactions. Liberty Title ceased operations in April 2009.
On the wire fraud conviction, Madden can receive a maximum of 20 years in jail, while he faces 10 years on the insurance fraud conviction. Sentencing is set for March 29, 2011.
