LI title insurer gets jail in 'crime spree'

The co-founder of a Jericho-based title insurance company was sentenced Tuesday in federal court in Manhattan to 20 months in prison after looting escrow accounts in a "crime spree."

Brian Madden, former president of the now defunct Liberty Title Agency, had pleaded guilty in December to one count of wire fraud and one count of insurance fraud after embezzling more than $2 million from clients.

His company was one of the state's biggest independently owned title insurance firms before it shut down in April 2009. It issued insurance policies for lenders and owners on behalf of insurance underwriters and put clients' money into separate, escrow accounts to pay taxes and other charges for them.

"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," said Manhattan U.S. Attorney Preet Bharara. "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."

Madden transferred escrow funds to the bank accounts of two other businesses that he controlled, spending some on himself. Without giving details, federal and state insurance investigators cited one example in which Madden drew $2 million from clients' accounts for his personal use between January 2008 and April 2009.

Also, in a practice called "playing the float," Madden took new funds from clients to pay off other clients' taxes and real estate deals. Because of this, property changes were not recorded on time and taxes went unpaid on dozens of mortgage and real estate transactions, affecting nonprofits, sophisticated commercial developers and mom-and-pop property owners, federal authorities said.

Madden, 57, of Greenlawn, could not be reached for comment last night.

U.S. District Court Judge Robert Sweet also sentenced him to 2 years of supervised release.

In his guilty plea, Madden also agreed to forfeit four properties and more than $2 million found in various accounts and personal checks.