The Long Islander who co-founded the now defunct Liberty Title Agency pleaded guilty in Manhattan federal court Tuesday to one count of wire fraud and one count of insurance fraud in a scheme that embezzled millions of dollars from clients, according to the office of U.S. Attorney Preet Bharara, left.
Starting in early 2008, Brian Madden of Greenlawn commingled and transfered money between clients’ accounts and funds entrusted to Jericho-based Liberty, one of the state’s largest independently owned title insurance firms, and two of his other companies, Skyline Title and GNY Liberty, federal officials said. These companies set up escrow accounts for clients and collected money to pay taxes and other charges for them.
For example, Madden took $2 million from clients’ accounts between January 2008 and April 2009, when Liberty shut down, investigators found.
In a practice called “playing the float,” Madden then used new funds from clients to pay off other clients’ debts, the U.S. Attorney’s Office said. Because of this, property changes were not recorded on time and taxes on dozens of mortgage and real estate transactions were not paid.
Madden could not be reached for comment.
The wire fraud charge carries up to 20 years in prison and insurance fraud, up to 10 years. Sentencing has been set for March 29.
Bharara, the U.S. attorney for the Southern District in Manhattan, said Madden destroyed his own business: "Brian Madden brazenly stole millions of dollars from his clients, who included not only sophisticated commercial developers, but also not-for-profit organizations and Mom-and-Pop real estate owners. In the process, he not only breached his fiduciary and legal duties to his clients, he sunk his own business.”
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