City of St. Clair Shores General Employees Retirement System v. Lender Processing Services, Inc. et al
Filing
41
AMENDED COMPLAINT against Jeffrey S. Carbiener, Francis K. Chan, Lee A. Kennedy, Lender Processing Services, Inc., Michelle Kersch with Jury Demand filed by Baltimore County Employees Retirement System. (Attachments: # 1 Appendix Index of Exhibits, # 2 Exhibit A, # 3 Exhibit B, # 4 Exhibit C, # 5 Exhibit D, # 6 Exhibit E, # 7 Exhibit F, # 8 Exhibit G, # 9 Exhibit H, # 10 Exhibit I, # 11 Exhibit J, # 12 Exhibit K, # 13 Exhibit L, # 14 Exhibit M)(Reise, Jack)
EXHIBIT K
Linda Fisher, Esq.
Kyle Rosenkrans, Esq.
CENTER FOR SOCIAL JUSTICE
SETON HALL LAW SCHOOL
833 McCarter Highway
Newark, New Jersey 07102
(973) 642-8700
Fees waived under R. 1:13-2
Attorneys for Applicant-Intervenor
SUPERIOR COURT OF NEW JERSEY
CHANCERY DIVISION
GENERAL EQUITY PART
MERCER COUNTY
IN THE MATTER OF
RESIDENTIAL MORTGAGE
FORECLOSURE PLEADING AND
DOCUMENT IRREGULARITIES
DOCKET NO. F-059553-10
Civil Action
CERTIFICATION OF
ADRIAN G. LOFTON
I, Adrian G. Lofton, of full age, do hereby certify as follows:
1.
I make this certification based on my personal knowledge.
2.
I am an adult citizen of the United States and have resided in Duval County, Florida
since 1999.
3.
I received an associate’s degree in business administration from Keiser University in
1997.
4.
I continued my education at Nova Southeastern University, but left school in 1999, 12
credit hours short of bachelor’s degree.
5.
I moved to Jacksonville, FL in 1999 to help my grandmother when my grandfather
became sick.
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6.
I worked in the mortgage default servicing industry for over six years starting in
September 2001.
7.
Mortgage default servicing is a specialty business area that provides services to banks
servicing mortgage loans that have gone into default.
8.
When a mortgage loan goes into default, banks outsource their default servicing
operations to a business specializing in the area of mortgage default servicing.
9.
A mortgage loan is considered to be in default when a borrower’s records reflect the
borrower has failed to make periodic payments required by the loan documents.
10. The life cycle of servicing a default loan commences with the default determination.
11. The life cycle of servicing a default loan ends with a sheriff’s sale or some other event
resulting in the real estate being owned by the bank or an investor, a status known in
the industry as REO for “real estate owned.”
12. Typically in the mortgage default servicing industry when a borrower’s mortgage loan
is more than 90 days in default, the loan is turned over to a default mortgage-servicing
provider.
13. I started working in the mortgage default servicing industry in September 2001 as an
employee of the Law Office of Gerald Shapiro (“LOGS”) in Jacksonville, FL.
14. LOGS had mortgage servicing operations all over the country.
15. When I started at LOGS, I understood that it had the lion’s share of default mortgage
servicing nationwide.
16. Referrals from bank mortgage servicers came to LOGS on the 91st day of default for
foreclosure default servicing.
17. The Jacksonville LOGS office had approximately 150 employees.
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18. There were approximately 10 different subject-matter areas within the LOGS
Jacksonville operation.
19. LOGS hired me as an intake specialist handling default mortgage foreclosure matters
referred by Washington Mutual Bank & Everbank, two banks for who LOGS
provided default mortgage processing services.
20. As a LOGS intake specialist I reviewed incoming foreclosure files and sent the matters
out to LOGS network referral attorneys.
21. LOGS maintained a network of foreclosure attorneys in every state.
22. The LOGS foreclosure-servicing operation was computerized with internet links to the
banks that turned over default mortgage servicing to LOGS and internet links to the
LOGS network attorney law firms.
23. The basic computer platform used by the banks’ mortgage servicing operations is
called Mortgage Servicing Package (“MSP”).
24. MSP is a computer program developed in the early 1960s.
25. In 1990, a company named Alltel Information Services purchased the company that
owned MSP.
26. In 2002, Fidelity National Finance purchased the financial services division of Alltel
Information Services, renamed the purchased business Fidelity Information Services,
and moved the company headquarters to Jacksonville, FL.
27. Fidelity licenses the MSP program to banks and other businesses in the finance
industry.
28. MSP is available as a platform for use by any bank mortgage servicing operation.
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29. In my six-years experience in the default mortgage servicing industry, each bank
mortgage servicing operation used MSP for entering, processing and storing customer
account data.
30. Bank mortgage-servicing operations also use a suite of web-based default management
tools to communicate messages, images and invoices with other businesses to whom
the banks outsourced default mortgage servicing.
31. The banks’ mortgage servicing operations transmitted foreclosure loan file data to
default mortgage service providers over the internet using web-based applications.
32. As part of a default mortgage-servicing contract between the banks and LOGS,
designated LOGS employees had access by way of an internet link to the bank’s
computer systems and records for individual mortgage loans.
33. As a LOGS employee, I was authorized by the banks to enter the banks’ computerized
records regarding individual loans referred by the banks to LOGS for mortgage default
servicing.
34. The LOGS employees’ access to the borrower information on the banks’ computer
systems was controlled by security protocols.
35. The security protocol included the assignment of unique user names and passwords to
LOGS employees with specific access authorization to the banks’ computerized
customer records.
36. As a LOGS employee, I was assigned a unique user name and password to access each
banks’ computerized customer records over an internet link using Lenstar.
37. The unique computer user name and password assigned to me gave me access to the
entire bank’s mortgage loan portfolio, including loans that were not in default as well
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as other loans in default that had not been assigned to me as part of the LOGS intake
process.
38. While assigned to foreclosure referral duties at LOGS, I could access banks’ customer
records on the banks’ computer system to confirm data contained in the referral
transmission.
39. I worked in the LOGS foreclosure referral department from 2001 to 2003.
40. From the foreclosure referral department, I moved to the LOGS bankruptcy
department in 2003.
41. The LOGS bankruptcy operation was broken down into five different subject matter
areas.
42. While working in the LOGS bankruptcy department, I worked on preparing proofs of
claims for use in bankruptcy court proceedings.
43. In the bankruptcy department, my work required me to access bank loan customers’
files in the bank’s computer records stored on MSP at the bank.
44. I kept the user names and passwords I already had for banks I already did work for, but
I had different access to account data in bankruptcy.
45. I also received new user names and passwords for additional banks on whose loans I
did work.
46. I was authorized in accordance with the banks’ security protocols to make changes in
the individual bank customer mortgage loan records.
47. The unique computer user name and password for each bank servicer gave me access
to bank’s customer loan files for loans that were in default as well as for loans that
were not in default.
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48. For example if bank’s mortgage loan portfolio had 2 million mortgage files, I could
access the customer data for the entire 2 million mortgage loan files.
49. For loans that were in default, I could access the bank’s computerized customer
records to change customer account data in the banks’ computer records for the
purpose of reconciling the computerized data with other records.
50. The customer account data I could change included payment and disbursement data.
51. For loans that were not in default, I could access the bank’s computerized customer
records to change customer account data in the banks’ computer records for the
purpose of reconciling the non-defaulting customer’s computerized data with other
records, including the defaulting customer’s records whose loan was assigned to me.
52. For example, typically if a customer in default claimed a payment for expenses had
been made and misapplied, I could investigate the claim.
53. If the investigation substantiated the claim, I could correct the prior error.
54. To correct the prior error, I could “move” funds from one subaccount to another
subaccount, e.g., from payment accounts reflecting payment of principal, interest,
taxes, insurance, and escrow amounts to a suspense account.
55. 24 hours later I could then “move” funds from the suspense account to a corporate
expense account and credit the amount of the claimed payment for a corporate
expense.
56. If the investigation showed that the defaulting customer’s payment had been
misapplied by the bank to another non-defaulting customer’s account, I could go into
the other customer’s account and “move” monies to show the correct account had been
credited with the payment.
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57. I and other LOGS employees had the ability to reverse transactions previously made
by going into the bank’s customer account records and “moving” funds from a
payment account to a suspense account and then “move” the funds to a corporate
expense account.
58. While I was working at LOGS, the mortgage-servicing contract with Washington
Mutual Bank came to an end.
59. In 2004, an insurance company named First American purchased LOGS and started
laying off employees.
60. First American was a Fidelity competitor.
61. The successor First American business, known as FANDO, continued to used Lenstar
as the internet application for communicating among banks and network law firms.
62. I was laid off from LOGS in summer of 2004.
63. When I left LOGS in 2004, I was a senior bankruptcy associate handling contested
cases.
64. In the summer of 2004, I started working for Option One Mortgage Company as a
bankruptcy specialist where I handled all subject-matter areas of bankruptcy, including
mortgages in foreclosure.
65. Around the end of 2005, I left Option One Mortgage Company and went to work for
ABN AMRO Mortgage assigned to hurricane insurance claims involving properties in
default.
66. I left ABN AMRO Mortgage until April 2006.
67. In April 2006 I got work through a temporary employment agency with Fidelity
National Information Services (FIS).
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68. From April 2006 to October 2007 I was employed by at an FIS subsidiary called
Fidelity National Foreclosure Solutions, Inc., which was a division of Fidelity National
Default Solutions in Jacksonville, Florida.
69. I understood then and still understand that Fidelity National Financial (FNF) company
is the parent company of FIS.
70. By August 2007, the FIS business was using the name FIS LPS Technology Solution.
71. After I was no longer employed, in 2008 the business became Lender Processing
Services, Inc.
72. For purposes of this certification, I refer to my employer as Fidelity.
73. Fidelity was then and is now a competitor of my former employer LOGS.
74. Fidelity had two servicing sites for the entire United States, one in Jacksonville, FL
and Minnesota.
75. Fidelity had network attorneys in every state.
76. As was the case with LOGS, Fidelity’s default mortgage servicing operation was
computerized.
77. I had the opportunity to learn first hand a number of different operational functions
from job “shadowing.”
78. Fidelity’s intake program for foreclosure referrals from bank servicing operations was
NewTrak.
79. When I first started working as a temporary employment agency employee assigned to
Fidelity, I was reviewing foreclosure files that Everbank was submitting to Fidelity to
be loaded to the Fidelity system called NewTrak.
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80. NewTrak is an internet software program used for communicating with Fidelity
network attorneys and bank mortgage servicing operations.
81. I worked as a Fidelity Associate at the Everbank facility for 3 months.
82. At end of 3 months in approximately July 2006, I became a full time Fidelity associate
and moved to the corporate office at 515 Riverside Ave. in Jacksonville, FL where I
remained until I was terminated in October 2007.
83. Corporate headquarters had approximately 600 associates plus supervisors, managers,
assistant vice presidents, vice presidents and the president.
84. Fidelity’s headquarters operation had a number of departments including foreclosure,
bankruptcy, reinstatement, loss mitigation, claims, attorney management and document
execution.
85. Each Department included an Assistant Vice President, a Team Manager, one or more
Team Supervisors, one or more Team Leaders and the Team Associates.
86. Each Team had about 8 to 10 Associates.
87. Individual teams had a designated subject matter responsibility.
88. All of the Team Associates, Team Leaders, Team Managers, Supervisors and Vice
Presidents had usernames and passwords to the Bank Servicers’ MSP systems and to
NewTrak.
89. As a full time associate at corporate headquarters, I worked with a team within the
Foreclosure Department responsible for reinstatements, payoffs and judgment figures
until approximately January 2007.
90. In January 2007, I moved to the Breakdowns Team within the Foreclosure Department.
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91. As a breakdown team associate, I had a broad responsibility to provide breakdowns of
corporate foreclosure expenses to law firms.
92. This job required pulling all of the information about the borrower’s loan history as the
loan passed through multiple hands over time
93. I remained a breakdown associate until I was terminated.
94. Fidelity team associates’ access to the bank servicers’ computer records was similar to
the access to bank customer records available to me when I worked at LOGS.
95. Access was permitted through use of assigned user names and passwords and governed
by security protocols that prohibited others from using user names and passwords that
were not assigned to them.
96. The bank servicers for whom Fidelity provided default services and for whom Fidelity
team associates and supervisory personnel had access to the bank servicers’ computer
systems were:
•
•
•
•
•
•
•
•
•
•
•
•
Option One
Bank of America
Countrywide
Washington Mutual
Wachovia
Key Bank
HomEq (Wachovia now Barclays)
EMC
Wells Fargo
America’s Servicing Company (Wells Fargo)
Saxon
HSBC
97. Fidelity’s Employee Handbook provided:
“Use of Company’s Technical Resources: Employees should never
access any technical resources using another employee’s password.
Employees should only access the libraries, files, data, programs and
directories that are related to your work duties. Unauthorized
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review, duplication, dissemination, removal, installation, damage or
alteration of files, passwords, computer systems or programs, or
other property of the Company, or improper use of information
obtained by unauthorized means, is prohibited.” (p. 51.)
98. I could go into each bank servicer’s computer system and view individual borrower
records using login credentials provided to me.
99. Each bank’s login credentials consisted of a user ID and password.
100. To get these credentials I had to be vetted with a background check.
101. With the computer credentials I could access the bank’s computer records for servicing
mortgage loans.
102. I could go into each bank servicer’s computer system and view individual borrower
records.
103. As was the situation when I worked for LOGS, I could access accounts and “move’
funds around.
104. The banks’ computer system included screens for suspense funds that I could access
and “move” money around various subaccounts.
105. Fidelity team associates received bonuses based on speed in resolving issues.
106. The bonus system placed a premium on resolving issues without raising them with
supervisory personnel.
107. If a team Associate could not resolve a problem, the associate would go up the chain of
command to the Team Leader, then to the Team Supervisor, then to the Team Manager
and then to the Assistant Vice President.
108. Team Associates were graded, ranked and paid bonuses based on the number of
disputes or issues they could resolve without going “up the line” and based on how fast
they could resolve the matter.
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109. Towards the end of my employment at Fidelity, my biggest concern was that most of
the Associate Team members had gained unauthorized access to the logins and passwords
of their team associates and supervisors for all of the bank servicers’ computers.
110. With this unauthorized access to the Bank’s computers, the Fidelity associates could go
into the banks computer files and manipulate the data.
111. Such manipulation of the bank customer data could include changing entries, reversing
transactions, adding transactions and moving funds in and out of suspense accounts.
112. I was particularly concerned that during “crunch” times when a great volume of work
came in during a short time and we were understaffed, Team Associates were cutting
corners.
113. There were times when a lot of work would come in at one time and there were
pressures to get the work done quickly.
114. Supervisors would tell the Team Associates to do whatever was needed to get the job
done.
115. In my experience, the system encouraged Team Associates to cut corners.
116. When an employee cut corners, the employee left out one or more steps that should
have been performed and had to make something up.
117. The problem caused by cutting corners might not come to light until six months down
the road when an attorney asks questions about the billing record.
118. One reason I believe I was terminated is because I complained to the Assistant Vice
President about Team Associates having improperly gotten their supervisors’ and other
associates usernames and passwords to the banks computer systems
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119. I complained that Team Associates were misusing other employees’ passwords and
user names to gain unauthorized access to the banks’ computer systems and to make
changes to the customer account records by adding data, cancelling out prior entries, and
reversing payments.
120. I went through the chain of command with my concerns.
121. On August 22, 2007 I received a notice sent to all FNFS employees from James M.
Dorian, Assistant Vice President of Security and Compliance, FIS LPS Technology
Solutions.
122. Dorian’s notice in bold letters advised: “Username and password information
should NEVER by shared between users.”
123. I immediately picked up the phone and called Mr. Dorian.
124. I spoke with Mr. Dorian about my concerns over breach of computer security regarding
misuse of passwords.
125. I told Mr. Dorian that Team Associates were being forced by the pressure to produce
results quickly that they disregarded not only Fidelity’s computer security rules, but also
the rules of each mortgage bank servicer.
126. I told Mr. Dorian that Team Associates were using Fidelity team managers’ user name
and passwords to access bank servicer computers and to make unauthorized changes on
MSP accounts.
127. I told Mr. Dorian that these breaches of computer security were widespread.
128. On August 24, 2007, I was verbally reprimanded by my team lead and supervisor for
reporting these breaches.
129. I was terminated on October 14, 2007.
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130. In November 2007, I filed a civil case against Fidelity for wrongful discharge based on
my complaints about breaches of computer security involving unauthorized use of bank
servicer passwords and access to bank servicer customer records.
131. I lost my case in a summary judgment motion in October 2009 in which I represented
myself.
132. In the course of pursing my case, from mid- 2008 through mid-2009, I personally
deposed twelve Fidelity employees as witnesses.
133. These 12 witnesses included Mr. Dorian who was the Assistant Vice President of
Security and Compliance and his boss Vice President Bill Newland.
134. Based on the sworn testimony of the 12 witnesses, I learned that nothing had changed
regarding the practices that prompted my raising questions about the lack of integrity in
the company’s computer systems.
135. Not one witness said anything had been done to tighten up computer security.
136. Not one witness I deposed said anything had been done to address the computer
security breaches I brought to management’s attention.
137. As was the case with the Team Associates, network law firms were also subjected to
pressures to get things done quickly.
138. The network law firms were rated on how fast they got things done.
139. The network law firms were given “APR,” or Attorney Performance Ratings.
140. Fidelity maintained a master matrix for each Fidelity network law firm that included
graphs on how fast or slow each firm performed certain functions in bankruptcy and
foreclosure.
141. Every network attorney firm has to have NewTrak.
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142. Every attorney activity is monitored in NewTrak.
143. All processes are tracked in NewTrak from opening the file, to ordering title work and
preparing mortgage assignments.
144. A task is opened when a matter is referred to the attorney and it is closed when the task
is responded to.
145. Many times the Fidelity associates would pick network firm A for a bankruptcy
because they were the fastest with a bankruptcy APO (Adequate Protection Order) and
then they would pick network firm B in the same city for a foreclosure matter because
they were faster with foreclosure matters.
146. Fidelity ranked the network attorneys every 3 months based on how fast they got things
done and Fidelity paid them bonus money based on the APR ratings.
147. The network law firms were ranked like the Top 25 College basketball teams and the
number 1 bankruptcy and foreclosure firms received the most bonus money.
148. As for the APR ratings, each time a network law firm had to contact Fidelity about
something Fidelity personnel thought the attorney should have resolved, it could bring
down their APR rating.
149. The network attorneys got hit with “negative points” for such contacts.
150. Fidelity had “Green Firms” and “Red Firms” in their firm matrix systems.
151. A “Green Firm” was the type of network firm that would do whatever it takes to get the
job done on time and in time.
152. Green Firms were more concerned about earning bonus money than addressing ethical
issues.
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153. The Green Firms knew every task was being timed on NewTrak and the green firms
were players who would do what Fidelity wanted done.
154. In contrast, the “Red Firms” were firms that would raise ethical issues from time-totime about how they were doing or not doing things and these firms were to be avoided if
possible.
155. Fidelity associates made decisions as to which firm would get new work.
156. Red firms “slowed the system down.”
157. The Fidelity attorney management team consisted of Fidelity associates and
supervisors, but no attorneys.
158. The Fidelity attorney management team handled problems network attorneys had with
files and could help resolve issues law firms had with their files.
159. Fidelity network attorneys would fly to meetings in Jacksonville, FL to meet with the
Fidelity attorney management team to discuss cases and judges.
160. I recall a firm named Federman Phelan from Philadelphia that visited the Jacksonville
office 2 or 3 times a year during 2006 and 2007.
161. It was usually a group of about 5 people, including 3 attorneys and paralegals.
162. Most times the Federman Phelan law firm took the entire Fidelity attorney management
team to lunch or dinner at an expensive restaurant.
163. The restaurant of choice for the Federman Phelan attorneys was Ruth Chris Restaurant
in Jacksonville, FL.
164. I attended one of these dinners hosted by Federman Phelan at the downtownJacksonville Ruth Chris Restaurant.
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165. As part of my job training, I shadowed one of the Federman Phelan meetings with the
Fidelity attorney management team.
I hereby certify that the foregoing statements made by me are true and I am aware that if any of
the foregoing statements made by me are willfully false, I am subject to punishment.
Dated: March 24, 2011
______________________________
Adrian G. Lofton
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