Brian MaddenBrian Madden, president and co-founder of title insurer Liberty Title Agency, was sentenced to 20 months in prison for misappropriating and embezzling escrow and other client funds from Liberty Title and two other insurance agencies he controlled, the office of the U.S. Attorney for the Southern District of New York announced today.
Beginning when the real estate market was crashing in 2008, Madden took about $2.2 million from Liberty Title. To support these withdrawals, Madden paid current client debts with new funds he collected from other clients.
As The Real Deal previously reported, Extell Development was among the victims of Madden’s crimes. For its project at 535 West End Avenue, Extell wired funds to Liberty Title to pay $2.1 million in mortgage taxes. Liberty did not use the money for its intended purpose. Instead, Madden transferred funds from a smaller agency, to cover the payment, but it still lacked sufficient money to complete the transaction. These recording files were kept hidden in Madden’s office.
“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,” Manhattan U.S. Attorney Preet Bharara said in a statement. “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 pleaded guilty to wire fraud and embezzlement in December 2010. He was originally eligible for between 63 and 78 months, but he filed an objection for a weaker punishment because the losses caused by his actions amounted to less than $2.5 million (note: correction appended).
— Adam Fusfeld