12.11.2013 Order of Discipline – Censure [Wayne County]
James Thomas Brown was censured for his role as closing attorney in certain real estate transactions that occurred from 2004 to 2006. In total, there were nine real estate transactions at issue, all of which were purchase transactions. In his role as the closing attorney, however, Brown prepared HUD-1 Settlement Statements falsely indicating that the transactions were refinance loans rather than purchase transactions.
Brown prepared and submitted the false HUD-1 statements at the direction of a third party, Mark Webb, the Vice President of the lending institution. The net effect was that the lending institution loaned more funds than it otherwise would have loaned in a purchase transaction. In some cases, the bank loaned an amount exceeding the actual purchase price of the property, resulting in borrowers receiving money from the closing.
The Commission found that Brown (1) was aware of the effect of his false statements, (2) knowingly provided the false statements, (3) provided the statements for the purpose of influencing the bank, and (4) knew the purpose of filing was to cause the bank to rely on the statements. The Commission found, however, that Brown was not aware of the fraudulent scheme perpetrated by the lender’s VP, which was the subject of a criminal investigation.
Pursuant to 18 U.S.C. § 1014, it is a felony when a person “knowingly makes any false statement or report … for the purpose of influencing in any way … any institution the accounts of which are insured by the [FDIC].”
The Commission concluded that Brown’s criminal acts constituted a violation of Rule 8.4 of the North Carolina Rules of Professional Conduct. Specifically, Brown (1) engaged in acts which “reflected adversely on his honesty, trustworthiness, or fitness in other respects in violation of Rule 8.4(b)”; and (2) “engaged in conduct involving dishonesty, fraud, deceit, and misrepresentation in violation of Rule 8.4(c).” Additionally, Brown’s actions assisted others in criminal conduct, thus placing him in violation of Rule 1.2(d) of the North Carolina Rules of Professional Conduct.
Ultimately, the Commission concluded that a censure was necessary in order to adequately protect the public.
View the full disciplinary order below.
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