Fidelity National bails out Landcastle Title
Discovered “substantial account misappropriations”
Fidelity National Financial (FNF) has purchased a 70% stake in Landcastle Title after “substantial escrow account misappropriations” were discovered within Landcastle’s parent company, the law firm of Morris Hardwick Schneider.
According to a letter posted to the joint website for Landcastle and Morris Hardwick Schneider, the acquisition was “precipitated by a significant shortage in the accounts of MHS and Landcastle, of which Fidelity became informed by the partners of MHS.”
The letter states that Nathan (Nat) Hardwick, who was the managing partner of MHS and the chairman of the board and CEO of Landcastle Title, has resigned from the firm and that Mark Wittstadt has been named managing partner of MHS.
Hardwick’s bio has been removed from the company’s website and his personal Twitter feed is now deleted.
According to a lawsuit filed Monday in Fulton County Superior Court and obtained by HousingWire, MHS and LandCastle Title have sued Hardwick, alleging that Hardwick embezzled at least $30 million from the companies’ own accounts and the companies’ trust accounts, allegedly using the money to pay for private jets, cover real estate investment losses, cover millions in gambling debts and other investments.
For more information on the lawsuit, click here.
Hardwick’s attorney, Ed Garland, has issued a statement on Hardwick’s behalf, claiming that Hardwick is not guilty of “any improper, illegal or unethical conduct,” and states that Hardwick believes all of the money he received was “properly distributed to him as his share of the profits of the firm.”
Click here to read more of Garland’s response to the lawsuit’s claims.
The letter also states that David Baum, who was previously Fidelity’s southeast regional manager, was installed as president of Landcastle.
“To allow Landcastle to fail would have been a calamity for the company’s employees, consumers, and the real estate industry, in general,” Fidelity said in a statement to HousingWire. “As a result, we felt it was in the best interest of all parties to put the financial resources of FNTG behind Landcastle Title.”
The letter, which was signed Wittstadt and Baum, states that the move was made to “protect the many consumers, customers, lenders and employees who would have been harmed by the escrow account misappropriations.”
“Sending communications like this is never something a company wants to do, and is never easy,” the letter, which is addressed to “valued business partner,” states.
“However, we value your partnership and your support and believed it was important to let you know what has happened and our plans to for the future.”
The letter states that upon discovering the shortages in MHS’s and Landcastle’s account, Fidelity’s team of managers, auditors, accountants, and attorneys worked to “obtain better understanding of the shortages and its causes.”
The letter then states that as a result of what was uncovered by that investigation, “FNTG became convinced that the best way to protect your funds, your transactions, our mutual customers, MHS’ and Landcastle’s employees, and the goodwill of the mortgage and title insurance industries was to fund the shortages and acquire an ownership interest in Landcastle.”
Wittstadt and Baum also tell the company’s business partners that Fidelity “stands behinds the funds you have on deposit, or may in the future deposit, with MHS and/or Landcastle.”
They also write that, “All of the transactions that you have with MHS or Landcastle will be completed on a business as usual basis according to the same high standards as you are accustomed to receiving.”
The letter also states that Roddy Wittstadt will continue in his role as general counsel of MHS and that both Mark and Roddy Wittstadt will continue to have ownership in Landcastle.
“We thank you for the many expressions of support and encouragement we already received, for continuing to place your trust in MHS and Landcastle, and for the past and future business which we will handle in the efficient, professional and friendly manner you deserve to expect from us,” the letter states.
“Fidelity National Title Group is financially the strongest family of all title insurers, which enabled us to secure the safety of your funds, but we know that financial strength alone is not enough,” the letter concludes.
“Of equal importance are the relationships our employees have with all of you based on years of positive experiences. We intend to protect and nurture and grow these relationships as we move forward.”