Former LandCastle Title CEO Nat Hardwick arrested on federal embezzlement charges
Feds charge Hardwick and firm's former CFO with $20 million theft, cover-up
Nathan (Nat) Hardwick, the former chief executive officer of LandCastle Title and former managing partner of Morris Hardwick Schneider, was arrested Monday morning in downtown Atlanta by federal authorities on charges relating to allegations that he embezzled millions of dollars from his former companies.
According to a release from the U.S. Attorney’s Office for the Northern District of Georgia, Hardwick and Asha Maurya, the firm’s former chief financial officer, were charged with multiple counts of conspiracy, wire fraud, and related crimes in connection with Hardwick’s alleged theft of over $20 million from the attorney escrow accounts and operating accounts of Morris Hardwick Schneider and LandCastle Title.
“The indictment alleges an embezzlement scheme dating back years,” said U.S. Attorney John Horn. “Along the way, Mr. Hardwick is alleged to have repeatedly lied to his clients, law partners, banks and others. The allegations are especially troubling given that the actions were orchestrated by a lawyer who swore an oath to uphold the law and to represent his clients with integrity.”
According to the U.S. Attorney’s Office, Hardwick and Maurya worked together to conceal the funneling of millions of dollars from the firm’s and title company’s accounts to Hardwick and Maurya.
The release from the U.S. Attorney’s Office states that Hardwick allegedly began experiencing “severe” financial problems in the late 2000s, when a “sharp decline” in the residential real estate market made MHS less profitable.
Hardwick was also subject to a July 2008 divorce decree requiring him to pay his ex-wife over $550,000 per year in alimony and other payments for five years.
According to the release, Hardwick’s “legitimate” income could not “keep pace with his lavish lifestyle,” which included private jet travel; multi-million dollar homes; high-end retail goods and services; gambling at casinos in Louisiana, Mississippi, New Jersey, and Nevada; and payments to “bookies and girlfriends.”
To support his lifestyle, Hardwick then allegedly began directing Maurya to make millions of dollars in shareholder distributions, bonuses, and other payments for Hardwick’s benefit, directly out of MHS’s bank accounts, in amounts that exceeded the share of MHS’s profits to which Hardwick was entitled.
According to the release, this occurred at times when no shareholder bonuses or distributions were scheduled to be made, and without causing or directing proportionate bonuses or distributions to be made to the other MHS shareholders.
The excess bonuses, distributions, and payments to and for Hardwick’s benefit included payments to casinos, private jet charter companies, credit card issuers, and other creditors and accounts.
“To fund the vast majority of these illicit payments, Hardwick and Maurya allegedly caused millions of dollars to be wire transferred to and for Hardwick’s benefit out of MHS’s attorney escrow accounts,” the release states. “Hardwick and Maurya fraudulently concealed Hardwick’s excess payments from the other MHS shareholders, MHS employees, outside auditors, title insurance underwriters, and others through false statements, half-truths, and by the omission of material facts, and by distributing false and misleading financial information and records.”
According to information provided in the indictment, when fellow MHS employees, partners, and “one of MHS’s title insurance underwriters,” which is likely Fidelity National Financial, began to discover the conspiracy in 2014, Hardwick and Maurya took further steps to conceal the illicit payments and to delay and obstruct the discovery of their scheme, including by making false statements about the nature, amount, and cause of the excess payments and any resulting escrow account shortages.
In particular, Maurya allegedly provided excuses and denials that attempted to attribute any problems to bank error, the release stated.
The indictment also charges Hardwick with lying to obtain over $3.5 million in loans from federally-insured banks in 2009, 2011, 2013, and 2014.
In addition to charges against Maurya for her assistance with Hardwick’s alleged theft of over $20 million, the indictment separately charges Maurya with a scheme to defraud MHS by tricking the firm into issuing checks to pay off her personal credit card bills.
Maurya is alleged to have diverted over $900,000 from MHS’s attorney escrow accounts and operating accounts to pay off her credit card bills and home mortgages.
The indictment charges Hardwick and Maurya with one count of conspiracy to commit wire fraud and 18 counts of wire fraud. Additionally, the indictment charges Hardwick with one count of bank fraud and three counts of making false statements to federally-insured financial institutions.
The indictment charges Maurya with 11 counts of mail fraud. The conspiracy, wire fraud, and mail fraud charges against Hardwick and Maurya each carry a maximum sentence of 20 years in prison and a fine of up to $250,000 per count.
The bank fraud and false statements charges against Hardwick each carry a maximum sentence of 30 years in prison and a fine of up to $1 million per count
In 2014, Hardwick’s former partners with the law firm that bore his name sued Hardwick for allegedly embezzling $30 million from the firm’s accounts and the accounts of the firm’s subsidiary, LandCastle Title.
After the initial allegations against Hardwick first surfaced, the situation only became increasingly more sensational seemingly by the day.
The Hardwick allegations first came to light when Fidelity National Financial bailed out LandCastle and “stepped in” as a 70% owner of the title company.
Fidelity stepped in after “substantial escrow account misappropriations” were discovered with the accounts of MHS and LandCastle and “precipitated by a significant shortage in the accounts of MHS and LandCastle, of which Fidelity became informed by the partners of MHS.”
Hardwick’s former partners then 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.
Hardwick denied those charges, stating at the time that he is not guilty of “any improper, illegal or unethical conduct,” and stating that he believes all of the money he received was “properly distributed to him as his share of the profits of the firm.”
But that was just the first in a series of lawsuits involving Hardwick and his former companies, including one brought by PGA golfer Dustin Johnson.
Johnson’s lawsuit, which was first reported by HousingWire, alleged that Morris Hardwick Schneider, which subsequently changed its name to Morris Schneider Wittstadt, Hardwick and the firm’s managing partners, Mark and Rod Wittstadt, used their positions as Johnson’s “trusted advisors” to steal $3 million from him to cover shortages in the firm’s accounts allegedly created by Hardwick himself.
Johnson sued the firm after lending it $3 million at the behest of Hardwick, who was, at one time, one of Johnson’s primary advisors.
When Johnson filed suit against the firm, he said Hardwick “played a particularly unique and significant role of trust and confidence” in Johnson’s life, serving as one of his primary advisors on all matters relating to his career as a professional golfer.
Hardwick was also an officer in Johnson’s professional corporation, and was listed on Johnson’s personal website as a member of “Dustin’s Team” as Johnson’s “attorney/counselor.”
Johnson’s original lawsuit laid much of the blame on Hardwick, but later filings shifted the blame from Hardwick onto the Wittstadts.
Johnson’s amended complaint, filed in November 2014, called Hardwick a “pawn,” who was set up by the Wittstadts to take the fall for the shortages discovered within the companies’ accounts.
In their amended motion to dismiss, the Wittstadts said that Johnson’s reversal from initially calling Hardwick a “racketeer” to later referring to Hardwick as a pawn raises “serious questions” about Johnson’s judgment.
Eventually, Morris Schneider Wittstadt filed for Chapter 11 bankruptcy, citing the publicity surrounding the Hardwick situation and subsequent lawsuits as “too much for even an otherwise successful firm like MSW to bear.”
In a statement provided to HousingWire, MSW declined to go into the “specific” reasons it chose to go into Chapter 11, but the firm’s bankruptcy filing sheds some light on how the firm, which once employed 150 lawyers and 700 staff members in 50 offices in 13 states, was left with no choice but to declare bankruptcy.
In the firm’s bankruptcy filing, Wittstadt said that upon learning of Hardwick’s “over disbursements,” the firm chose “to part with a significant asset,” in the form of LandCastle, which Fidelity now has 100% ownership and control over.
Wittstadt said that Hardwick’s “unauthorized disbursements” from the firm’s trust accounts were “devastating” to the firm, but said that it was “not a death sentence.”
Wittstadt said that with Fidelity’s backing of the firm’s escrow accounts, plus Hardwick’s removal from the firm, the firm was able to convince many of its clients that the firm would be able to “survive and thrive again.”
But, Wittstadt added that the “false allegations” levied by Johnson and his attorneys caused many MSW clients to contact the firm and tell them that they would no longer do business with the firm, unless the firm could find a firm to merge with before the end of 2014.
MSW found that firm in the form of Butler & Hosch.
In February 2015, HousingWire reported that MSW agreed to sell its default assets to Butler & Hosch. At the time, details of the sale were scarce, but Wittstadt provides more insight into that deal and its ramifications.
In the bankruptcy filing, Wittstadt said that due to the firm’s concern for its employees, it agreed to sell its foreclosure, bankruptcy and eviction operations to Butler & Hosch, including the assumption of MSW’s lease obligations, in exchange for an unsecured promissory note of $2,072,167.24.
As part of the merger, the client files were turned over to B&H, and the majority of the attorneys who formerly worked for MSW became employees of B&H.
But, soon after the agreement was finalized, Wittstadt said that he learned of serious issues at B&H.
“Unfortunately, almost immediately after the agreement was signed, but before the transition period had ended, I learned that B&H had created false invoices for reviewing each file to be transitioned from MSW to B&H, which B&H surreptitiously used for the purposes of factoring through its secured lender to obtain loans,” Wittstadt told the court in the bankruptcy filing.
In March 2015, B&H filed an Assignment for the Benefit of Creditors, an action analogous to Chapter 7 bankruptcy, shut down and laid off all 700 of its employees. And Monday, Bob Hosch, the former managing partner of Butler & Hosch, resigned from the Florida Bar Association.
And later that year, MSW would declare bankruptcy itself.
All told, the situation that began with the discovery of missing funds in the accounts of Morris Hardwick Schneider and LandCastle Title left a trail of destruction behind it.
It took down took down two massive law firms and left hundreds of employees out of work. Tens of millions of dollars disappeared. It lead to countless lawsuits, countersuits, legal maneuverings, accusations, allegations and now, criminal charges.
“The magnitude of theft as alleged in the federal indictments of these two defendants clearly merited the resulting federal investigation and prosecution,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated.
“The allegations describe a trusted corporate officer and attorney in personal financial troubles conspiring with another corporate officer to steal from their employer, primarily through escrow accounts entrusted to their company,” Johnson said.
But this situation isn’t over yet. Far from it, in fact.
As of publication time, multiple attempts to contact Hardwick's legal representation were unsuccessful. This article will be updated if necessary.