Lots of Cash, Fat Checks Found in Search of Insurance VIP's Home

More than $100,000 in cash and nearly a quarter million in cashiers checks were seized during the search of an insurance bigwig's suburban New York home, according to a Manhattan federal indictment that charges him with a $5 million fraud.

The raid was disclosed in the indictment's forfeiture allegations.

Federal prosecutors identified defendant Brian H. Madden, 55, of Greenlawn, Long Island, as a major player in the lucrative East Coast title insurance business.

Madden's company, Liberty Title Agency, is "one of the largest independently owned title insurance agencies in New York state," according to a statement by the Manhattan U.S. attorney's office.

Prosecutors said Liberty handled title insurance for commercial real estate developers and residential customers throughout the Northeast. Madden is the firm's president and co-founder.

Real estate purchasers and lenders buy title insurance to protect their financial interest against any losses related to liens or title defects.

Liberty Title and two other companies Madden owned, Skyline Title and GNY Liberty Abstract, issued title insurance policies for several underwriters.

Long Island Business News reported May 26 that Liberty had 60 employees and handled $50 billion in real estate deals.

The alleged fraud scheme involved Madden's stewardship of Liberty and closely followed the subprime mortgage crash that dragged the real estate market down with it.

According to the indictment filed in the U.S. District Court for the Southern District of New York, Madden misappropriated $4.7 million worth of title insurance funds held by his companies from as late as last year to April 2009.

"Madden then used the misappropriated funds to sustain Liberty Title's operations and permit significant withdrawals for his personal use," the U.S. attorney's statement says.

The statement further alleges that Madden used money from existing clients to pay off other clients. In the process, it says, he failed "to properly record and pay taxes on dozens of mortgages and other real estate transactions, further exposing his clients to loss."

The search of Madden's home in Greenlawn was executed May 19 in tandem with his arrest on wire fraud and insurance fraud charges related to the alleged scheme. The recent indictment added a money laundering count based on his alleged movement of client funds through various bank accounts he controlled.

During the search, federal agents seized $108,610 in cash and $246,000 in cashiers checks made out to Melissa K. Madden, according to the indictment's forfeiture allegations. Her relationship to the defendant was not disclosed.

The government is also demanding that Madden forfeit his Greenlawn residence and other properties in New York; Huntingdon Bay, N.Y.; East Marion, N.Y.; and Greenport, N.Y.

Finally, the government is seeking forfeiture of all assets in accounts held by Madden at TD Bank, American Community Bank and Devenir Group Wealth Management and any funds in the name of his wife, Elizabeth D. Madden, held by Paychex Services in a 401(k) account.

Prosecutors said Madden faces a maximum 50 years in prison if he is convicted on all counts and a fine that could range from $500,000 to $10 million.

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