Former LandCastle Title CEO Nat Hardwick sentenced to 15 years for embezzling $26 million
The saga of Nathan (Nat) Hardwick, the former chief executive officer of LandCastle Title and former managing partner of Morris Hardwick Schneider, is finally nearing its end.
Back in October, Hardwick was found guilty of embezzling more than $25 million from his former companies, a crime that destroyed a prominent real estate law firm and left hundreds of people jobless.
And this week, a federal judge sentenced Hardwick to serve 15 years in prison for his crimes.
In a federal courtroom in Atlanta earlier this week, Hardwick was ordered to serve 15 years in prison after being convicted on 21 counts of wire fraud, one count of conspiracy to commit wire fraud, and one count of making false statements to a federally insured financial institution.
Hardwick was accused of conspiring with Asha Maurya, the law firm’s former chief financial officer, to steal $26 million from the attorney escrow accounts and operating accounts of Morris Hardwick Schneider and LandCastle Title.
The Hardwick scandal first exploded back in 2014, when Hardwick’s former partners with the law firm that carried his name sued him for allegedly embezzling $30 million from the firm’s accounts and the accounts of the firm’s subsidiary, LandCastle Title.
The allegations against Hardwick first surfaced when Fidelity National Financial bailed out LandCastle and stepped in as a 70% owner of the title company after “substantial escrow account misappropriations” were discovered in 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.”
Fidelity eventually acquired the rest of the company, but the law firm’s fate was all but sealed.
Hardwick’s former partners, Mark and Rod Wittstadt, sued Hardwick, alleging that Hardwick embezzled at least $30 million from the companies’ accounts and trusts. The Wittstadts claimed that Hardwick was using the money to fund a lavish lifestyle, 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,” adding that he believed all the money he received was “properly distributed to him as his share of the profits of the firm.”
From there, the situation deteriorated into an ugly back-and-forth between Hardwick and the Wittstadts and eventually led to the discovery that one of the country’s top golfers was involved in the scandal.
Soon after the Wittstadts sued Hardwick, PGA golfer Dustin Johnson sued the firm for allegedly stealing millions of dollars from him.
Johnson’s lawsuit, which was first reported by HousingWire, accused Morris Hardwick Schneider, which subsequently changed its name to Morris Schneider Wittstadt, Hardwick, and the Wittstadts, of using their positions as Johnson’s “trusted advisors” to steal $3 million from him.
Hardwick was, at one time, one of Johnson’s closest advisors. In Johnson’s suit, he claimed that Hardwick “played a particularly unique and significant role of trust and confidence” in Johnson’s life, serving as one of his primary advisors on his career as a professional golfer.
Hardwick was also an officer in Johnson’s professional corporation, and listed on Johnson’s personal website as a member of “Dustin’s Team” as Johnson’s “attorney/counselor.”
Hardwick was also friends with several other PGA players and even owned a NASCAR team, all part of his “extravagant lifestyle” that was apparently funded with ill-gotten gains.
According to Johnson’s lawsuit, Hardwick allegedly came to Johnson while the firm was faltering to ask him to lend money to the firm. Hardwick allegedly told Johnson that he’d receive a return of $4 million for his loan of $3 million, but did not inform Johnson about what was going on at the firm.
As a result, Johnson was unaware that the money was used to cover shortages in the firm’s accounts that were created by Hardwick himself.
Johnson’s original lawsuit laid much of the blame on Hardwick, but later filings in the lawsuit shifted the blame toward the Wittstadts instead.
Eventually, Morris Schneider Wittstadt filed for Chapter 11 bankruptcy and shut down, citing the publicity surrounding the Hardwick situation and subsequent lawsuits as “too much for even an otherwise successful firm like MSW to bear.”
The firm’s demise was as sad as it was spectacular. The firm had once employed approximately 800 people in 16 states and specialized in residential real estate closings and foreclosures. Hardwick was the managing partner of the law firm, the CEO of its title business, and ran the law firm’s closing division.
According to the charges against Hardwick and Maurya, the pair worked together to conceal the funneling of millions of dollars from the firm’s and title company’s accounts to Hardwick and Maurya. Hardwick claimed that all the money he received was deserved up, but the authorities (and his former partners) claimed otherwise.
But, according to the authorities, Hardwick took money that wasn’t his to fund his “extravagant” lifestyle.
According to the U.S. Attorney’s Office, in 2007, Hardwick sold off a part of an earlier firm, pocketing approximately $11.8 million from the deal. But that money quickly disappeared. “Hardwick quickly squandered that money, however, and by the end of 2010 was broke and deeply in debt,” the U.S. Attorney’s Office said.
The U.S. Attorney’s Office claimed that 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.”
Between January 2011 and August 2014, Hardwick conspired with Maurya to embezzle “more than $26 million from MHS’s accounts to pay his personal debts and expenses and to finance his extravagant lifestyle.”
According to court documents, more than $19 million of that was client money that was stolen from MHS’s attorney trust accounts, with Hardwick spending approximately $18.5 million of the ill-gotten gains on “gambling, private jets, and more than 50 different social companions.”
While Hardwick was receiving that money, he and Maurya “conspired to cover-up the fraud and made numerous false statements to Hardwick’s law partners concerning the amount of money that Hardwick was taking out of the firm,” the U.S. Attorney’s Office said.
In fact, the money Hardwick took from the firm actually exceeded the firm’s total net income in several of those years. According to the U.S. Attorney’s Office, the firm’s combined net income from 2011 through 2013 was approximately $10 million. During that same period, Hardwick took more than $20 million out of the firm’s accounts.
More than a year after the scandal first came to light, the federal authorities got involved, indicting Hardwick and Maurya in February 2016 with conspiracy, wire fraud, and bank fraud. The government also charged Hardwick with making false statements to a federally insured financial institution and charged Maurya with mail fraud.
Maurya pleaded guilty to conspiracy in May 2017 and agreed to help prosecutors in their case against Hardwick.
And this week, U.S. District Judge Eleanor Ross sentenced Hardwick to 15 years in prison. In addition to the prison sentence, Hardwick was also ordered to forfeit more than $19.9 million in criminal proceeds, given a $2,300 special assessment, and will be required to pay restitution to the victims of the offense.
Upon his release from prison, Hardwick will be required to serve six years on supervised release.
Ross also handed down a sentence to Maurya, ordering the firm’s former CFO to serve seven years in prison, followed by three years of supervised release. Maurya was also ordered to forfeit $900,000 in criminal proceeds.
“This attorney violated the trust placed in him by his clients and his partners; as a result, he is now facing a lengthy prison sentence,” said U.S. Attorney Byung Pak. “Lawyers who steal client money and embezzle from their partners can expect years in prison for their violation of trust.”
For a look at HousingWire's extensive coverage of the Hardwick situation since the very beginning, click here.
Published at Wed, 13 Feb 2019 16:50:00 +0000