Meredith Hobbs Brings Us the Next Crooked Lawyer Story

Morris Hardwick Schneider Accuses Founder of Embezzling $30 Million

Meredith Hobbs, Daily Report

Nathan E. Hardwick IV
Nathan E. Hardwick IV

Related Article: Hardwick Denies Embezzling from Firm


Residential real estate firm Morris Hardwick Schneider alleges that founder Nathan Hardwick IV embezzled more than $30 million from the firm and its affiliated title company, LandCastle Title.

In a suit filed Monday in Fulton County Superior Court, the firm claims Hardwick used the money to pay for casino expenses, private jet rides, a luxury Buckhead condo and real estate investments.

The two firms allege in the complaint that Hardwick raided the trust and escrow accounts that the firms maintain for residential mortgage closings and then created false bank statements and altered accounting records to hide the deficits.

Hardwick was listed as MHS’s managing partner and as the board chairman and CEO for LandCastle Title in a biography that has been deleted from MHS’s website.

A nanny who answered the phone at Hardwick’s residence at the St. Regis in Buckhead said he was not at home.

LandCastle’s lawyer, W. Reese Willis III of Fidelity National Law Group, declined to comment on active litigation. “The complaint speaks for itself,” he said.

Art Morris, another founding partner of MHS, did not respond to requests for comment, nor did MHS’s lawyer, Jeffrey Schneider of Weissman, Nowack, Curry & Wilco.

Fidelity National Title Group bought a 70 percent interest in LandCastle Title, one of its agents, after the escrow account losses were discovered, according to a letter Fidelity National posted Monday to MHS and LandCastles’ joint website.

A “significant shortage” in the accounts of MHS and LandCastle prompted the acquisition and Fidelity National is funding the shortages in return for the ownership interest in LandCastle, according to the letter. Fidelity National Title Group is owned by Fidelity National Financial.

Hardwick has resigned from MHS and Mark Wittstadt is now the managing partner, according to the letter, which was signed by Wittstadt and David Baum, the Southeast regional manager for Fidelity National Title Group who is now the president of LandCastle Title.

According to the suit, Hardwick spent $4 million from MHS’s trust accounts in wire transfers to casinos, $1 million to pay private jet companies, and $645,000 to cover losses from failed property investments.

He diverted $6.3 million from MHS’s trust accounts to a personal holding company called Divot, according to the suit, which names Divot as a co-defendant. According to Hardwick’s firm bio, he is an “avid golfer.”

Hardwick partially financed the February 2013 purchase of a $3 million unit at the St. Regis in Buckhead with funds from MHS and LandCastle, according to the suit, and siphoned off another $390,000 in regular payments to himself from MHS’s trust accounts, after draining the operating accounts.

The suit alleges that Hardwick has been embezzling money for at least 18 months, saying the $390,000 in personal payouts from the MHS trust accounts occurred between January 2012 and July 2014.

‘The far-reaching impact on lenders, realtors, law firms and consumers would have been a catastrophe had our parent company, Fidelity National Financial Inc. not stepped in with the capital and resources available to us and a plan to allow them to move forward,” said Fidelity National Title’s state manager Jim Petropoulos in an email to members of the Mortgage Bankers Association of Georgia.

MHS and LandCastle Title are headquartered in Atlanta. They have more than 50 offices in Georgia, Florida, Alabama, Mississippi, South Carolina, Tennessee, Virginia, West Virginia, Delaware, Maryland and Ohio.

 

The Next Article on This Attorney:

Hardwick Denies Embezzling from Firm

Nathan Hardwick denies allegations of embezzlement from his real estate law firm

Meredith Hobbs, Daily Report

Nathan Hardwick IV is accused of spending the money on casino expenses and a luxury condo.
Nathan Hardwick IV is accused of spending the money on casino expenses and a luxury condo.

Related Article: Morris Hardwick Schneider Accuses Founder of Embezzling $30 Million


Nathan Hardwick IV denied Wednesday that he embezzled $30 million from his residential real estate law firm, Morris Hardwick Schneider, and its affiliated title company, Landcastle Title.

In a suit filed Monday in Fulton County Superior Court, MHS and Landcastle Title claim Hardwick used the money to pay for casino expenses, private jet rides, a luxury Buckhead condo and failed real estate investments.

The firms allege in the complaint that Hardwick raided the trust and escrow accounts that they maintain for residential mortgage closings and then created false bank statements and altered accounting records to hide the deficits.

Hardwick was MHS’s managing partner and the board chairman and CEO for Landcastle Title, according to a biography that has been deleted from MHS’s website.

Hardwick denied the fraud allegations in a statement supplied by his lawyer, Ed Garland.

“Nat is not guilty of any improper, illegal or unethical conduct,” the statement said. “Nat became aware of a problem with the accounting earlier this summer and immediately alerted his partners and initiated a review by outside auditors.”

“The law firm was profitable and Nat believed that all of the money he received was properly distributed to him as his share of the profits of the firm,” the statement said.

Hardwick has resigned from the firm, according to a letter from Fidelity National Title Group that was posted Monday to MHS and Landcastle’s joint website.

Fidelity National Title Group bought a 70 percent interest in Landcastle Title, one of its agents, after the escrow account losses were discovered, the letter said. A “significant shortage” in the accounts of MHS and Landcastle prompted the acquisition and Fidelity National is funding the shortages in return for the ownership interest in Landcastle, it said. Fidelity National Title Group is owned by Fidelity National Financial.

Mark Wittstadt is now MHS’s managing partner, according to the letter, which was signed by Wittstadt and David Baum, the Southeast regional manager for Fidelity National Title Group, who is now the president of Landcastle Title.

“To allow Landcastle to fail would have been a calamity for the company’s employees, consumers, and the real estate industry, as a whole. We are grateful that FNTG made the decision to put the financial resources of the company behind Landcastle Title. Together, we are working to restore confidence in our industry,” said Wittstadt in a statement.

According to the suit, Hardwick spent $4 million from MHS’s trust accounts in wire transfers to casinos, $1 million to pay private jet companies and $645,000 to cover losses from failed property investments.

He diverted $6.3 million from MHS’s trust accounts to a personal holding company called Divot, according to the suit, which names Divot as a codefendant. According to Hardwick’s firm bio, he is an “avid golfer.”

Hardwick partially financed the February 2013 purchase of a $3 million condo at the St. Regis Residences in Buckhead with funds from MHS and Landcastle, according to the suit, and siphoned off another $390,000 in regular payments to himself from MHS’s trust accounts, after draining the operating accounts.

Landcastle’s lawyer is W. Reese Willis III of Fidelity National Law Group. MHS’s lawyer is Jeffrey Schneider of Weissman, Nowack, Curry & Wilco.

The suit alleges that Hardwick has been embezzling money for at least 18 months, saying the $390,000 in personal payouts from the MHS trust accounts occurred between January 2012 and July 2014.

“The far-reaching impact on lenders, realtors, law firms and consumers would have been a catastrophe had our parent company, Fidelity National Financial Inc. not stepped in with the capital and resources available to us and a plan to allow them to move forward,” said Jim Petropoulos, Fidelity National Title’s state manager, in an email to members of the Mortgage Bankers Association of Georgia.

MHS and Landcastle Title are headquartered in Atlanta. In Georgia, 57 lawyers work for MHS, according to the State Bar of Georgia’s directory.

It has 52 offices in 13 states, including Georgia, Florida, Alabama, Mississippi, South Carolina, Tennessee, Virginia, West Virginia, Delaware, Maryland and Ohio.

Hardwick, 48, started his own real estate closing firm, Jackson & Hardwick, in 1994. With visions of expanding into a regional or even national firm, he merged his firm in 2005 with the older and more established Atlanta closing firm Morris & Schneider.

Hardwick told the Daily Report at the time that he wanted MHS to be the nation’s biggest real estate firm within a decade. As comanaging partner with Randolph Schneider, he was responsible for marketing and business development.

MHS added foreclosure services in 2008 through a merger with Baltimore-based Wittstadt & Wittstadt. That firm was founded by Mark Wittstadt, now MHS’s managing partner, and his father, Gerard Wittstadt Sr.

Hardwick told the Daily Report in 2008 that MHS’s goal was to become a national one-stop shop for residential real estate. “We can take [property] from closing to refinancing to foreclosure to REO and back to retail again,” he said.

Mary Anne Walser, a real estate agent for Keller Williams Realty, expressed shock at the fraud allegations against Hardwick. “It’s the talk of every real estate and mortgage office in town,” Walser said. “No one had any inkling that there would ever be a problem.”

She said MHS is one of the major closing firms in the city, with a reputation as a “competent firm that does a good job.”

“All of us had at least one if not multiple closings there,” she said.

Walser spoke highly of Hardwick. “He is a smart guy and he built a great, wonderful firm. I hope there is some other side to the story,” she said.

Even though Fidelity National Title stepped in and covered the shortfall to the escrow accounts, real estate agents and mortgage lenders don’t know whether it is safe to use the firm, Walser said, adding that some mortgage companies have announced they’ve stopped using MHS for closings.

One mortgage lender, Ari Berman, said his company, Silverton Mortgage Specialists, has pulled all its real estate closings from MHS.

“The last thing we want to do is get involved in any kind of fraud or anything that smacks of fraud,” said Berman, who manages Silverton’s Dunwoody office. Silverton has nine Georgia offices and one in South Carolina.

Silverton can’t take the risk of entrusting mortgage money to MHS to hold in escrow during a real estate closing for fear that it could disappear, Berman said. “What if we end up losing those funds?”

“Even though it’s just an allegation, we can’t be associated with it,” he said. “That is a sacrosanct account. It’s other people’s money.”

Even though Hardwick has resigned from MHS and Fidelity National Title has covered the escrow shortfalls, Berman said there is no guarantee that he was the sole actor. “There is too much that is unknown. I’m not willing to take that risk,” he said.

“Fraud is a real hot-button issue in this industry. People lose their life savings because of it,” he said.

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Faith in Jesus Christ is our response to God's elective purpose in our life. These two truths--God's initiative and man's response--co-exist throughout the Bible. The gospel is "the message of truth" because truth is its predominant characteristic. Salvation was conceived by the God of truth (Ps. 31:5); purchased by the Son, who is the truth (John 14:6); and is applied by the Spirit of truth (John 16:13). To know it is to know the truth that sets men free (John 8:32). Believers are people of the truth (John 18:37), who worship God in spirit and in truth (John 4:24), and who obey the Word of truth (John 17:17). People have rejected, neglected, redefined, and opposed God’s truth for centuries. Some cynically deny that truth even exists or that it can be known by men (John 18:38). Others foolishly think that denying truth will somehow make it go away. Truth determines the validity of one's belief. Believing a lie doesn't make it true. 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Faith in Jesus Christ is our response to God's elective purpose in our life. These two truths--God's initiative and man's response--co-exist throughout the Bible. The gospel is "the message of truth" because truth is its predominant characteristic. Salvation was conceived by the God of truth (Ps. 31:5); purchased by the Son, who is the truth (John 14:6); and is applied by the Spirit of truth (John 16:13). To know it is to know the truth that sets men free (John 8:32). Believers are people of the truth (John 18:37), who worship God in spirit and in truth (John 4:24), and who obey the Word of truth (John 17:17). People have rejected, neglected, redefined, and opposed God’s truth for centuries. Some cynically deny that truth even exists or that it can be known by men (John 18:38). Others foolishly think that denying truth will somehow make it go away. Truth determines the validity of one's belief. Believing a lie doesn't make it true. 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