Nathan Hardwick IV, the former managing partner of Morris Hardwick Schneider, has been indicted on federal charges of conspiracy, wire fraud, bank fraud and making false statements in connection with his alleged embezzlement of more than $20 million from the residential real estate closing firm’s escrow and operating accounts, and those of its affiliated title agency, LandCastle Title.
The firm’s former chief financial officer, Asha Maurya, was also indicted on conspiracy and wire fraud charges in the indictment, unsealed Monday. It alleges she assisted Hardwick in his theft and separately stole about $900,000 from the firm’s accounts to pay her own personal expenses.
“The indictment alleges an embezzlement scheme dating back years,” said U.S. Attorney John Horn in a statement. “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.”
A federal grand jury returned the sealed indictment against Hardwick, 50, and Maurya, 40, on Feb. 9. Both defendants made their initial appearances Monday before U.S. Magistrate Judge Justin Anand.
Hardwick’s lawyer, Ed Garland, could not be reached early Monday evening. In a civil filing last year, Hardwick said that he was the firm’s rainmaker but did not have oversight over its financial accounts—so he isn’t responsible for millions of dollars that went missing from the escrow accounts and LandCastle. Instead, Hardwick accused people in the firm’s accounting department of misappropriating the money.
Hardwick, who ran the closing practice, owned 55.55 percent of Morris Hardwick Schneider. After the shortfalls were discovered in July 2014, the firm’s other owners, Mark and Gerard Wittstadt, who ran the default practice, ousted Hardwick and filed suit, alleging he embezzled $30 million and spent it on casinos, private jet rides, failed real estate investments and a luxury condo at the St. Regis in Buckhead. The brothers later reduced their claim to $22 million.
Fidelity National Title bailed out LandCastle Title in return for a 70 percent stake in the title company.
Even so, the firm, renamed Morris Schneider Wittstadt, could not withstand damage to its reputation from a lawsuit by a creditor, pro golfer Dustin Johnson, who alleged “criminal conduct.” Hardwick had solicited a loan to the firm from Johnson, his personal client, after the shortfalls came to light.
The firm filed for Chapter 11 bankruptcy on July 5, along with six related entities—a holding company, MSW branches in Virginia and West Virginia and three title companies. At its peak Morris Hardwick Schneider, which billed itself as the largest residential closing firm in the country before the lawsuits started in 2014, employed about 850 people—150 lawyers and 700 staff.
According to the statement from the U.S. Attorney’s Office for the Northern District of Georgia, Hardwick’s finances became strained in the late 2000s, when the sharp dropoff in home sales after the financial crisis diminished the firm’s profits. He 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.
“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,” the statement said.
“To maintain the illusion of wealth and success despite his financial problems, and to continue to live beyond his means, in or about 2011, Hardwick 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,” the statement continues. Those disbursements came at times when no shareholder bonuses or distributions were scheduled or made to the firm’s other owners, it said.
The indictment alleges that Hardwick and Maurya caused millions of dollars to be wire-transferred for Hardwick’s benefit out of MHS’s attorney escrow accounts, and that they fraudulently concealed those payments from other shareholders, employees, outside auditors and title insurance underwriters.
“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,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, in the statement.
The indictment charges Hardwick and Maurya with one count of conspiracy to commit wire fraud and 18 counts of wire fraud. It charges Maurya with 11 counts of mail fraud. The conspiracy, wire fraud and mail fraud charges each carry a maximum sentence of 20 years in prison and an up to $250,000 fine.
The indictment also charges Hardwick with one count of bank fraud and three counts of making false statements to federally insured financial institutions. The bank fraud and false statements charges each carry a maximum sentence of 30 years in prison and an up to $1 million fine.
The FBI is investigating the case with assistance from the IRS’s Criminal Investigation Division. Assistant United States Attorneys David M. Chaiken and J. Russell Phillips are prosecuting it.