Posted Aug 27, 2014 06:35 pm CDT
Updated: A former managing partner of a well-known Atlanta real estate boutique has been sued by the law firm and an affiliated title company for allegedly embezzling $30 million.
The suit says Nathan E. “Nat” Hardwick IV diverted funds from operating and trust accounts at Morris Hardwick Schneider and LandCastle Title, using the money to cover gambling debts, expenses for private jets and investment losses in real estate, among other payments, Housing Wire reports .
Filed Monday in Fulton County Superior Court, the suit seeks an accounting, a court order freezing assets of Hardwick and other defendants, damages and attorney fees and costs. It asserts causes of action for alleged conversion, fraud, conspiracy to defraud, unjust enrichment and breach of duty and contends the claimed embezzlement went on for at least 18 months.
Until recently, Hardwick was at the helm of both the law firm and the title company—he served as board chairman and chief operating officer for the latter. He has now resigned from both the firm and the title company, a letter posted Monday on their joint website says.
Written on Fidelity National Title Group letterhead, it is signed by the new managing partner of MHS and the new president of LandCastle, who is also the southeast regional manager of FNTG, the Daily Report notes. The letter says FNTG stepped in to fund the losses of LandCastle, which is one of its agents, in exchange for a 70 percent interest in LandCastle. It says members of the law firm reported what the letter describes as “substantial escrow account misappropriations” and participated in an investigation to determine what had happened.
Hardwick is accused of taking money from multiple accounts at both companies, shifting remaining funds from one account to another to cover up shortages. Then, “to hide the deficiencies created in those accounts by his misappropriation of funds, Hardwick caused or directed the manufacture of fraudulent bank statements,” the suit alleges. It also says he made inaccurate accounting entries.
The articles don’t include any comment by Hardwick or his legal counsel. However, a subsequent Daily Report article says Hardwick denies that he misappropriated from the firm..
“Nat is not guilty of any improper, illegal or unethical conduct,” says a written statement provided by his lawyer, Ed Garland, to the legal publication. “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 statement also says “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 MHS firm has approximately 85 attorneys and bills itself on its website as the country’s largest real estate closing firm. Together with LandCastle, MHS maintains more than 50 offices in Alabama, Delaware, Florida, Georgia, Maryland, Mississippi, Ohio, South Carolina, Tennessee, Virginia and West Virginia, the Daily Report says.
‘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, who serves as Georgia manager for Fidelity National Title, in an email to Mortgage Bankers Association of Georgia members.
Updated on Sept. 3 to include comment by Hardwick’s lawyer in subsequent Daily Report article.