Federal prosecutors in San Diego have deemed whether to criminally charge Chicago Title, a nationally recognized title coverage organization, for its function in the massive Ponzi scheme orchestrated by former businesswoman Gina Winner-Cain, now in jail for securities fraud.

As lately as six months ago, lawyers hired by the corporation submitted an considerable confidential “white paper,” laying out the factors why it should not experience criminal expenses. The Aug. 21 doc, written by attorneys from the Cooley regulation organization, says it was geared up at the request of the U.S. Attorney’s Southern District of California business in San Diego, which was “examining the conduct” of Chicago Title in the Winner-Cain rip-off.

A the moment higher-profile restaurateur, Winner-Cain admitted her guilt and is serving a 15-calendar year federal sentence for functioning a approximately decade-lengthy Ponzi plan in which she elevated hundreds of thousands and thousands of pounds from individuals and corporate traders, promising them their money would be employed to make higher-interest financial loans to liquor license candidates, these kinds of as cafe entrepreneurs.

Their investments have been then purportedly parked in personal escrow accounts with Chicago Title, which investors mentioned gave them reassurance their cash was secure. In truth of the matter, there were no true liquor license applicants or financial loans. In its place, the money was pooled in standard-intent escrow accounts that Winner-Cain was in a position to obtain and use for her other businesses and for herself. The scheme took in additional than $400 million about 8 several years and resulted in losses of at least $184 million to additional than 300 traders.

The San Diego Union-Tribune reviewed the confidential white paper in which the Chicago Title legal professionals wrote that “we respectfully submit that a felony prosecution of CTC is unsupported by the information, the law, and all suitable considerations” under Division of Justice guidelines for when firms should be charged with crimes.

As aspect of its defense, the business seems to be arguing that there might be person liability but not corporate culpability. It notes, for occasion, that it terminated an escrow officer, Della DuCharme, and her assistant, Betty Elixman, who it mentioned violated company policy when they allegedly acknowledged significant gifts from Winner-Cain in the course of the time they were being operating with her in environment up escrow accounts for the liquor license lending system.

“To the extent there was misconduct at CTC, it was minimal to a one escrow officer and her assistant in a single office environment,” Chicago Title attorneys wrote. “Management played no part in any respect in Champion-Cain’s fraud … Simply put, there’s not a shred of proof that any misconduct at CTC is pervasive, or that management bears any complicity in any misconduct.”

The white paper was not the initial interaction the organization had with prosecutors. The paper refers to a July 2 letter to the business “describing the collateral outcomes that would consequence from an indictment of CTC.”

And in April of 2020, the same law organization submitted a PowerPoint presentation to the Department of Justice on the conclusions of an internal investigation into the Winner-Cain plan. That document, recognized as confidential, gives an overview of its romance with Champion-Cain and her company, ANI, and also discusses the alleged roles of DuCharme and Elixman. As in the white paper, Chicago Title reported there was no proof that business management knew of Winner-Cain’s fraudulent plan or the alleged receipt of “gifts and entertainment” from Winner-Cain.

It is not known if Chicago Title has properly convinced prosecutors not to indict the company. The U.S. Attorney’s workplace in San Diego declined to comment on the circumstance. Michael Attanasio, a previous federal prosecutor and a notable white-collar protection legal professional who submitted the report together with a second Cooley lawyer, declined to comment .

In a assertion, Chicago Title downplayed the documents. “Given the size and scale of the fraud operated by Gina Winner-Cain, it is unremarkable that the govt is conducting a thorough investigation,” the firm said. “Chicago Title has fully cooperated and will keep on to cooperate with any inquiries from the Office of Justice.”

The company has been the target of virtually a dozen civil lawsuits and so significantly has settled a huge share of the litigation, acquiring resolved $128 million in claimed losses from far more than 300 persons and entities. In each and every of its settlements, it has admitted no liability. The company, in its white paper defense, highlights the payouts it will be creating to victims, noting that “as the DOJ (Division of Justice) Principles recommend, a corporation’s ‘efforts to fork out even in advance of any court docket order’ is a aspect from prosecution.”

In a proposed $47 million settlement with financial commitment company Ovation Companions that was filed this week in Exceptional Court, Chicago Title factors to a the latest deposition of Champion-Cain that it claims now casts potent doubt on its culpability.

“During her January deposition, Cain testified that she hardly ever explained to any individual at Chicago Title, including principal escrow officer Della DuCharme, that the liquor license lending company was a fraud,” attorney Megan Donohue wrote in the quick. “Instead, she testified that at all times she ‘attempted to give the effect [to Chicago Title] that [she was] jogging a authentic company.’ She even further conceded that only she and other folks at ANI realized that the ‘liquor license purchasers and the liquor license financial loans have been fictional …’ Given this testimony, which took spot after the Ovation settlement had been negotiated, any liability by Chicago Title or its workers is in significant doubt.”

It is typical for organizations who study they are being scrutinized by federal prosecutors to employ the service of outside the house companies to carry out an interior investigation and present all those success to federal authorities.

The reports can fluctuate in what they address, but they generally tackle the allegations of misconduct, make clear who might or may not have been accountable and outline the measures the company has taken to increase its inner controls. It can also incorporate a compliance approach outlining actions the corporation would choose so the similar conduct does not happen in the long term.

Chicago Title’s white paper does just that, pointing out that its mum or dad corporation, Fidelity National Economical, has a robust compliance system designed to detect and prevent potential misconduct, and it describes in depth how it has beefed up its escrow controls.

Attorneys who usually depict providers and people today dealing with federal scrutiny said the inner investigation is a prevalent tactic businesses deploy when authorities investigators are hunting into corporate wrongdoing.

White papers are part of the very same method, addressing issues prosecutors could continue to have following the internal investigation has been offered, say lawyers with expertise in such issues. The paperwork are part of the back-and-forth that happens about several months as corporations endeavor to encourage the government not to file rates.

The scrutiny by federal prosecutors below arrives at a time when the Department of Justice under Lawyer Normal Merrick Garland has introduced a harder line on corporate misconduct.

Improvements consist of requiring prosecutors to just take into account a corporation’s full prison, civil and regulatory background with the govt when earning selections, and requiring corporations to disclose all info about everyone included in misconduct to get credit score for cooperating.

Chicago Title asserted in the conclusion of its white paper that “the steps of two people today do not in any way reflect the society of the enterprise or its motivation to remaining a very good corporate citizen and that a criminal prosecution of the corporation would not serve the public fascination in punishment, deterrence, rehabilitation, or restitution.”

One particular possible hurdle for Chicago Title is the prison and civil situations stemming from a substantial house loan fraud plan in San Diego that surfaced in 2007 when former money planner Rollo “Rick” Norton pleaded responsible to mail fraud. Norton employed the fiscal qualifications of his buyers devoid of their consent to obtain loans on a condominium challenge.

Norton pleaded guilty and testified his fraud was assisted by employees of Chicago Title, who aided get ready and signal fraudulent paperwork that perpetuated the scheme. The business confronted many civil satisfies and compensated out millions to investors.

The white paper and PowerPoint documents organized by Chicago Title are subject matter to a protecting buy of the court docket, and as these kinds of are intended to continue to be confidential, Chicago Title has reported. As part of the discovery procedure for the lawsuits naming Chicago Title, its lawyers have mentioned the enterprise shared the documents with the plaintiffs