Scams

Scams
Elvis Presley's Graceland mansion scam brought this kind of thing to my attention. And I thought, “Wow, this could really happen.” Here’s what happened there: Graceland was set to go up for auction under the pretext that Elvis’ daughter, Lisa Marie, who died in 2023, failed to pay back a $3.8 million loan she’d secured from  something called “Naussany Investments”. She’d used Graceland as collateral, according to court documents. But Elvis’ granddaughter and final heir sued to protect the estate from the auction block, alleging fraud and saying Naussany and the people supposedly behind it didn’t exist and had no rights to the property. Which turned out to be true as the court documents apparently were forged. If the heir didn’t find about it and take immediate steps against the fake Naussany firm, if the name Naussany hadn’t been used elsewhere, if it were some run-of-the-milll mansion and not Elvis’, if the real perpetrator hadn’t have a long line of scams to her credit, they might have succeeded.

That this is something the world now needs to look out for is witnessed by this: I recently sold a property I owned in Schoharie County, a perfectly legitimate sale. And a few days later, got a letter from the County saying that there had been a sale, and was I aware of it? If I wasn’t, I was to contact them immediately. Yes, a little ex post facto, but I applaud them for this action and hope all counties do something similar. But what if the owner was on vacationer the hospital  and didn’t get the letter right away?

A month ago,  I received an email from a fellow who wanted to sell his hunting camp. Nothing suspicious about that;  we see these things once in a while, not often enough, actually. We’d like more hunting camp business. The story was that he’d lost his out of state home in a fire, and needed to raise some money. Adding to his difficulties, he was in Canada for some medical procedure that would keep him there for some time, after which he was to go to Great Britain. I was supposed to use the official address as shown on the County records rather than a new one where he was in Canada. He gave me a phone number if we needed that too (a Canadian area code - I checked).  When I queried him on details, he had none, saying his deed and keys were lost in the fire. I viewed this lack of information as a red flag. Well, not really a red flag, a pink one.

For many years we have sold an occasional property where we never met the owner face to face or even speak directly to them, just via email. No cause for suspicion there. The lack of details was different. I asked things that any owner should know. What was the water source? Had any logging been done? Could he describe the buildings? You know, the stuff you need in order to represent and advertise a property. And got the same answer: go there with a locksmith to get in and advertise what you see.

Let me describe the place: This was a hunting camp, located in the Adirondacks and on a closed seasonal road. And there is 3’ of snow right now. Of course the owner was not there. Nor is locksmith going to open the doors. My associate, Pete, snowshoed in 300 yards off the maintained road, took photos, and got enough information for a write-up. We communicated with the purported owner; he was good about that. Another piece of information for you: he wrote perfectly fine English, not like a Nigerian scammer might do. And not like a owner with a very Eastern European first and last name might be expected to do.

Suspicions raised, I wrote to the owner at the address on record, down in Pennsylvania, saying that I was just writing him for a “routine confirmation” ( this was a line of complete BS - but if this was legitimate, I didn’t want to offend the owner) and asked him to contact me immediately if the property wasn’t for sale. I got no reply.  Weeks passed waiting for one.  I called the NY State Police hoping they could find a way for me to contact the owner at his home. If he was there - Canada was still considered a possibility, as could be Florida as well. Older folks in cold climates like to visit Florida during the winter.. The Staties clearly were not interested and just told me to contact police in Pennsylvania.

So, I did, several times, and had to content myself with messages left. I tried call fire companies to see if the home had actually burned - and left a lot of messages with them too. Finally, I reached a fireman. And he said there were no fires in that area in the last 18 months; he knew that for a fact. OK, giving the purported owner the benefit of the doubt, he might have had that fire years before, even though the camp looked like it had been used regularly - during the right season of course. I am not one to accuse people without better evidence than just my suspicions. And if the listing was legitimate, which was still not ruled out, I did not want to piss him off and lose it.

I’d been thinking: if a stranger emails you, how can you know he is who he says he is? It’s not as if we ever met face to face or had mutual acquaintances. How would this kind of scam work? This time, there were no neighbors to give evidence: the place is isolated and the bordering neighbors are not there either. Here’s what could happen. We find a buyer (after traipsing on snowshoes for many miles doing the showings), get his deposit and signed purchase contract, then email it to the purported owner who duly signs it and returns it. All as it should be. We find an attorney for him who does his job and we get to a closing which of course would be done by mail. So many of them are done by mail anymore, nothing suspicious about that.

OK. We have a closing and things have gone well… so far. The deed is filed and the old owner is no longer the owner of record. The purported owner gets his money wired to him, collects it and closes the account, then goes off to enjoy his vacation in the Caribbean. Months pass. Then the old owner goes up for some hunting only to find a stranger in there, who tells him to get off his new property.

Now we have a problem, Houston. Either the old owner has lost his property or the new owner lost his money. The attorneys and abstractor are out their work and we have to give back a commission we already spent. And the scammer is off scot-free, still on his Caribbean island. I spoke to my attorney about this. She was not so worried, as she asks for driver’s license or government ID up front. But maybe another attorney wouldn’t. Anyhow, by the time we get the purchase contract to an attorney, we’ve done our work, so our driving, our advertising, our many phone calls - would all for nothing. Since there there would be  a sore loser involved and since no one can find the perpetrator, someone might decide to go after Mr. Deep Pockets (me), as he’s the one who can be found. And we’d get sued and have to pay to defend ourselves, even if we win. Everyone loses. Except the scammer.

Resuming the story. Every so many days I’d been calling the Pennsylvania police and the fire companies, always leaving messages which disappear into black holes. I also called the local Post Office to see if there was a forwarding address for the old owner, but they were not allowed to give out any kind of useful information. I’d even thought of driving 5 hours, one way,  to his home just to see. My luck changed:  I finally got a fireman, then a few days later a policeman. So they do pick up the phone sometimes. I hadn’t been sure. The police called the old owner right away

He called me soon after and as luck would have it, rang when I was on the phone with someone else. Suspecting who it might be, I returned the call a few seconds later and had to leave a message. Then thought, “Maybe he left a message for me and that’s what he was doing when I called.” Sure enough he’d left a short message, in a thickly accented voice. Now, that sounded legitimate. So I called again, only to leave another message. This, I might add, was not the Canadian area code number the purported owner initially gave me; it was a Pennsylvania one. With cell phones your area code may or not represent where you live, so you cant go by that anymore.

Half an hour later, I got a call, from the old owner.’s son, who spoke perfect English and who readily understands these kind of things. His father had looked on line and there was his property listed for sale, so he called the son to intercede. The son said his father would have been devastated had the scam succeeded, devastated both financially and emotionally. He’d received my letter weeks ago, but thought it some sort of joke, so didn’t bother to reply.  We discussed how to catch this guy and both us us agreed to speak with our local police and for the time being to leave the listing active until we hear how to best bring the scammer  to justice.

What I am afraid will happen is that the police will say that it’s too hard and too expensive to try to trace the guy, then to hope to get a conviction across national borders. Maybe alI I can do is warn others that this could happen to you too (which, if you read this, is what I am doing). But we’re going to try to bring him to justice. There was nearly $100000 at stake here; it’s not any penny ante scam. Maybe that’s enough for the police to go after him seriously. We’ll see.

(Later) The sheriff called. They can’t do anything about it. Here’s what he said (nicely).

1)  “There’s too many of these things going around for them to take the time to attempt to bring anyone to justice. And it’s too hard when state boundaries are involved. Harder yet with national boundaries.” I have heard this before. Yet, we had the scammer’s phone  number - couldn’t they trace that and find out who he is? There's enough of this stuff going around and for long enough that you’d think authorities would have protocol in place by now to handle this sort of crime. I understand: they do what they can with the limited resources they have. Still….

2) “Until the owner loses his property or the buyer his money, there’s no crime committed.” Well, isn’t signing a false contract (the listing) a crime? Or forging a signature? Haven’t we lost money in our efforts so far? We could have been arrested for trespass. I don’t care so much about any the stuff about us except as an excuse to go after him. To agree to this kind of excuse is like saying an attempted murder doesn’t count. You can keep trying to injure someone and until you actually do, you are innocent? Come on.

3) “The FBI won’t be involved without a $250000 loss”. Oh, so they have a price? So, as long as you keep your frauds under $249000, you get off? Stealing from a poor person is not the same as stealing from the rich? (I’ll admit, historically, it hasn’t been the same. Haven’t we gained anything as a society? Yes, I am looking at this as an idealist, not a realist. But, while realists establish the status quo; idealists further it.)

We concluded the scam was real on Monday. On Tuesday, the real owner drove up to the County, just to make sure, and to meet me. We talked for way over an hour, a great guy and if he lived near, we’d be friends.
But the story doesn’t end here, as it should. Less than two weeks later, Mike asked me to sell his lakefront lot. It was a bit far for me but near one of my own homes, so I took it on. He asked me to prepare the listing so he could sign via DocuSign, an online way to sign documents. Though it’s used broadly, I have never liked it: you type in your name, which makes it legible alright, but not distinctive and I fail to understand why lawyers accept this as legal. I won’t use it on my own purchases or sales.  I explained to Mike that this was a service to which one had to subscribe and that the simplest was to do this was to print out the listing, sign, then scan and return. If he had no scanner, he could take a careful photo instead. For some reason Mike could not do this. Perhaps he only had a cell phone?  He gave me clear authority via email to go ahead and work on it. I told him, “OK, but I still need your signature before I can do all my ads as some sources requires  this (which was a white lie, I guess). So I sent him the listing form via good old Post Office. Taking him at his word,  I posted it, figuring I could take them down fast enough if I did not get back the signed listing.

Two or three days later, I got a call from the agent with the frozen sign. The subject of the call was not getting the sign out but the fact that this property was under contract and the buyer happened to notice it, called her, worried that the owner had for some reason changed his mind. One of the things I checked on-line right in the beginning was to see it it was for sale. It wasn’t. Well, that was why; it wasn’t listed as for sale because it was in the process of being sold. She was nice and not surprised at my story as she was aware of other recent similar scams. This is far more prevalent than I had assumed.

We instituted some changes in our policies. Now, when agents have not personally met the owner and are dealing via email, we now ask for a copy of their drivers license (which should be needed at the closing), And we mail the listing form to them to sign. I have also added a paragraph to purchase contracts to be used in such situations, one which gives additional protection to our firm and puts the ”seller” a little more on the hook. I wish there was a practical way to catch scammers. Preventing them is hard enough.

Abstracts and Title Insurance

New York is what is called “an abstract state”, meaning we still use abstracts of tile to pass property. More states now rely upon title insurance and increasingly, I am seeing more of that here. What is the difference?

An Abstract of Title is a long document which gives a complete historical summary of all recorded documents which could affect your title - deeds through the years, wills, liens and releases, mortgages, easements and rights of way, pending lawsuits, marriages and divorces, tax liens…. It also says which records were searched and which ones weren’t.  It’s a lot of stuff and abstracts tend to be BIG and can be interesting reading for someone who enjoys knowing the history of your property. What your attorney reads here gives him the information he needs to render his opinion of the marketability of the title, that it is good and that there will be no one i0n the future claiming to own it as well. There is some legal liability for both the attorney and the abstractors if they screw up and miss something, so it is in everyone’s interest that this part of a transaction be done carefully.

Title Insurance is something else: an insurance policy sold to you, one that lasts as long as you own the property. Just one payment, given at closing, does the trick and you are fully indemnified against any future person who might claim to own all or part of your property. In many states, there are no closings without title insurance, so it is becoming common when buying property owned by a multi-state bank or other lender to require this as a matter of course. It is not a New York State requirement and on property that I flip I prefer to avoid it when I can. In my view, it is a cost that protects, not for years as it would for most folks, but only until I resell it a year later. Not worth the expense, in this case as I would still have recourse against my attorney and abstractors, not that I’d use it. But when you intend to make this your home or even to own it for a long period, the equation changes and you may feel  the security is well worth the expense.

Here’s why title insurance is replacing abstracts: people (this includes lawyers and bankers too) assume that if the insurance company is satisfied that there is little to no risk that they will need to make good on their indemnification obligations, then that’s good enough to pass on the title. It also tends to take attorneys off the hook which no doubt makes it easier for them to embrace the process. The same employees and firms do the work for each because basically the research need for each is similar. If it is wasn’t, there’d be more attorneys demanding abstracts instead. There is little financial incentive either way for most people.

 Sometimes, often, title searches are simple and just take time. Any lawyer can do a title search and draw up the abstract. Some of the abstract/title companies are owned by lawyers as an adjunct to their normal services. However, they nearly always farm the actual work out to abstract/title firms, ones who do that for their living and become expert at it. I know of just one lawyer who routinely does his own abstracting. He also is in his upper 80’s, still sharp. I have seen rare special situations where other lawyers will do this work themselves, but go many years between examples.

In the beginning, it is decided among the lawyers which one orders the title work, which is  typically not ordered until the contract is fully in place as it would be wasted money and time (the abstractor's time, which has to be paid for) if for some reason there was not going to be a closing. Examples of that would be if the parties failed to agree on a small point or if the buyer needed to get a mortgage nor sell another property, then couldn’t. So, it saves money to wait. But there are times when it costs buyer and seller to wait and if your case is one such, then you should make this clear to your attorney that you’d rather risk wasting money on a title report than delay. But in nearly every case title is not ordered until both attorneys are sure that the deal will close, that the only possible’s stumbling block left is the possibility there is bad title or perhaps a cloud upon the title, which the report will reveal.

I can think of only one place where lawyers have not been able to resolve clouds upon the title. That place was under contract several times and failed to close each time, for the same reason.  Fortunately none were my deals. But in every other instance I have heard about, eventually the difficulty gets taken care of. But it comes with a cost of a delay in the closing and can take additional weeks to be resolved.

Abstracting typically takes about 3 weeks, but it really depends upon how busy they are. I have seen it done in a week and have seen it take over a month, even two. Each case is different. If you have an abstract, you will want to make sure you know where it is before you decide to sell as it may be expected that your attorney will want to send out the physical copy for updating, which is much cheaper and faster than creating a new one each time. It is surprising how often an attorney asks the seller for his abstract and it cannot be found. After all you have no need for it between the time you bought the place and when you decide to sell. It may be at your old attorney’s or the bank as well as in your own files, three places to search. Fortunately, there is a move toward digital copies, which makes these things easier as well as saving mail delays. If you intend to use title insurance, the company can still use the abstract to get them started, saving you time and money.