The thief was the New York Daily News. The newspaper said it drew up a batch of bogus documents, made a fake notary stamp and filed all of the paperwork with the city to transfer the deed to the property. Found to be in proper form, they were duly recorded and the Empire State Building then belonged to the Daily News’ entity created just for this purpose, Nelots Properties LLC.
They didn’t but they could have arranged financing, given a mortgage to a bank or other lender and made off with the mortgage proceeds. A nice day’s work. Being the good guys, the News deeded the building back to the owners. No harm, no foul.
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I spoke to Pima County Recorder F. Ann Rodriguez, Tucson’s equivalent of the city of New York Department of Finance. She told me her office has experienced very little of this type of fraud, but it had become a problem in Maricopa County. The bigger the city it seems, the more fraud appears to be perpetrated.
I know that a few years ago in South Carolina they were experiencing a rash of this kind of fraud. Myrtle Beach was a seasonal community. In the off-season, sharpies would invade the town, claim to own properties that were closed until the next season, and list them for sale with local brokers. The brokers were happy to have the listings and didn’t investigate the identity of the “owners.” The houses would sell and the imposters would pocket the proceeds and disappear. When the true owners returned for the season, they found their house had been sold. Much litigation ensued.
In Arizona, each county’s recorder’s office is charged only with recording what papers are presented for recording. They are not equipped or authorized to analyze the contents of the documents they record. That analysis is up to the courts if they become the subject of a controversy.
When I presented the above fact situations to Pima County’s Rodriguez, she quickly asked, “Where was the title company?”
It is safe to assume that no one would buy the Empire State Building, a $2 billion dollar asset, without buying title insurance. Since they would have insured the transaction, one would think the title agent would have verified the identity of the seller. Under the Patriot Act, business people are required to know who they are dealing with, to demand credible identification, so that when the recorder receives documents from a title company, it can be pretty sure the partiers have been vetted.
If documents are submitted directly by the parties, the recorder’s only recourse is to refuse to accept them. But if the papers are in proper form, they should be recorded even if suspicious.
When a fraudulent transaction is consummated, some lender (bank) holds a mortgage. Typically, the true owner will refuse to pay on that mortgage. The lender doesn’t care about the problems with the transaction. It wants its money and will foreclose the property. You can see how all this would inconvenience the true parties to the ownership of the property.
Like most crime, it’s worse in Maricopa than in Pima County. But it would seem only a matter of time before this kind of crime arrives here. When it does, it may be necessary for the recorder’s office to hire one or more attorneys to pass on the quality of the documents submitted for recording, Those that look suspicious could be referred to the county attorney.
Pima County must establish a reputation for hostility to recordation fraud. And it must do it soon before it causes trouble here.
Contact Lionel Waxman at territorial@waxmanmedia.com or visit his website: www.waxmanmedia.com. Lionel Waxman’s Flashpoint commentaries are published in The Daily Territorial.
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