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New York City - NY Daily News New Owner Of Empire State Building By Stealing, And You Could Do it Too |
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Egan-Chin/News Daily News reporter William Sherman in front of the Empire State Building.
And it wasn't that hard.
The News swiped the 102-story Art Deco skyscraper by drawing up a batch of bogus documents, making a fake notary stamp and filing paperwork with the city to transfer the deed to the property.
Some of the information was laughable: Original "King Kong" star Fay Wray is listed as a witness and the notary shared a name with bank robber Willie Sutton.
The massive ripoff illustrates a gaping loophole in the city's system for recording deeds, mortgages and other transactions.
The loophole: The system - run by the office of the city register - doesn't require clerks to verify the information.
Less than 90 minutes after the bogus documents were submitted on Monday, the agency rubber-stamped the transfer from Empire State Land Associates to Nelots Properties LLC. Nelots is "stolen" spelled backward. (The News returned the property Tuesday.)
"Crooks go where the money is. That's why Willie Sutton robbed banks, and this is the new bank robbery," said Brooklyn Assistant District Attorney Richard Farrell, who is prosecuting several deed fraud cases.
Of course, stealing the Empire State Building wouldn't go unnoticed for long, but it shows how easy it is for con artists to swipe more modest buildings right out from under their owners. Armed with a fraudulent deed, they can take out big mortgages and disappear, leaving a mess for property owners, banks and bureaucrats.
"Once you have the deed, it's easy to obtain a mortgage," Farrell said.
Many crooks have done just that:
- Asia Smith stole her 88-year-old grandmother's house in Springfield Gardens, Queens, pocketing $445,000 in mortgages she took out.
"Her grandmother raised her," said Queens Assistant District Attorney Kristen Kane. Smith, 22, was arrested last December and is serving a one-year jail term for fraud.
- A man posing as someone who had been dead for 19 years deeded the dead man's property to himself. He then sold it to the scheme's mastermind, who took out a $533,000 mortgage and vanished with the cash.
- Toma Dushevic managed to steal seven dilapidated city-owned buildings in Brooklyn 10 years ago.
He got renovation permits, fixed up one of the buildings, and rented out apartments. He sold another building for $250,000 and ran his scam for nearly two years until he was caught. Dushevic returned the buildings and did 18 months behind bars.
The FBI says financial institutions filed 31% more Suspicious Activity Reports involving mortgage fraud last year than in 2006. Nationwide, lenders' losses totaled $813 million, and New York was one of the top 10 mortgage fraud states.
In the city, deeds accepted by the register's office are recorded on that agency's Web site, where they are easily viewed and are the basis for mortgage transactions.
The News investigation disclosed that mortgage brokers, representatives of title companies, lending banks, lawyers and others in the mortgage process often failed to verify identification and other information provided by the thieves.
Unlike the city employees, the brokers and others should check mortgagors' information, their professional trade associations say.
In one Queens deed fraud case, a mortgage broker and title company representative are accused of taking part in the scam. They are charged with helping obtain $1.4 million in mortgages from two of the biggest banks in the city on behalf of the scammer, who has vanished.
In all cases The News reviewed, the city register's office accepted and recorded the fraudulent mortgages.
Unlike the thieves, The News did not obtain a mortgage on the Empire State Building.
Instead, The News returned the property to its rightful owners Tuesday - less than 24 hours after the fake deed was filed. The News also is withholding key details of how the scam works.
Real thieves get the mortgage cash, ripping off banks and leaving the properties' owners with mortgage debt and ruined credit.
"Mortgages stay with properties," Farrell explained.
When the victims don't pay the mortgages they didn't take out, lending banks foreclose on the properties.
A major tool thieves use is the notary stamp on documents, one item city employees check.
"They don't check to see if it's real, but they do check to see if it's there," said a lawyer familiar with the system. The stamps are easy to get and cost about $30.
National mortgage broker and title company trade associations said their members try to verify identification but can be fooled by clever hustlers.
"We know you can forge driver's licenses," said Marc Savitt, president of the National Association of Mortgage Brokers.
"Every time the industry finds out measures to stop fraud, the thieves always get one up on us."
Anne Anastasi, a member of the board of governors of the American Land Title Association, said, "There are people who are very good at this and it's hard to stop."
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Read Comments (22) — Post Yours »
1
Dec 03, 2008 at 09:05 AM AuthenticSatmar Says:
I hope the reporter that pulled of this scam gets prosecuted. Just because he is writing an article doesn't make it legal. Yes you can speed and may not get a ticket. Doesn't make it legal. Anybody can steal, rob, and kill. The laws in place are simply detterents, and the hope is that perpetrators will get caught by the checks and balances in place.
This is the new defense "you're honor, I killed the president so I can investigate the security and write an article for the Daily News".
Let the reporter rot in jail, and charge the Daily News with conspiracy.
2
Dec 03, 2008 at 09:44 AM Anonymous Says:
don't you need title insurence?
3
Dec 03, 2008 at 09:41 AM Anonymous Says:
I always wondered why articles like these are printed. I would love to do a survey to see how many people over the next few weeks try this scheme....and get caught!
4
Dec 03, 2008 at 09:52 AM Anonymous Says:
Gee, and we wonder why the economy is in trouble...
5
Dec 03, 2008 at 10:28 AM Anonymous Says:
He didn't take out title insurance, he just filed a deed.
6
Dec 03, 2008 at 10:56 AM Anonymous Says:
What are you guys so scared of? You think that was his discovery? Besides, #1, this was a Goinev al-m'nass l'hachzir which he would probably go to jail if he'd be caught before he returned it.
It did happen when a passanger on an airline wanted to try the security at the airport that was cought and got arrested. Still don't get too excited. unfortunately too many are doing it and drive around in their Hummers or their Lexus.
7
Dec 03, 2008 at 11:51 AM awacs Says:
“ don't you need title insurence? ”
Only if you want to take out a mortgage.
8
Dec 03, 2008 at 12:20 PM Anonymous Says:
“ Only if you want to take out a mortgage. ”
Actually, title insurance is necessary on every conveyance of real property, regardless of whether or not you obtain a mortgage. But, in any event, a bank will not give you a mortgage unless you have title insurance, to protect themselves.
9
Dec 03, 2008 at 12:18 PM Anonymous Says:
“ don't you need title insurence? ”
Ordinary title insurance does not protect against fraudulent transfers of a deed. You have to get extra coverage for such a provision.
10
Dec 03, 2008 at 12:48 PM awacs Says:
“ Actually, title insurance is necessary on every conveyance of real property, regardless of whether or not you obtain a mortgage. But, in any event, a bank will not give you a mortgage unless you have title insurance, to protect themselves. ”
Oh? What's your cite for that (that you need title insurance in a private, non-financed conveyance if both parties don't want it)?
11
Dec 03, 2008 at 12:57 PM Anonymous Says:
title insurance says it belongs to this person from you are buying the house how should the title company know that this trasfer was not made true if its even regestered in the city and state.
12
Dec 03, 2008 at 01:38 PM Anonymous Says:
“ Actually, title insurance is necessary on every conveyance of real property, regardless of whether or not you obtain a mortgage. But, in any event, a bank will not give you a mortgage unless you have title insurance, to protect themselves. ”
As #10 pointed out, you do not need title insurance in order for a conveyance to be legal - you do not need title insurance to record a deed -- proof of title insurance is not something you include with your deed when you send the deed to the county register or clerk for recording -- title insurance protects the buyer (a so-called "fee policy") or the lender (a "loan policy") -- here the person perpetrating the fraud is the "buyer" and there is no lender --
13
Dec 03, 2008 at 01:50 PM Title Says:
“ Oh? What's your cite for that (that you need title insurance in a private, non-financed conveyance if both parties don't want it)? ”
If private lender agrees not to take title insurance, then they don't have to. Pretty stupid move, though.
14
Dec 03, 2008 at 02:04 PM Title Says:
I'm a title insurance professional and this is the silliest article I've seen. Fraud is a job for the DA, not the City Register. What is the reporter trying to prove? That he can record documents? Whoop de do. He is at best a novice at real estate and so are the people that are impressed with his article. Someone who commits mortgage fraud takes the risk of getting prosecuting and going to jail. And trust me, they get prosecuted. Everything get taken away from them and they sit and rot. It's not pretty.
15
Dec 03, 2008 at 02:02 PM Anonymous Says:
“ Oh? What's your cite for that (that you need title insurance in a private, non-financed conveyance if both parties don't want it)? ”
I didn't say you are required (by law or otherwise). I said it's necessary, and to explain myself i will now add, it is necessary to protect yourself against title defects. That's all.
16
Dec 03, 2008 at 02:01 PM Anonymous Says:
“ If private lender agrees not to take title insurance, then they don't have to. Pretty stupid move, though. ”
awacs
#10 clearly said private and non-financed - between that and #12's explanation -- will you at least agree that technically speaking, you were not correct, when you stated that title insurance is required for every conveyance?
17
Dec 03, 2008 at 02:11 PM Title Says:
“ Ordinary title insurance does not protect against fraudulent transfers of a deed. You have to get extra coverage for such a provision. ”
Disagree. An innocent insured party is covered against fraud. See covered defects on NYS owner and loan policies for exact details.
18
Dec 03, 2008 at 02:16 PM awacs Says:
“ I didn't say you are required (by law or otherwise). I said it's necessary, and to explain myself i will now add, it is necessary to protect yourself against title defects. That's all. ”
Title is necessary in the same sense that collision insurance is necessary - if and only if you have a bank involved. Otherwise, it's just a good idea. Note that I said collision, not liability.
"I am a lawyer, but I'm not your lawyer, and this is not legal advice."
19
Dec 03, 2008 at 02:15 PM Title Says:
Title insurance is not required for certain family transfers or mere change transfers as there is continuation of coverage. See section 32 of the TIRSA rate manual for NYS.
20
Dec 03, 2008 at 04:32 PM Anonymous Says:
“ Disagree. An innocent insured party is covered against fraud. See covered defects on NYS owner and loan policies for exact details. ”
As per the General Counsel for a respected title insurance company in NYS who emailed me today, "the issue for an owner in title whose title is clouded by a later fraudulent deed would not be within the coverage of the title policy obtained at the time the true owner took title, and that the true owner may need to clear the title before further conveying his or her property.
There is a form of owners policy available to the purchaser of a 1-4 family dwelling in New York State, and elsewhere, known as a Owner's Extended Protection Policy, which includes as a Covered Risk "someone else [claiming] to have rights affecting Your Title arising out of forgery or impersonation", even when the fraud occurs post-policy."
21
Dec 03, 2008 at 05:14 PM awacs Says:
“ As per the General Counsel for a respected title insurance company in NYS who emailed me today, "the issue for an owner in title whose title is clouded by a later fraudulent deed would not be within the coverage of the title policy obtained at the time the true owner took title, and that the true owner may need to clear the title before further conveying his or her property.
There is a form of owners policy available to the purchaser of a 1-4 family dwelling in New York State, and elsewhere, known as a Owner's Extended Protection Policy, which includes as a Covered Risk "someone else [claiming] to have rights affecting Your Title arising out of forgery or impersonation", even when the fraud occurs post-policy."
”
All true, and a good point. But the policy would cover, I would think, the sad case where our hero bought the property from a shyster who forged a deed, or a subsequent conveyee of the shyster. Right?
22
Dec 03, 2008 at 05:02 PM Title Says:
“ As per the General Counsel for a respected title insurance company in NYS who emailed me today, "the issue for an owner in title whose title is clouded by a later fraudulent deed would not be within the coverage of the title policy obtained at the time the true owner took title, and that the true owner may need to clear the title before further conveying his or her property.
There is a form of owners policy available to the purchaser of a 1-4 family dwelling in New York State, and elsewhere, known as a Owner's Extended Protection Policy, which includes as a Covered Risk "someone else [claiming] to have rights affecting Your Title arising out of forgery or impersonation", even when the fraud occurs post-policy."
”
You are correct. There are instances where fraud is covered and where fraud is not covered. I was just responding to the claim that fraud was not covered at all.