For new Sheriff and Finance Commissioner, tackling deed fraud is top priority
In response to rising reports of real estate fraud, the city’s Department of Finance commissioner and the New York City sheriff, both recently appointed to their positions, are teaming up to thwart increasingly brazen schemes and protect homeowners.
“I was surprised how easy it was for someone to fraudulently record a deed,” said City Finance Commissioner Jacques Jiha, Ph.D., who assumed his post in May. “Immediately we heard stories of fraud from news outlets, and I knew we had to implement some changes.”
The city’s Department of Finance (DOF), an agency that handles the administration of all the tax and revenue laws of the city, is also in charge of the Office of the City Register, which handles the recording of all deeds for real property.
Jiha explained how the City Register is required to record any deed offered in “recordable form,” a requirement that is easily met if the paperwork submitted is certified by a public notary, has a seller’s signature, a buyer’s signature and all the correct documentation. Until recently, the office would return defective deeds to filers if a review by staff found some questionable issues with a “road map” advising how to cure the defects and resubmit the deed so that it would be filed.
“We were trying to be consumer-friendly, but incidentally we were also helping certain determined people commit fraud,” Jiha said.
Now if staff reviews a deed and identifies a problem, it is referred to the Sheriff’s Office for investigation. If the filing is not legitimate, the sheriff can continue investigating, and if appropriate, make an arrest for fraud.
City Sheriff Joseph Fucito, who has worked in the department for 26 years and was appointed in June, noticed similar issues and is supportive of the modified policy.
“Immediately there were a couple of cases that came to the new commissioner’s attention,” Fucito said. “We started talking about what the department could do to curb this problem from a law enforcement perspective. The employees at the city Register’s Office are very good at picking up on a filing that doesn’t look quite right, but in the past, their direction was to return it. So now we’re utilizing their skills for when something doesn’t look correct.”
The sheriff, who was merged into the DOF in the 1990s, handles the enforcement of Court Orders, as well as other types of criminal investigations, which includes deed fraud, tax cases and tobacco enforcement. Illegal activity investigated by the sheriff can be a mix of several different types of fraud.
“A lot of these cases overlap from deed fraud to mortgage fraud to tax fraud,” Fucito added. “It’s often this multi-tentacled creature, and we’re trying to get to what’s at the core. Ultimately, the people that pay are the tenants, the banks, the city and the Department of Finance if we’re not collecting the proper taxes we should be receiving, and the economy as a whole as the ownership of homes remains uncertain.”
In addition to the new policy of red flagging suspicious deeds, both Jiha and Fucito offered proposals for additional legislative and technical changes that they claim would assist them. One requirement would be to mandate that all real property conveyances require a deed to be registered in the state of New York — though it’s often done out of practice, currently there is no such requirement.
Another reform would be to strengthen the process by which public notaries are held accountable, requiring fingerprint identification for the signature of the parties in deed documents, for example.
A third law sought would allow the department to “undo” a deed that its investigation reveals to be fraudulently filed. Currently, the sheriff can investigate and even make arrests, but the DOF cannot legally remove a deed from the records that was discovered to be fraudulent — affected parties have to seek their redress in court, spend money and go through a lengthy process.
“We’re pushing for several pieces of legislation in Albany that would change the process and further assist us,” Jiha said.
Fucito also touched upon the need to require more information to track down the individuals behind “shell companies” used in many of the deed filings.
“We’ve talked about how it may be more beneficial to have more information as to who is behind an LLC, especially in the filings. Like a document that would say, ‘This is the LLC, and these are the individuals who are attached to or invested in the LLC,’” Fucito said. “Attaching a responsible party, even if they’re not liable for the actions of the organization in a civil realm, would be helpful if criminal conduct is being conducted in the LLC’s name. It would allow us to focus our investigative efforts as to who these people are.”
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This article is a summary of a lengthier interview by the sheriff and commissioner provided to Brooklyn Brief, available here, and follows an exposé of a large-scale real estate fraud ring in several Brooklyn neighborhoods.
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