Chairs Dromm and Cornegy Jr., and members of the Committees on Finance and Housing and Buildings, thank you for the opportunity to testify on behalf of the Manhattan District Attorney’s Office at this oversight hearing on the City’s deed theft and deed fraud crisis. My name is Gilda Mariani, and I serve as Senior Investigative Counsel in the Rackets Bureau. I am also a member of the New York State Attorney General’s Task Force on Deed Fraud, and serve on its Subcommittee on Legislation and Policy.
There are few greater threats than being displaced from one’s home. Shockingly, that can happen through property title theft, or deed fraud, with the stroke of a pen or the click of a mouse. Deed fraud is not only harrowing to the victim, but it also affects the integrity of real estate ownership, and real estate taxes are a substantial source of New York City revenues. Notaries public are the gatekeepers that can thwart this criminal activity.
This crime happens when fraudsters discover prized parcels by scouring obituaries for recently deceased owners, canvassing neighborhoods for unoccupied or dilapidated residences, and locating publicly filed deeds of property owned by older individuals. The fraudster then gets control of the property through criminal means, including forging the owner’s signature on the deed, tricking the owner to sign the property over, masquerading as a legal distributee, and transferring the property to a limited liability corporation, a series of shell entities, or a totally fictitious person. The fraudsters are then able to use the property as collateral for mortgages and loans, make renovations, or extract cash for personal benefit. They can also sell the property to a bona fidepurchaser.
The notary public is the gatekeeper poised to avert this most dastardly fraud.
Every document associated with a real estate transaction requires a notarization, which requires the notary public to positively identify the signer of the document by obtaining proper identification from that person. Sometimes, the notary public also administers an oral oath or affirmation. Virtually every fraudulent transfer involves a faulty notarization, either by a willing, or an unwitting notary public. For example, the notary public may affix his or her signature and seal to documents even though the signer does not appear before the notary; or be persuaded to dispense with lawful protocol when someone is regarded as a respectable member of the community; or may even sign and notarize a blank grantee or grantor signature line.
More brazen perpetrators affix a fake notary public signature themselves by stealing and using a valid notary public stamp, lifting valid notary commission information from public documents and photo-shopping the notarization onto the new documents, or using information about a notary public that is contained in public filings, such as the license number, expiration date, and county of issue, to purchase a phony notary public seal from a retail vendor of notary paraphernalia – who are not required to verify the notary public commission of purchasers. To test the laxity in the industry, one law enforcement official, acting in an undercover capacity, purchased a fake New York notary seal from an out-of-state online vendor. The officer simply provided the vendor with a fake notary public registration number, county of issuance, and commission experiation date. Upon payment of a modest fee the notary seal was created. The vendor did not verify the notary public’s commission.
A New York County Grand Jury, empaneled upon the application of Manhattan District Attorney Cyrus R. Vance, Jr., responded to the wave of deed fraud by issuing a first-of-its-kind Grand Jury Report in December 2018, setting forth simple recommendations to combat this problem. Of note, the Grand Jury urged the New York State Legislature to do the following:
- To require all notary public applicants to be fingerprinted as part of the background check and to file an official bond, which would establish the applicant’s true identity, disclose if the applicant has been convicted of a disqualifying crime, and provide victims some measure of recovery for damages in cases of misconduct.
- To increase the applicants’ required education, mandate a designed course on notary public law prior to the written examination, and require continuing education course prior to reappointment.
- To institute new procedures that a notary public should follow in the exercise of official acts, including keeping a chronological and contemporaneous journalof all notarial acts, as is the required or recommended practice in nearly every jurisdiction in the United States. Journals can be used to refresh a notary’s memory years after the fact, establish the signer’s identity and corroborate the integrity of notarization, and are valuable investigative tools that have enabled New York City law enforcement to prosecute a person engaged in deed fraud in instances where the notary public voluntarily kept such journal.
The Manhattan District Attorney’s Office has written draft bill language to amend the Penal Law to attack this problem. If adopted, the draft language would amend Articles 170 and 175 of the Penal Law, related to offenses involving fraud and offenses involving false written statements, to specifically account for crimes involving false “real property instruments,” including adding a Class D felony for presenting such, and expanding the class C felonies of Forgery and Criminal Possession of a Forged Instrument to include such false instruments in the First-Degree classification. The draft language also suggests adding a Notarial Offenses article to the Penal Law that provides consequences for notaries public who flout procedures to notarize false real property instruments, making deed fraud easier to detect and prosecute, and for individuals who tamper with notarial journals as well as those who impersonate notaries public.
Since 2018, the Manhattan DA’s Office has had a dedicated attorney focusing on issues of real estate, housing, and deed scams and fraud. We encourage members of the public who would like to report alleged deed fraud in Manhattan to call the District Attorney’s Financial Frauds hotline at (212) 335-8900. Help is available.
In closing, the notary public stands in a pivotal position to thwart real estate conveyance fraud and to assist in bringing scammers to justice. With Notary Public Day being celebrated each November 7thin the United States, it is an appropriate time to call for legislative revision. The notary public must be the gatekeeper.