Chairs Zebrawski, Rozic, Pichardo, and Lavine, and members of the Committees on Government Operations, Consumer Affairs and Protection, Banks and Judiciary, thank you for the opportunity to testify on behalf of the Manhattan District Attorney’s Office onthe important topic of modernizing the process of notarization in New York State and for seeking input from relevant stakeholders. My name is Gilda Mariani, and I serve as Senior Investigative Counsel in the Rackets Bureau. I am also a member of the Subcommittee on Legislation and Policy in the New York State Attorney General’s Task Force on Deed Fraud.
From a prosecutor’s standpoint, much like from a legislator’s standpoint, public safety is always of the utmost importance. Now – while the legislature is considering modernizing notarization laws to account for the application of technology – is the perfect time to likewise consider ways to enhance the notarization laws to further account for public safety.
To that end, my comments today address recommendations for legislative reforms designed to prevent and deter fraud by notaries public. A lengthy New York County grand jury investigation of property title theftor deed fraud revealed that notaries public – as both willing and unwitting participants – foster fraud schemes that result in individuals, often elderly and vulnerable, losing millions of dollars. But this is preventable.
Let me first take a moment to describe deed fraud. Deed fraud happens when fraudsters discover parcels by reviewing obituaries for deceased owners, scouring public documents for properties with tax liens, unpaid utilities, and/or longstanding ownership, and by canvassing neighborhoods for unoccupied residences. The fraudsters then get 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, transferring the property to a limited liability corporation, shell entity, or totally fictitious person. The fraudsters are then free to use the property as collateral for loans, extract cash for personal benefit, or sell the property to a bona fidepurchaser. Deed fraud is not only harrowing to the victim, but it also affects the integrity of real estate ownership and the proper collection of state and local tax revenues.
Now, I will explain how notaries public are integral to this fraud. The deed and other related documents recorded with a real estate transaction require notarization. Fraud occurs when the notary public affixes his or her signature and seal to documents even though the signer does not appear before the notary, is persuaded to dispense with lawful protocol when someone is regarded as a respectable member of the community, or signs and notarizes 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 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. Although the transactions investigated by the grand jury were paper notarizations, such fraud can be perpetrated through remote notarizations or notarizations in electronic form.
The New York County Grand Jury noted above, empaneled upon the application of New York County District Attorney Cyrus R. Vance, Jr., responded to the wave of deed fraud by issuing a 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 combat notarial fraud:
- Institute new procedures that a notary public should follow in the exercise of official items, 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 law enforcement to prosecute a person engaged in deed fraud in instances where the notary public voluntarily kept such journal.
- Require all notary public applicants to be fingerprinted as part of the background check and to file an official bond.
- Increase the applicants’ required education, mandate a designated course on notary public law prior to the written examination, and require continuing education course prior to reappointment.
The Manhattan District Attorney’s Office proposes legislative amendments that include the creation of a new article in the Penal Law that adds a handful of new felony or misdemeanor classification crimes to combat the false notarization of or tampering with a real property instrument; impersonation of a notary public on a real property instrument, and violation of a notarial duties in connection with real estate instruments.
In closing, the notary public is the gatekeeper poised to avert this most dastardly crime of deed fraud. This risk is equally salient regardless of whether the laws require in-person notarization or allow virtual notarizations. Again, we thank the legislature for considering this important topic of updating notary public laws and urge you to modernize how the notary public laws protect the public. If implemented, the recommendations of the grand jurors, your constituents, would thwart fraud in the notarization of real property instruments, be it in paper or electronic form, conducted in-person or remotely. Thank you for your consideration.