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Phony documents increase in hard economic times

Charlotte-area property owners often victims.

By Kirsten Valle Pittman
kpittman@charlotteobserver.com

More Information

  • Check county records for any documents filed in your name. "Just like it wouldn't hurt to check your credit once or twice a year, it probably wouldn't hurt to check your property records," Caldwell County Register of Deeds Wayne Rash said.

    If you see something unusual, contact your Register of Deeds to see what the document is. Likewise, check into any information you receive in the mail from a mortgage company that's not yours.

    If you spot a fraud, you can initiate civil or criminal legal action. Consult your attorney with questions.

    If you're facing foreclosure and you're offered help holding off those proceedings, check the person or company's background and licenses.


  • State and federal authorities are reporting an increase in bogus paperwork cases by filers tied to political or religious causes:

    Some phony paper comes from people who identify themselves as "sovereign citizens," claiming to be above the law, authorities say. They often file documents declaring name changes, international travel rights, home ownership and liens against authorities, sometimes resulting in long court battles.

    Others claim to be members of the Moorish Science Temple of America, a religious organization founded in 1913. According to a statement from the organization sent to the Observer last week, the "radical and subversive fringe groups claiming to be affiliated" with the group actually have no connection to it.

    The group says its bylaws state that members must obey all laws of the government.

    "Today, some people are under the misconception and erroneous notion that the Moorish Science Temple of America Inc. is a place where one can learn how to forgo their civic duty paying taxes ... and assert their so-called sovereignty," the statement said. "We assertively declare that the Moorish Science Temple of America Inc. is in no form or fashion a Sovereign Citizen Movement or a Tax Protestor Movement; consequently, our teachings are diametrically opposed to that ideology."


  • Paperwork scams are cropping up across the country, particularly in places hit hardest by the housing market's collapse, with a large inventory of abandoned homes.

    In Georgia, a dozen self-declared sovereign citizens were indicted in March on charges that they stole millions of dollars of properties, including mansions and a strip mall, where they changed locks and attempted to collect rent from tenants, The Atlanta Journal-Constitution reported.

    The suspects allegedly broke into vacant properties and either signed or notarized deeds for themselves, then filed the phony paperwork with courts.

    In Utah, a man was sentenced to 2 1/2 years in prison and ordered to pay $321,000 in restitution for a wire fraud case in which he and others identified distressed properties in a number of states, posed as bankruptcy court or bank representatives and secured deeds for the properties. They later rented them to other tenants, according to the U.S. Department of Housing and Urban Development.



Some of the documents forgive debt. Others cancel contracts, declare citizens exempt from taxes or even grant home ownership.

Problem is, they're all fake. And the phony paper can create a nightmare for unsuspecting property owners: stolen identities, seized homes and long hours in court to set the record straight.

In one recent case in Union County, authorities say two scammers obtained a false deed for a vacant home, seized the property during a real estate showing and changed the locks before sheriff's deputies arrested them a few days later.

Real estate experts and local officials say bogus documents are becoming more common in Charlotte and other places where economic uncertainty and mortgage woes persist. Some fake papers come from borrowers desperate to escape financial hardship; other filers appear to be motivated by political or religious causes.

Although the problem isn't widespread across North Carolina, it's a rising concern.

"They were a novelty (a few years ago)," said Mecklenburg County Register of Deeds David Granberry, whose office processes thousands of county records every week. "You'd see one and you'd show it around to everybody. Now, everybody sees them."

About 200 questionable documents, from fake deeds to letters proclaiming mortgage debts wiped away, have surfaced in Mecklenburg this year - up significantly from before the recession, said Granberry, who was elected to the post in 2008.

Sometimes the paperwork is harmless: jabs at the government or big companies with no legal standing. But in other cases, scammers file documents in an effort to evade payments or control real estate.

A few recent offenders:

-- A deed, created to look like it's from a bank, that transfers the title of a Charlotte property to another owner.

-- A certificate of satisfaction showing a $151,900 debt had been paid.

-- An affidavit granting the filer "diplomatic status, diplomatic immunity and ... the status and treatment of a foreign Sovereign," plus the right to travel internationally.

Such scams come and go, but they've surged in parts of the country in recent years amid the rising tide of distressed properties. In Mecklenburg County last year, for instance, half of residential property sales involved a foreclosed home or one on the brink of foreclosure. Now the Internet makes it easy to find detailed directions on how to fake documents, said Tom Miller, legal counsel at the N.C. Real Estate Commission.

Authorities say some of the fake papers have come from "sovereign citizens," anti-government crusaders who claim to be above the law. Others come from people who claim to be members of the Moorish Science Temple of America, an obscure religious group. Their motives are sometimes unclear, but in some cases, the documents seek everything from name changes to home ownership to international travel rights.

In a federal sentencing hearing in Charlotte last week, a woman accused of participating in a massive mortgage fraud scam told the court she couldn't be sentenced because she was a sovereign entity representing herself. Alicia Taylor, who prosecutors said helped facilitate fraudulent loans in the Operation Wax House scheme, had filed paperwork declaring her special status. As authorities handcuffed her and led her from the courtroom, she told the judge he lacked jurisdiction to sentence her.

But a growing number of false documents are clearly tied to the recession, Miller said. Some are from people who have fallen on hard times; others come from scammers who offer to help them - for a fee - by filing documents purporting to eliminate debt or halt the foreclosure process.

"How is the ordinary citizen, who's stressed out of his mind, supposed to know the difference?" Miller said. "He wants to believe that all of this is true."

Causing complications

In the most extreme cases, the bogus documents can stall foreclosures and create headaches for property owners and potential buyers, who often have to go to court to prove a conflicting deed is false or evict squatters who claim to own an abandoned home. Even years later, such deeds can cloud a title history, making it difficult to buy or sell a home.

In the Union County case, real estate agents were showing a man and woman a vacant $700,000 house last month. As brokers walked the would-be buyers through the Weddington home's finished basement, the couple asked if they might look around alone and went upstairs.

Soon after, the brokers went upstairs to find two men who showed a deed and said they owned the property, Union County Sheriff's Capt. J.C. Luke said. The men claimed to be part of the Moorish Science Temple.The sheriff's office investigated and a few days later confirmed the deed was false. By then, the men had changed the locks.

Deputies arrested Kenneth William Lewis on charges of obtaining property by false pretenses, possessing stolen goods, breaking and entering and trespassing. He's still in jail under a $500,000 bond.

The second man, Asaru Aalim Ali, was charged with breaking and entering and trespassing and has been released. The man and woman who requested the showing have disappeared, but authorities believe they're connected and might have let the two men inside, Luke said.

It was the first such case in Union County, but "we're watching for it now," he said. "... If it happens in Union County, they will be charged."

Real estate professionals say deed scams are nothing new among desperate homeowners. Jennifer Frontera of Wanda Smith & Associates in Charlotte, who lists and sells foreclosures, has seen homeowners sign over deeds to friends, family or newly formed companies, thinking the lender won't foreclose on a new owner.

A document she came across last year granted the bearer home ownership from a bank - but no one from the bank had signed it, she said.

Attorneys can usually spot such stall tactics quickly, but homeowners and potential buyers should still be vigilant about their records, said Frontera, president-elect of the Charlotte Regional Realtor Association. Realtors, she said, should check tax records and other documents for anything unusual, such as property that changes hands every few months.

Fraudulent filings began showing up at the Mecklenburg Register of Deeds more often in 2009, as the region reeled from the financial crisis and deepening recession, Granberry said. He said they have grown increasingly sophisticated, too.

But there are red flags, such as signatures that don't match the printed name, unusual symbols - even thumbprints that appear to have been stamped in blood, he said. False documents often arrive by certified mail or on expensive paper to appear more legitimate, Granberry said.

Safeguards are elusive

Despite the telltale signs, there's little registers of deeds can do to curb the problem. The officials are required to enter all records that come through their office, as long as they meet minimum standards and the filer pays the appropriate fee.

Once a document is on the record, only a judge can declare it void. In the meantime, "the general public sees that it looks official," said Granberry, who has alerted authorities and keeps stacks of questionable documents in his office. "Once it's recorded, it seems more legitimate."

The Charlotte-Mecklenburg Police Department investigates cases involving bogus paperwork, but it's up to the victim to bring it to their attention, Detective Tawanda Garrison said. Charges can include forgery and fraud, though arrests solely for filing false paperwork are rare, authorities say.

Often, the injured party doesn't find out his name has been removed from a lease or a phony lien has been filed against him until months or years later, she said. And by then, chances of finding witnesses and making an arrest are slim. Police advise victims in those cases to pursue a civil action to restore their name to a deed or recoup money, for example.

"To me, it's a major issue, because it involves people's property, and the value is always, if not $100,000, around that figure," Garrison said.

For other agencies, it's a matter of resources. The FBI, for instance, investigates mortgage fraud and home seizures, but usually only if the case involves an organized crime group involved in a high-dollar scheme, spokesman Bill Carter said. The general cutoff, he said, is $1 million.

"We have to look at the most significant problems out there," he said.

The N.C. Real Estate Commission and other regulatory agencies sometimes pursue fraud cases, but their scope is limited; the real estate commission, for instance, has jurisdiction only over licensed real estate brokers, Miller said.

The commission sometimes receives complaints about bogus documents that purport to take away a bank's ability to foreclose or a trustee's ability to sell the property, and it investigates them when it can - particularly if a scammer is collecting a lot of money from a lot of people, Miller said.

But "do we have enough of these people to step in front of it and stop it? No, because so much of it happens at the grassroots level," he said.

Miller hopes the problem doesn't get worse - but he said he doesn't expect paperwork scams to subside at least until the housing market recovers.

"It's symptomatic of the distress," he said. "... That creates an opportunity, unfortunately, for the people who want to operate outside the marketplace and below the line of minimal acceptable conduct."

Kirsten Pittman: 704-358-5248

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