SELLER IMPERSONATION FRAUD: Owner of vacant land discovers $1.5M home built on it
By: Cheri Hipenbecker, General Counsel at Knight Barry Title Group | 10/20/2023
In full disclosure, we took liberties and used the same title for this article as used by TheRealDeal.Com
in its July 30, 2023 article of the same name. We did so because of the impact - did the title grab your attention? It certainly did mine, so let me first tell you the story and then talk about the role all of us in the real estate sector, including property owners, have to prevent seller impersonation fraud - the latest evolution of cybercrime in our real estate world.
The Story - Fraud from the Beginning to the End
Well, not the entire beginning - just what happened in 2022. Dr. Daniel Kenigsberg grew up in the picturesque Town of Fairfield, Connecticut, not far from the Long Island Sound, in a home owned by his parents. Dr. Kenigsberg and his brothers played in the house and the adjoining vacant lot for years, no doubt as boys do. Dr. Kenigsberg matriculated at New York Medical College and discovered that New York was his home. But when Dr. Kenigsberg’s mom passed away in 2007, and presumably thinking about his childhood home and town, he purchased the adjoining vacant lot from his brothers. Life is bliss.
Switch forward to 2023 - Dr. Kenigsberg was on a call with a childhood friend who happened to mention a new home being built on the doctor’s vacant lot. And not just any old home - this was a 4,000-square-foot, four-bedroom house listed at $1.5 million. Of course this came as a shock to Dr. Kenigsberg, who intended to pass the vacant lot to his heirs in its unimproved condition. The mystery then began to unravel. I don’t know the full depth of what Dr. Kenigsberg did but I did some of my own research and here’s what I found:
- Dr. Kenigsberg allegedly signed a durable power of attorney on September 8, 2022, in Johannesburg, South Africa, appointing Anthony E. Monelli as his attorney. The durable power of attorney was recorded in the Fairfield, CT, land records office on October 18, 2022.
- A Warranty Deed was signed by Anthony E. Monelli, as the apparent attorney in fact for Dr. Kenigsberg, on October 13, 2022, conveying the vacant lot to 51 Sky Top Partners LLC for $350,000. This Warranty Deed was also recorded in the Fairfield, CT, land records office on October 18, 2022.
These are the only two documents recorded in the Fairfield, CT land records office. On July 14, 2023, Dr. Kenigsberg started a lawsuit in the District of Connecticut Federal Court against two named defendants: (1) the attorney, Anthony E. Monelli, who is a real attorney in Connecticut, and (2) the Grantee on the October 13, 2022 Deed, 51 Sky Top Partners LLC. In his federal Complaint, Dr. Kenigsberg alleged that the durable power of attorney to Anthony E. Monelli was a forgery, that he never lived in Johannesburg, South Africa, was not traveling there in 2022, never authorized the sale of the vacant lot, and Anthony E. Monelli should have known that the power of attorney was a forgery. In his prayer for relief to the court, Dr. Kenigsberg asked the federal court to “quiet title” and declare that the Warranty Deed to 51 Sky Top Partners LLC was void. Dr. Kenigsberg also asked for double and treble damages under Connecticut state law, along with punitive damages and attorney’s fees. Life is not so bliss.
As of the writing of this article, neither 51 Sky Top Partners LLC nor Anthony E. Monelli have filed an Answer to the federal Complaint, so we don’t have their side of the story yet. But we do have some insight into Anthony E. Monelli’s position based on his October 3, 2023, Motion to Dismiss, where Attorney Monelli requested that four of the five counts against him be dismissed for failure to state a claim (those four counts are Slander of Title, Conversion, Forgery, and CUTPA). The Motion to Dismiss does not mention or seek to dismiss the fifth count against Attorney Monelli, Statutory Theft, which per the Complaint carries with it treble damages. Life is a bit ugly.
But taking a step back - who did Dr. Kenigsberg not name as defendants in the federal lawsuit? Dr. Kenigsberg alleged that the power of attorney was a fraud - fraud by who, and why was that person not named? No real estate agents or brokers were named. No title insurance company was included. I could speculate and will speculate on some of these thoughts. As to the fraud - well, cybercrime is rampant, and the fraud was probably done by someone outside of this country and a long away from the arm of our law. As to the real estate agents and brokerages - it’s not uncommon for cybercriminals to post vacant land for sale on social media with the goal of getting a quick cash buyer - thus, real estate agents/brokerages may not be involved. Finally, as to the title company - if there was one involved, that’s a claim for 51 Sky Top Partners LLC to make against the title company if 51 Sky Top Partners LLC was an innocent buyer.
There are winners and losers here. In the loser camp, I’ll put Dr. Kenigsberg, who no longer has a vacant lot with old-growth trees to pass onto his heirs; 51 Sky Top Partners LLC, who constructed a 4,000 square foot home on a lot that by all accounts they don’t own; and Anthony E. Monelli. In the winner's camp, I’ll put the cybercriminals who fooled everyone and have $350,000 in their pockets, probably converted to a Crypto Wallet by now.
The Role we all can play to STOP seller impersonation fraud
Seller impersonation Fraud, also known as vacant land fraud or Deed Fraud, is simple. At its core, the criminal is fooling people into believing that the criminal owns the land, wants to sell the land, and signs a contract to sell the land. Ultimately, the criminal signs a Deed conveying the land and walks away with a hefty payday (in the Connecticut case, $350,000). Stopping the fraud is just as simple. Here’s what YOU can do to prevent this fraud:
Say someone reaches out to you via email and a phone call to list property for sale - should you? The industry is flipping on this question and asking real estate agents to be on the defensive. In today’s world, if a REALTOR® doesn’t meet with the seller in person, then the REALTOR® should start with the assumption that it’s a seller impersonation fraud and use all available tools to either prove this is a valid seller or kick the cybercriminal to the curb. Those tools include:
- Research the seller online using search engines and social media to confirm any information they have provided. Look for online pictures of them.
- View the property online or in-person. What is the terrain like? How many structures are on the property? What else makes it distinct?
- Contact any neighbors of the property the seller wants to list for sale. Ask them if they know the owner and how to contact them. Ask the seller to meet you at the property so they can walk it with you to familiarize yourself with it.
- If the seller cannot meet at the property, ask them to meet you virtually using video conference software. Ask them to hold up their I.D. to the camera to review. Confirm the picture matches the person along with the date of birth, etc. Ask them to describe the property they own and want to list for sale. If they cannot meet virtually, carefully consider whether or not to proceed.
- Use trusted title and settlement companies for the exchange of closing documents and funds.
- Support the settlement company. When the seller is unavailable or demands to use their own notary, do not interfere in the settlement company’s requirements to use a known, trusted notary.
If one or more of these tools won’t do the trick, contact Knight Barry Title. We’ve partnered with cybersecurity industry leader CertifID
to use AI against these cybercriminals to verify a seller’s identity even before you sign the listing contract. By weeding out potential fraud immediately, you’ll avoid wasting time on bogus deals and reduce risk to your business.
Oh, and if you do list the property and later discover that this was a seller impersonation fraud, be kind to your colleagues and include some notice in the MLS about the thwarted fraud - because you are not the only REALTOR® that the cybercriminal is trying to fool into listing the property for sale.
Use trusted title and settlement companies for your purchase who understand the risks of our ever-changing cybercrime world. You don’t want to be 51 Sky Top Partners LLC, having paid $350,000 for a lot and invested hundreds of thousands of dollars in constructing a new home, only to find out months later that you bought the lot from a cybercriminal and thus don’t own the lot.
TITLE AND SETTLEMENT COMPANIES
Whoever handles the money and documents is the last line of defense against a fraudulent Deed being recorded in the land records. Like a REALTOR®, if the settlement company doesn’t meet with the seller in person to sign the Deed, then the settlement company should start with the assumption that it’s a seller impersonation fraud and use all available tools to either prove this is a valid seller or kick the cybercriminal to the curb. The tools available to title and settlement companies mirror the tools available to a REALTOR® with one important addition - the settlement company must insist on Controlling the Signing. Gone are the good old days of “mail away” closing, where a settlement company would email a Deed to a Seller for the Seller to sign in front of a notary public of their choosing. In today’s world, if the settlement company is not meeting with the seller in person to sign the Deed, then the settlement company has two main options: (i) schedule a remote online notary signing or (ii) select a vetted notary public to send to the seller’s home or place of business for signing. If the vetted notary public is chosen, the settlement company should provide the documents to the notary public via secure email for the notary public to print out and sign with the seller.
COUNTY LAND RECORDS OFFICES
Once a fraudulent Deed is recorded the conveyance is complete, and the Grantee under the fraudulent Deed is the owner until challenged. County Land Records Offices can help mitigate damages of the fraudulent Deed by implementing a Recording Notification system (also known as Property Fraud Alert or Land Notification System), which will alert a property owner when a Deed, Mortgage, or other document is recorded in the land records associated with the property owner's name. Of course, this does not stop the fraud. Still, it can provide the owner early notice of fraudulent activity so the owner can timely react by investigating and contacting local law enforcement. Imagine if a recording notification system had been in place in the Fairfield, Connecticut case - would the 4,000-square-foot, four-bedroom house have been built?
Because property fraud/seller impersonation fraud is rampant, some state legislators are reviewing state laws and the process to unwind a fraudulent conveyance through the courts. One such example is Florida, which passed House Bill 1419
in June of 2023, specifying that an action to quiet title based on a fraudulent attempted conveyance allegation may be maintained under Florida’s Quieting Title laws. The Florida Bill directs the Florida circuit courts to provide a simplified form for filing a complaint to quiet title based on a fraudulent attempted conveyance allegation and instructions for completing such form.
Stay vigilant - protect your property by signing up for your county’s recording notification system. To sign up for our Wisconsin friends, please follow this link
. For non-Wisconsinites, connect with your local County land records office to determine if they have a recording notification system.
The End of the Story
The end of the Fairfield Connecticut story has yet to be written, but no matter the outcome, all parties in the federal lawsuit have lost something. This could have been prevented. October 2023 marks the 20th anniversary of our Cybersecurity Awareness Month, and the real estate sector once again is at the core of what the cybercriminals are attempting to infiltrate. The cybercriminals won’t stop because they’re successful - to the tune of over $10 Billion (with a B) in the United States alone being stolen in 2022. Because there are fewer real estate transactions in 2023 for the cybercriminals to infiltrate, the cybercriminals are inventing transactions using tools like seller impersonation fraud. Stop them. Stay ahead of them. Secure our World.
Want to know more about seller impersonation fraud and cybercrime in the real estate sector? Reach out to your local Knight Barry Title office
, and we’d be happy to set up a training.