2009-04-23 / Local & State

Tougher Notary Laws Sought To Curb House Thefts


PHILADELPHIA (AP) - The small row house had been unoccupied for months, but it was still a home. And if she had really wanted to sell it, Virginia Coontz says, she certainly would have spelled her name right on the title transfer.

Even with her name wrongly spelled "Coonzt,'' the sale went through and she ultimately lost the house. Prosecutors said she was a victim of a title fraud ring that collected about $400,000 by selling off more than 80 properties - unbeknownst to the true owners - through the help of corrupt notaries.

Experts on real estate fraud say the yearslong scheme shows why a patchwork of state laws governing the work of notaries, who certify title transfers and other official documents, should be strengthened.

With a notary seal, criminals can steal the title to a house, take out a mortgage, drain the equity in the property and even give themselves power of attorney to access a victim's bank accounts.

"Notaries really are the gatekeepers for fraud in real estate transactions, yet we don't put in the type of mechanism that would help law enforcement track down the crooks,'' said Dave Fleck, a former Los Angeles County prosecutor specializing in real estate cases.

States have widely varying rules for becoming a notary public, many not requiring a background check. About 20 states don't mandate that notaries keep journals of their transactions, and even fewer require a thumbprint from home sellers when notarizing property transfers - a regulation recently enacted to help combat title fraud in the Chicago area.

Philadelphia District Attorney Lynne Abraham said stricter regulations in Pennsylvania may have prevented Coontz's nightmare and the heartache of dozens of other victims, including owners who lost title to their homes and unwitting buyers who spent thousands of dollars on properties they never really owned.

In the scheme, ring members scouted for abandoned homes - the owners were dead or living elsewhere - looked up the property records and began the forgery process with the help of four notaries, prosecutors said. They then sold the homes, usually for a few thousand dollars, to unsuspecting families, many of them immigrants with little understanding of real estate procedures.

Abraham said a thumbprint requirement might have deterred criminals posing as home sellers because they likely would not have wanted to leave behind evidence of their identities.

The district attorney tried to add that mandate to legislation in Pennsylvania in 2000, along with a requirement to photocopy the ID cards of those seeking notary services. Her effort failed, partly because the Pennsylvania Association of Notaries said the proposals would be too onerous. Association president Marc Aronson said he believes such provisions would get more backing today.

Under current law, Pennsylvania notaries need personal knowledge, "satisfactory evidence'' - a government-issued ID card - or a creditable witness to verify someone's identity, he said.

A thumbprint requirement has been the law in California since 1996, providing an invaluable tool for tracking down forgers and also helping protect notaries from being victimized, Fleck said.

"Notaries do so many transactions, they ... rarely if ever are able to pick people out of lineups,'' Fleck said. "The notary memory is really not a tool for law enforcement, so we need to rely on something else.''

The National Notary Association, based in greater Los Angeles, is pushing for all states to require notaries to keep transaction journals, said executive director Tim Reiniger. Only 29 states and U.S. territories, including Pennsylvania, currently do, though legislation is pending in several other states.

The association is also calling for stronger vetting and better education of notaries.

Twelve states do background checks before commissioning notaries, Reiniger said, and of those, only California requires fingerprints. Pennsylvania requires would-be notaries to take a three-hour class and obtain an endorsement from their state senator.

Without strengthening Penn- sylvania's notary laws, Abraham said title fraud will continue as a "cottage industry'' in Philadelphia, where a shrinking population has left behind many rundown, unoccupied row houses; she estimates about 500 homes have been stolen over the past few years. It's a problem that has been prevalent in a number of cities, including Chicago and Detroit.

Fifteen people, including the four notaries, were charged in February in the Philadelphia scam that cost Coontz her home and ran from 2004 to 2007. Last week in San Diego, a notary was among 24 people charged in a $100 million mortgage scam involving 220 properties.

In 2004, Coontz and her teenage daughter left their home temporarily unoccupied when they moved in with her son. Then, in October 2005, relatives saw people coming and going from the property; Coontz arrived to find her valuables gone and bags full of her other belongings on the sidewalk. A confrontation and several phone calls led to a police report and discovery of the forged deed.

Behind on her taxes and unable to afford a lawyer, Coontz gave up. The house was sold at a sheriff 's auction in 2007 for $15,600.

Coontz, 49, now says she is unable to work due to depression. She and her teenage daughter continue to live with her son. She sleeps in the basement, and her daughter, on a living room couch.

"It hurts to have to see that,'' she said. "What 17-year-old doesn't want their own room?''

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