Real Estate Deed Fraud: A Growing Concern and a Case Study in Deception
In recent times, the real estate industry has witnessed a disturbing upswing in fraudulent activities, with the U.S. Secret Service and CertifID noting a sharp increase in real estate fraud involving vacant properties. Con artists, armed with new tactics, are increasingly targeting unsuspecting prospective buyers. But while industry experts are sounding the alarm about these deceptive schemes, a particular case stands out as emblematic of the dangers buyers face.
Thomas Cronkright, Chairman of CertifID, detailed a common fraudulent tactic: scammers identify ownership records of vacant properties online, impersonate the property’s owner, and then rope in real estate agents to list these properties. They press for a quick, under-market-value cash sale, intending to vanish with the buyer’s money. Cronkright notes the alarming simplicity of the scam, “It’s relatively simple to do, and that’s what concerns all of us.”
This fraudulent trend is not just theoretical. A case currently unfolding provides a textbook example of how complex and devastating these scams can be.
The Case of Deception: Lauderhill Mall Investment LLC vs Florida Holding 4800 LLC
Yoram Izhak, operating under his company, Lauderhill Mall Investment LLC, reportedly sold a property located at 4200 NW 16th Street, Lauderhill, FL 33313, to Florida Holdings 4800 LLC. What should have been a straightforward transaction was mired in secrecy and deceit. Izhak conveniently omitted to mention an outstanding $16 million loan from Ocean Bank linked to this property. To add to the deception, Old Republic National Title Insurance Company, the title company in question, also failed to highlight this existing mortgage. As a result, neither Izhak nor his company cleared this mortgage.
The plot thickens. The loan from Ocean Bank was tied to a total of seven property addresses. Each of the first six properties carried a tag of $1,780,000, while the seventh one had a $850,000 price tag. But here’s the catch: instead of registering these properties, cumulatively worth $16 million, the title company only recorded them for $11 million. This raises a glaring question – where did the remaining $5 million go?
The situation further devolves into illegality when considering that Yoram Izhak, despite not settling the loan, had the audacity to sell the land and issue a fresh title for another company under his ownership. Ocean Bank and Yoram Izhak conducted this pre-planed real estate fraud while the title company covered up for them by issuing title multiple times. This sale, undertaken without full disclosure and proper protocols, breaches the deed and real estate transaction rules.
Drawing Parallels: A Systemic Problem
The story of Yoram Izhak and Florida Holding 4800 LLC is a testament to the broader issue addressed by federal law enforcement and industry insiders. This case is a manifestation of the problems inherent in today’s real estate landscape, where vacant properties become hotbeds for fraud, and innocent buyers or companies can fall victim to elaborate scams.
Investors, prospective buyers, and industry professionals need to be acutely aware of these challenges. With scammers becoming more innovative, staying informed and vigilant is the best line of defense. As Jonathan Biggs from Investors Title Insurance Company rightly points out, the stakes are high, with some victims reporting losses in the hundreds of thousands or even millions.
The real estate industry, legal systems, and buyers need to join forces, ensuring that those engaging in fraudulent activities are promptly identified, and potential victims are safeguarded against such malpractices.