Operation Stolen Dreams
A Las Vegas sales representative comes to the aid of one of his customers and winds up providing valuable evidence to the FBI. The evidence presented by the sales representative assisted the FBI in its investigation and indictment of a ring of fraudsters as part of a nationwide mortgage fraud takedown.
Fidelity National Title
Michael Mitchell, a sales representative for Fidelity's Las Vegas operation, stopped by one of his client's real estate offices. The broker at that office told him that one of the properties he had just listed was an REO (bank-owned) property that should have been vacant but, upon inspection, the broker discovered a tenant living in the property. The broker couldn't understand how this could have happened – since the bank had foreclosed and the owner had been evicted.
In an effort to help his customer, Michael accessed the county records online and discovered that an entity "Reification Group, LLC" was shown as the owner of record. The deed was executed by the grantee, not the grantor, and the notary on the deed had a universal notary stamp called a "National Notary Public of Commerce." Michael performed an entity name search on the Secretary of State's Website and found that the license for that entity had been revoked. It showed the managing member as Karen Tappert – a name that rang a bell with Michael.
He went onto the Intranet under the Compliance & Security portal and looked up Tappert's name. There he read previously issued underwriting bulletins and found she was listed individually, along with Reification Group, which our Family of Companies refuses to do business with.
Utilizing our Fidelity Passport Online System (that includes a search utility for property address/owner names), Michael identified several other properties that had also been deeded to Reification Group and were all using various UPS® Mail Stores for the return addresses on the deeds. Michael then worked with the customer service department to produce an absentee owner report with matches to the first few mailing addresses on Reification Group. They found several other entities associated to Tappert, such as Saraland Investments, Pacific Federal Title Associates, Amari Group and Deschutes River Properties. Those new entity names gave additional mail drops and, after a few mailing address and owner name searches, Michael identified 28 Las Vegas properties involved with this ring of fraudsters. About a dozen of these were either notarized by or had deeds executed by Tappert.
Michael expanded his search and, ultimately, identified almost 100 properties from six states that all linked back, in some manner, to Tappert and the various entities she was involved with. All of them were using the same half dozen or so mail drop addresses in Las Vegas.
Michael alerted the title plant manager of his findings so he could tag the addresses of the properties as having fraudulent documents of record. Within hours Michael received an e-mail from the title manager stating the Company had just avoided a loss on one of those properties! Michael took the situation another step further and notified the Clark County Recorder's office, which issued an "internal alert" to watch for those names as potentially fraudulent. Michael didn't stop there.
He turned over his meticulous list of properties and ownership records to a local FBI agent. Turned out – Tappert and the entities she was involved with were part of an ongoing nationwide investigation called "Operation Stolen Dreams." As a result of the investigation, which began in March 2010, 123 defendants have been charged, convicted or sentenced in Las Vegas. Those defendants, including Tappert, are accused of engaging in hundreds of fraudulent transactions with straw buyers (someone whose name is used by someone else to buy a house) and causing losses to lenders of more than $246 million.
FBI Special Agent Roy Dampier sent the following e-mail message of thanks to Michael:
"I want you to know that your assistance with our investigation of Karen Tappert has been very helpful. All the material you have provided has been useful, but the binder you gave me recently will be an asset throughout the rest of our investigation. The Assistant United States Attorney working on this case, Michael Chu, commented that this binder is one of our most useful pieces of evidence, and it was very well put together and organized. Anything else you can provide will be greatly appreciated. Thanks again for all your hard work."
For his incredible insight and diligence, Michael has been rewarded a $1,000 on behalf of the Company along with a letter of recognition.
Months after these fraudsters were charged, it was discovered many of the ownership records still reflected "Saraland Investments" and other entity names created by the fraudsters. When the banks eventually sell the properties, the ownership records will not reflect the true owners. Now that the individuals, entities and properties have been identified, the title industry has begun the task of clearing the titles to those properties. This is a challenge. How does the title insurance industry somehow recognize a fraudulent deed in the chain of title? We must do one of the three following things: (1) ignore it and record a deed from the bank to the new owner; (2) record a corrective deed from the bank; or (3) record some affidavit of erroneous recording in order to perfect the transfer of ownership to the new buyer.
In addition, title insurers have to be sensitive to the rights of parties in possession where the fraudsters have leased the property to tenants who have rights to the property. If a tenant is occupying the property and we close and insure the transaction, the new buyer could face legal action regarding the removal of the tenant, which is likely covered under his/her owner's policy.