You Might Think Deed Fraud is New

John Mijac, Managing Broker
Long Realty Foothills Office

Deed Fraud is a storied and honored tradition here in the state of Arizona. In fact, some of you reading this are probably involved in a deed fraud right now! Is this business practice a part of your model? “No Way!” I hear you say. However, you may be a knowing participant, or at least an unwitting accomplice to deed fraud, whether you are a seller’s or a buyer’s agent. Before you rise with righteous indignation, let me outline a little historical perspective. You probably think deed fraud is new, a creation of the internet and rascals in Nigeria or Russia, but you’d be very wrong. Quite apart from the fact that land ownership and, indeed, deeds, were an Old World (read, European) invention, which facilitated colonialism and the establishment of empires … Arizona has a history rooted in fraud.

In fact, we have a grand tradition of deed fraud that goes back centuries! Additionally, the lengths that some of these swindlers took to perpetrate their frauds were amazingly sophisticated. These original scammers put our modern-day hucksters to shame, so their methods are worth our study.

The Peralta grant : James Addison Reavis and the barony of Arizona. Author: Donald M. Powell

Consider James Addison Reavis, who claimed to be the third Baron of Arizona, for example. I’m willing to bet most of you didn’t know there was a first Baron, let alone three, even if they were pretty much all fictional. Mr. Reavis laid claim to a huge swath of Arizona and New Mexico … at around 18,000 square miles, basing his claim on elaborately forged documents from the archives of Spain and Mexico. Modern day scammers might get away with a few parcels here or there, but the Baron took a whole swath of the territory, From Phoenix to Silver city. I suspect this fraud may have been the largest in terms of acreage of any in the US. Take a look at the so-called Peralta Grant overlayed on a modern map.  We’re talking real Deed Fraud here, he claimed a plot of land larger than some states. Mr. Reavis employed scores of people to act on his behalf who visited landowners large and small throughout the state, even swindling the Railroad companies into forking over cash to cross his Grant. Of course, eventually he was caught, but not before collecting over five million dollars from the various landowners and corporations; over 190 million in today’s dollars. His cost of doing business? $5,000 (about $198,000 in today’s dollars) and two years in prison. This was an elaborate scheme that took place over 18 years, beginning with the Baron visiting various document archives to do “research” which amounted to forging historical documents and placing them in the files. A very clever scheme until it collapsed, but one has to admire his persistence and audacity.

However, the history of deed and land fraud in Arizona does not stop there! Aside from the Baca Float and Gulf American Corporation, which I have detailed elsewhere, we can’t forget Ned Warren Sr., the so-called Godfather of Land Fraud. Under the direction of the New York Mafia, he sold thousands of uninhabitable acres in Northern Arizona, mostly by selling the same lot over and over to different buyers. He managed his scheme for more than a decade before he and his son were caught, fined, and sent to prison.

Today it seems, the most popular scheme is to find an absent landowner, impersonate them via email and the phone and then enlist a Real Estate agent to list the property to find a buyer and sell quickly.

When I told you at the beginning you might be a participant in such a deed fraud, I meant it. This little scenario is happening every day. In my orbit, on at least four occasions I know of in the last couple months, buyers have been tricked into making offers on a parcel listed by an agent representing a fake seller. Mostly I believe the agents had reason to believe the sellers were real, but in each case in my brokerage, red flags appeared to our agents…different phone numbers than those which could be found with a simple google search or parcel record, changing accents of the supposed seller on the phone, and the big tell: The desire to use their own notary at closing. Unfortunately, one agent, not at my brokerage, ignored these signs and it went to a closing. Now, to her credit, she is warning other agents via social media to pay attention to the warning signs she saw. I’m wondering how wise that was for her cost of doing business? Last, how is it that the title company was comfortable with the supposed seller using their own Notary? I would suspect their cost of doing business is also rising.

If you have been following along with my articles each month, you understand that the history of fraud and deception in Arizona almost overwhelms the good, however, you also know this is a state where good faith and fair dealing are written right into the law. Arizona is almost unique in that respect. Is it an oxymoron that fraud and good faith and fair dealing appear to go hand in hand? No, it is a call to action: every agent must be ever vigilant in our industry. Trust but verify only works if you do verify. We have a positive imperative to explore our misgivings, and even things that seem, on the face, to be legitimate. Do the hard work to make sure the deed of ownership is true, the person is who they say they are and be sure to be wary about those people looking to close as quickly as possible. Trust your gut, follow the flags, don’t assist the scammers.