Shell companies increasingly used to defraud desperate homeowners

The Department of Finance is currently investigating 120 cases of deed theft
November 07, 2015 03:00PM

Limited Liability Companies have become a hot button issue this year, especially regarding their use as a shield for buyer’s identities in high-dollar real estate deals. But it turns out, they also have a far more sinister application: defrauding the vulnerable.

Fraudsters are increasingly using the secrecy afforded through LLCs to trick poor, sick or simply foolish homeowners out of their deeds, leaving them without redress, according to the New York Times.

“Sham LLCs are a huge problem in terms of their lack of transparency, in terms of who is behind the property and who is behind these schemes,” Jennifer Sinton, a lawyer with South Brooklyn Legal Services, said.

Sinton is representing a wheelchair-bound women in Bed Stuy who lost her home to a company that promised to pay off her mortgage, pay her $43,000 and provide her with housing for two years. But when she signed over her lease, the representatives of the company disappeared.

The city’s Department of Finance told the Times that it was investigating 120 cases of deed theft, many of them complicated by LLCs, officials said. But beyond those cases, the Finance Department said it is aware of another 167 cases that appear suspicious, Joseph Fucito, the New York sheriff, the agency that investigates allegations of deed fraud, told the Times. [NYT]Christopher Cameron