Allegations of Housing Theft Persist in Brooklyn
Richard Flateau narrowly avoided being defrauded when he was alerted that a false power of attorney was filed in the Offices of the City Register on his 1424 Fulton Street property in Brooklyn. The criminal had forged Flateau’s signature.
“Even if the mortgage is paid off, you still have to be vigilant because property values have risen so much and buildings in Brooklyn are now worth millions of dollars,” said Flateau, chair of Community Board 3 for Bedford Stuyvesant, Brooklyn. “The criminal element is more sophisticated than ever. They are looking to steal whatever they can.”
Had the fraudster, who is originally from Nigeria and is currently incarcerated, not been caught, Flateau would have likely faced an expensive nightmare.
“He could have gotten a mortgage on the property, obtained a fraudulent deed and I would have had to spend hundreds of thousands of dollars on legal fees to get it reversed,” said Flateau, a real estate broker.
After hearing multiple stories of homeowners falling victim to various predatory schemes like the one that Flateau avoided, Brooklyn Borough President Eric L. Adams hosted a hearing calling for a full forensic audit and investigation into deed fraud in Brooklyn on federal, state and city levels.
“As our borough has become a more attractive place to live, work and raise a family, unfortunately the incentives for defrauding long-time homeowners — largely people of color living in Central Brooklyn — have only grown,” Adams told Medium. “Unfortunately, the TPT program may unintentionally be playing a role in exacerbating this crisis.”
Adams is referring to the New York City Housing and Preservation Development (HPD) Third Party Transfer (TPT) program, which designates qualified sponsors to purchase and rehabilitate distressed vacant and occupied multi-family properties in order to improve and preserve housing affordable to low-to-moderate income households.
But Adams alleges that the TPT program allows the City to foreclose on ‘distressed’ properties and hand them over to third-party developers.
“I believe the TPT program is deeply flawed,” said Adams. “I have called for a moratorium on the Third Party Transfer program while we figure out how to strengthen oversight and make the necessary reforms.”
According to Diane Struzzi, director of communications for
New York City’s Department of Investigations (DOI), an independent City enforcement agency, is aware of concerns involving HPD’s Third Party Transfer Program, is in touch with HPD and declined further comment.
An HPD spokesperson, who requested anonymity, said the City’s TPT program helps protect tenants.
“Property owners, deemed eligible by statute, are treated fairly and are given multiple opportunities for assistance and collaboration before the City takes action,” she said. “There is always room for improvement and we are committed to making the process as transparent and effective as possible. We look forward to exploring updates and changes to the program through our working group.”
Fraud allegations concerning real estate in Brooklyn are far from new. Complaints have, in some cases, landed in federal court. For example, a group of plaintiffs filed adversary proceedings against David Fischer, a real estate developer. At the time, counts included breach of fiduciary duty, fraud and conversion. But the Honorable Carla E. Craig, Judge, dismissed the proceedings.
“These adversary proceedings grow out of a long running dispute within the Lubavitcher Orthodox Jewish community in Crown Heights, Brooklyn and David Fischer, who was until 1987 a prominent member of the Community, and a group of individuals who claim to be shareholders in corporations set up by Fischer between 1974 and 1976,” wrote Judge Craig in her opinion.
A precursor to the lawsuit was the late Rabbi Menachem Mendel Schneerson, who advised his Lubavitch Crown Heights congregants before his death 25 years ago, to resist the compulsion to sell their homes and flee in reaction to the steady inflow of blacks who were relocating there from the American South and the Caribbean Islands.
“Fischer did not seek any authorization from the shareholders before he transferred or mortgaged the Properties, nor did he tell them after the fact that he had unilaterally transferred or mortgaged the Properties,” was among the allegations noted in Judge Craig’s decision to dismiss.
Mr. Fischer’s office declined a request for comment when reached by telephone.
Since the complaint against Fischer was adjudicated in 2004, real estate values in Crown Heights, Bed-Stuy and East New York have skyrocketed and according to Julie Howe, senior staff attorney for the Foreclosure Prevention Project at the New York Legal Assistance Group, foreclosures in Brooklyn are at their highest levels since 2009, which is why multiple non profit organizations are requesting additional funds to push back against allegedly fraudulent foreclosures.