Tue, Nov 24, 2009
Listen to an audio interview with Enyonam Tolessi describing her experience as a victim of identity fraud:
John D’Emic is waiting to find out if he will be allowed to return to work as the Brooklyn Chief Deputy County Clerk. Enyonam Tolessi, an immigrant from Togo, is trying to repair her credit after almost a million dollars in mortgages were illegally obtained using her stolen identity. Their fates intertwined two years ago, and their futures hang in the balance.
Tolessi and D’Emic’s story is complicated. It features a dead man selling his house, a man posing as a woman to buy that house, a disbarred lawyer who orchestrated the sale, and a group of defendants that falsified mortgage documents, not to mention a pair of nuns who benefit from D’Emic’s community service sentence. The drama depicts the human cost of identity theft and mortgage fraud. It illuminates the lax lending practices that led to the subprime mortgage crisis. And it examines the fallout of two people’s lives, two years after the crime.
I. Nine Days in September
Some time in 2007, according to an indictment issued by the Queens District Attorney, Alan Morris, a disbarred lawyer, contacted John D’Emic about overseeing the closings for three real estate transactions. Morris hired D’Emic, then in private practice, as the attorney to represent either the buyer or the seller for these sales, which took place over nine days in September. In New York, lawyers often oversee the closings of residential home sales, and this is what D’Emic was hired to do. “We were just doing closings,” said D’Emic in an interview outside of his Bay Ridge home. “That was my only function.” D’Emic was familiar with and had done past litigation for John Weber and Associates, the firm where Morris worked.
One of the transactions D’Emic oversaw depicts the complexity of these three back-to-back sales, and the moment when D’Emic and Tolessi’s lives intersected. In this case, a seller with a stolen identity sells a house to a buyer with a stolen identity. The buyer and seller stand in a room at a closing, but neither is who they say they are.
On Sept. 13, 2007, what D’Emic describes as a routine closing for a Queens property took place. At least three people were in the room. The first was a buyer who gave the name of Enyonam Tolessi. That man appeared with stack of documentation proving his identity as Tolessi: employment references, accountant letters, a driver’s license, and a green card. According to the indictment, all of these documents were phony, and some of the defendants who are accused of fabricating them await trial.
The second person in the room was Alan Morris, disbarred since 1992, who acted as the agent for the lending company, Wells Fargo. Wells Fargo issued a mortgage for $490,500 in Tolessi’s name to go towards the purchase of the house, which sold for $635,000.
The third person in the room was the seller, a man who gave the name of Eugene Thomas. The Queens District Attorney would later learn that the Eugene Thomas was actually Willie Thomas (no relation), a man hired to play the role of the seller. Willie Thomas received $1,000 for his appearance at the closing. He later pleaded guilty to criminal impersonation and identity theft for his role in the scheme.
There was a fourth person involved, John D’Emic, who acted as attorney for the seller, Eugene Thomas. The indictment indicates that D’Emic arrived after the conclusion of the closing and subsequently signed off on the mortgage disbursement checks. D’Emic said he noticed nothing unusual about these three transactions. “It was just bang, bang, bang. Routine closings,” he said.
But this sale was far from routine. In November of 2008, two months after the sale, Dorothy Thomas, the widow of Eugene Thomas, started receiving foreclosure notices in the name of Tolessi Enyonam, apparently the new owner of her home. She reported to the DA’s Elder Fraud Unit that her home had been sold out from under her. In doing so Thomas, unknowingly, had connected the dots. The District Attorney’s indictment would later issue 66 counts against the nine people allegedly involved with the intricate fraud, including D’Emic and Morris. The investigation revealed that Enyonam Tolessi was a New Jersey woman whose identity had been stolen to take out the mortgage on Thomas’s home. And that Eugene Thomas had died in 1986, and his widow owned the house free and clear.
On September 13, 2007, a dead man sold his property to a man posing as a woman from Togo. Alan Morris represented the buyer and the lending agent, and D’Emic represented the seller.
II. Three Checks Still Raise Questions
John D’Emic looks like an unassuming civil servant. He is a short, balding man with rounded shoulders, glasses and a soft, understated voice. Something about his posture and comportment is like the popular images of St. Francis of Assisi, sporting a ring of hair and surrounded by animals. In January 2008, D’Emic was appointed Chief Deputy County Clerk for the Second Supreme Court Judicial district. The job came with a $96,910 annual salary, and the responsibility of managing the more than 1,000 people who report to jury duty at the Clerk’s office each week. Louis Fiorillo, a Deputy County Clerk at the Supreme Court Second Judicial District, said D’Emic was in charge of calling the right number of jurors for each trial and tracking their attendance. Almost a year into his new job, D’Emic’s involvement in overseeing three real estate transactions in 2007 would come back to haunt him.
In Nov. 18, 2008 the District Attorney charged D’Emic on 15 counts, including falsifying business records, conspiracy and engaging in a scheme to defraud as well as the sharing of compensation by attorneys, which is illegal. D’Emic was suspended from his job without pay at the County Clerk’s office immediately after the charges were announced.
On Oct. 1 of this year D’Emic pleaded guilty to the last count of sharing compensation, a misdemeanor. The remaining 14 charges were dropped. His sentence included a $10,000 fine and 30 days of community service. The Queens District Attorney refused to comment about whether D’Emic is cooperating with the investigation of the other defendants and why the other charges were dismissed.
“I worked everything out with the DA’s office,” D’Emic said, emphasizing that he did not plead guilty to the other more serious felony charges. “All I can tell you is that I’m innocent. And I agreed to this just to get rid of the case.” D’Emic is eager to put the case behind him and return to work. David Bookstaver, the Director of Communications for the Unified Court System confirmed that the Court has received correspondence from D’Emic’s lawyer requesting that his client’s job be reinstated. Deputy Chief Administrative Judge Fern A. Fisher will decide if and when D’Emic can return. Bookstaver said Fisher is reviewing the request and may consult others, but that it is unknown when the decision will be made.
In reviewing the case, Fisher may consider the nature of the crime that D’Emic pleaded guilty to: sharing compensation with Alan Morris. During the days surrounding the three sales, the indictment states that Morris issued three checks to D’Emic, each for $1,800, to compensate him for acting as attorney for the buyer or seller in the three sales. But the indictment also states that D’Emic then issued three checks back to Morris, each for $850, during the same time period. This is a violation of New York Judiciary Law, which prohibits the sharing of compensation by attorneys. One question that remains about these three small transactions is: Why did D’Emic pay Morris? D’Emic refused to comment about why he issued these checks to Morris, and what the money was for.
Alan Morris, the disbarred attorney also present at all three sales, admitted to participating in the fraud. Court documents show that he pleaded guilty to criminal facilitation, falsifying business records and conspiracy. He paid a $10,000 fine and is currently serving a 90-day sentence at the Eric M. Taylor correctional center on Rikers Island for his involvement in the scheme. He is expected to be released on November 28, according to the Department of Corrections. Morris’s attorney, Anthony Battisti, said D’Emic did not testify against his client. Morris’s wife, Leslie, had no comment.
What seems straightforward—D’Emic pleads guilty to a misdemeanor and Morris lands in jail—gets more complicated when all three properties are considered. Questions remain about D’Emic’s role as the attorney in these three sales.
On Sept. 13, as we know, D’Emic represented the seller—later identified a dead man— and that the house was sold to a person posing as the buyer Enyonam Tolessi. But this was not the first time that D’Emic had seen the name Enyonam Tolessi on a real estate transaction.
In fact the indictment states that just seven days earlier, on Sept. 6, D’Emic acted as the attorney for a buyer—a person claiming to be Enyonam Tolessi—in the purchase of another Queens house. This house, in Richmond Hill, sold for $545,000—and the person posing as Tolessi took out a mortgage for $533,850—almost 98% of the purchase price. In the course of a week D’Emic represented first the buyer then the seller in two transactions on mortgages totaling almost $1 million, both in Tolessi’s name, and both with Morris acting as the lending agent. On Sept. 14, D’Emic would also participate in a third sale, of a Brooklyn home, sold to a buyer with another, different stolen identity.
In some ways, D’Emic is right: these transactions could be considered routine at the time. From 2005 to 2007, the environment was ideal for fraudulent mortgage transactions like these, says Evans Prieston, a mortgage fraud attorney who practices in New York and California. “You had these mortgage products that had very little certification. There was so little verification required.” The three transactions in September that D’Emic oversaw took place during the heady days of this glut of available credit, when a sale could take place between two parties both with stolen identities, without the presence of a buyer’s credit report, and for 98% of a home’s purchase price.
The string of losses from 2005 to 2007 can now be considered the lending industry’s most expensive teachable moment. And to avoid history repeating itself, lenders now call Justin Vedder of The Prieston Group. The firm focuses on protecting lenders from mortgage fraud losses. “Business today want to make sure they have sound practices to protect themselves from the liabilities of the past,” says Vedder. He estimates that of the thousands of claims he investigated during this time period, 10 to 12 percent involved stolen identities or straw borrowers. “Mortgage fraud is the quickest way to get capital. No other investment instrument returns that much money.”
Fraud, he adds, was widespread during a time when banks issued the types of subprime, stated-income, no-documentation loans that ultimately led to the current financial crisis. As the three sales in September show, these transactions involved a cast of questionably qualified characters. In some cases, lending agents and brokers may have taken a simple test to gain certification, or were not certified at all. There was often no background check, or required continuing education on industry practices, or standardized licensing procedure. Vedder says that now “scrutiny on these individuals is going to be greater than ever before.” And with photo identification and a social security number, a buyer could gain access to a mortgage for hundreds of thousands of dollars. So while the fraudulent circumstances surrounding the three sales in September may have been routine by past standards, what is not as common is D’Emic’s participation in the sales.
Multiple transactions over short time period of time, a familiar cast of characters and the swapping of roles from sale to sale are all warning signs of potential deception, says Evans Prieston. “Any time the same person is involved in multiple transactions over a short period of the time where the borrowers are buying primary residences, it’s a red flag. It is something that should raise a red flag.” Prieston says that swindlers seek out lawyers who may ignore or not notice these signs and not practice due diligence. “Fraudsters are looking for overly trusting and perhaps not so fastidious people. People who permit a situation—fraudsters do that all the time.” Back-to-back sales over a few days allow the transactions to unfold before the deed is recorded in real estate records.
D’Emic refused to speak about the specifics of each transaction, the red flags he may have seen or missed, and his relationship with Morris. But he did talk about how he has almost completed his community service.
For the past month, D’Emic has fulfilled his sentence by driving two nuns from of Our Lady of Perpetual Help convent to their doctor’s appointments. After D’Emic’s sentencing, his wife Andrea approached Sister Madeline DiCarlo and explained her husband’s predicament. The two had previously worked together at a local high school. “Andrea told me about the case and that John had to do community service. She asked if I could use him in any way. He did take me back and forth to the doctor when I had an appointment,” said Sister Madeline DiCarlo. D’Emic has also ferried Sister Teresa Collins to and from her doctor’s appointments twice a week. Sister Collins isn’t sure when D’Emic will return to work, or how much more community service he has left to serve. “He said he could pick me up next week,” she said, and expected to see his maroon Volkswagen on Tuesday morning.
DiCarlo says the D’Emic family has suffered as a result of the charges. “It devastated them,” she says. “They were all very upset about it. I know that Andrea had a hard time gathering money at the beginning to pay the bail. She’s finding it hard now.” DiCarlo said she knows D’Emic is eager to return to work. “He was so down when he lost the job. He was so happy at his job. He’s looking forward to that day when he gets it back.”
But there are already signs that not everyone at the Clerk’s Office would be pleased with D’Emic’s return in light of his crime. “They’re entitled to their opinion” D’Emic said, when asked what his response would be to colleagues who questioned his ability and fitness to perform his job. D’Emic’s law license may also be reviewed. D’Emic says he’s sent notification of his plea to the state’s licensing body, the Supreme Court of the State of New York’s Appellate Division, Second Judicial Department. Attorneys are required to self-report within 30 days of a guilty plea or conviction. The Grievance Committee will investigate whether further action by the court is warranted. The options for addressing misbehavior by an attorney include public censure, suspension or disbarment. Until his fate as the Chief Deputy County Clerk and a lawyer is known, D’Emic will spend his days helping Andrea unload groceries from the car into their brick home, festively adorned with Thanksgiving decorations. And he will transport Sister Teresa to and from physical therapy appointments.
III. A Knock and a Nightmare
Twenty miles away from D’Emic’s Bay Ridge home, Enyonam Tolessi is also waiting, but her circumstances could not be more different. Tolessi, her husband and their two children—6 years old and 8 months—live in a 216 square foot studio apartment within a vast complex of residential buildings in Irvington, New Jersey. The apartment has a kitchenette, a bathroom, and a small closet coming off of the main living area. The living area has a table, used for dining and as a computer station, where Tonny Adjalle, Tolessi’s unemployed husband, searches for work. Beyond the table is a bed. Behind the bed is a crib. In front of the bed is a wardrobe. Next to the wardrobe is a couch, and next to it is a dresser. Across from the bed is a bookshelf.
In 1996, Enyonam Tolessi lost her wallet. This is the only incident she can think of that may have led to her present predicament a decade later. In late 2007, shortly after Dorothy Thomas reported to the DA that she had received foreclosure notices addressed to Tolessi Enyonam, the new owner of her house, two Queens DA detectives banged on the door of Enyonam Tolessi. She was not home, but Adjalle was. They asked for Tolessi Enyonam, and Adjalle said she was his wife. The detectives looked confused. The identification documents belonging to the Tolessi Enyonam who purchased two Queens houses indicated that the buyer was a man. Adjalle confirmed she was a woman and the detectives asked to see a photo. In the days after this visit, Tolessi would be told she was the victim of identity theft that resulted in almost $1 million worth of mortgages being taken out her name, which were in foreclosure. Tolessi went to the courthouse to testify and was shown documents with her name and the photograph of an unidentified man.
Since then, the family’s life has been derailed. Some of Tolessi’s credit cards were suspended, her credit score was decimated, her credit line frozen, her interest rates shot up and JP Morgan Chase, one of the lenders, still continues to call despite Tolessi explaining that she was not the person who bought the house. “I’m crazy right now. I’m crazy. You don’t feel like a normal person,” Tolessi says, rocking her youngest son in her arms and describing the embarrassment of being told by store clerks that her credit card is declined. “It’s been a nightmare up until now,” says Adjalle. They’ve heard nothing from Detective Patrick Dolan, one of the detectives who knocked on their door, since Tolessi went to testify more than a year ago.
The couple has no outside help, and with Adjalle, an IT specialist, out of work, there is no money to pay for legal assistance. Tolessi travels to Manhattan four days a week and works as a home care aid from 7 AM to 7 PM for an elderly woman. “We cannot afford a lawyer right now,” Adjalle says. “To tell you the truth we have no truth at all up to now. We don’t know how the process actually goes. Since we can’t afford a lawyer…and they’d be the only person who’d actually be able to handle the case.”
So what legal recourse do victims like Tolessi have? Prieston paints a grim picture of their options. Banks and mortgage lenders are in the best position to try to recoup their losses. They hire attorneys like Prieston to follow the trail of fraud and identify culpable individuals or companies that may have tangible assets to recover as compensation: settlement agents, brokers, appraisal firms. “You look at the litany of people who participated in the transaction, evaluate their duties and rights and pursue the people who fail to live up to their expectations,” Prieston says. But for a lawyer to take on an individual’s case, they must face a pragmatic reality: in pursuing a case will the plaintiff and the defendant have the opportunity to be compensated? “At the end of the day I have to have someone to pay you and pay me as the lawyer,” Prieston says. For cases like Tolessi’s, with a long list of defendants playing minor and major roles who probably have minimal assets, the pragmatic reality is devastatingly clear: the road to justice will be long, and will probably lead to empty pockets.
Tolessi feeds her baby a bottle and waits for Adjalle and her older son to return from church. “We just come here to look for better,” she says. “And I never thought such a thing would happen to me. Never. Never. I decided to come here to have a better life. Go to school. But my dream never come true. I’m trying to do my best.”