Scam Case Study: Terry & Carla

Hello World!

Let’s change things up a bit and explore a scam operating in Dallas-Ft.Worth. Meet Carla and Terry:

Terry’s a minister by vocation and Carla validates medical credentials. Terry’s church closed after several years, cutting the family income in half. Home repairs and house payments fell behind. Foreclosure loomed and offers to buy their house poured in. Terry and Carla wisely decided to sell before the auction.

They talked to a potential buyer. Everyone agreed that, in disrepair, the house wasn’t worth what was owed—a short sale was needed. The buyer put paperwork in front of Carla and Terry: short sale paperwork, sale contract, legal disclosures, paperwork putting the property into a trust named for Terry and Carla, a release letting Wells Fargo discuss the sale with the buyer, and more.

Being a swell guy, the buyer offered to fill out all the forms later, saving Terry and Carla tedious hours of paperwork. They just needed to sign the documents. After all, it’s not illegal for the buyer to fill in the blanks, but it wouldn’t be legal for him to sign their names.

True to his word, the buyer filled out the paperwork, started the short sale and moved the property into the Carla and Terry trust. He urged Terry and Carla to move as soon as they found someplace, and they did. He put someone into the vacant house to keep vandals away while the short sale progressed.

The scam was now complete. Did you see it?

Let’s break it down. The “buyer” made copies of the signed blank short sale paperwork. Then he filled it out however he wanted and sent it to Wells Fargo. Short sales generally suspend foreclosures, keeping the house from auction. Per the signed release, after several months Wells Fargo told the “buyer” the short sale had been rejected, so he simply filled out new paperwork to start the process all over again.

The scam artist managed to string Wells Fargo along for 2½ years. He never intended to buy the property.

Meanwhile, the people now living in the house paid the scam artist rent.

They paid over $25,000.

Carla and Terry contacted me. We tried to identify the scammer, but his name wasn’t in any of Terry and Carla’s mountain of paperwork. We checked the tenant’s lease but it had the Carla and Terry trust as landlord, with checks going to a PO Box. Unlike corporations, trusts aren’t registered with the government; there’s no way to determine the beneficiary (owner). (The trust was named after Terry and Carla but that doesn’t make it theirs.)

And because the property had legally been put into that trust, technically Carla and Terry don’t even own the property anymore and therefore can’t sell it to anyone.

We did eventually find the scam artist’s name: the tenants still had the money order receipt for their security deposit, and it hadn’t been made out to the trust, it was payable to “Carlos Perez”.

Terry and Carla presented their case to the district attorney. The DA replied that this case couldn’t be prosecuted because there is no evidence a crime was committed. Everything had been done legally.

Epilogue: Wells Fargo hasn’t received payment in years so in one week this property’s going to auction. Because the loan’s in Carla and Terry’s name, for seven years their credit reports will include foreclosure. The tenants have already moved out, else they would’ve been evicted by the auction winner. And Carlos Perez remains free to continue scamming north Texans.

Protect Yourself:

  • Never sign a document with the word “Deed” in the title unless a legal expert (usually a lawyer or title company) has reviewed it.
  • Don’t sign legal documents that haven’t been filled out.
  • Don’t do real estate deals with Carlos Perez or his assistant Pat Martinez.

(This story was shared with Terry and Carla’s gracious permission.)

Please bookmark if this was useful or interesting. Also, please comment! What does this story say to you about human nature? Has a con artist ever tried to take advantage of you? If so, were they successful? If no, how did you spot the scam?

David Weiss

I help people solve real estate-related problems with an emphasis on helping folks avoid foreclosure. I've been a real estate professional since 2013.

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