The Estate Liquidation Scam/How to Protect Your Assets
After my father’s death a few years ago, our parents estate was embezzled by an “estate liquidator” I lost the legacy they toiled all their lives to leave their children and grandchildren, here is the story.
Mom and Dad were accomplished and well known antique dealers in the NY area. Mom had a keen eye with a sense for art and craftsmanship that proved invaluable. They purchased items that had little or unknown value at that time, but most would increase in collect-ability exponentially by the end of their lives.
The embezzler used a common scam that’s being run throughout the country. The scam targets those vulnerable who’ve just lost a loved one, or the elderly who have to liquidate assets for emergencies and/or important expenses.
The con begins with the predator forming an “estate liquidation” corporation. They work hard creating a false reputation by posting good reviews for themselves. In addition, after just a few consignments at reputable auction houses and antique stores, they may even get these reputable establishments vouching for their credibility.
Once that reputation is established they go to work.
The scam exploits a loophole in the law called “the right of possession”. This “right of possession” means that if you give someone your property for ANY reason, (i.e. to polish your jewelry, get an appraisal, etc), they can do whatever they want with those possessions! They do not have to provide you with any information about their whereabouts or pay you for your property!
They can sell the items without reporting the sale or remitting proceeds to you. They can claim anything happened to the items, since they now have “the right of possession”. By not returning your items or paying you for them it will not be considered theft (a crime). It becomes a civil issue, as a breach of contract.
When it happens to you/your family, there is little recourse. You can sue (which I did); and although you’ll probably win, these predators dissolve their corporation claiming “no assets”. They simply re-emerge after your suit, as a new corporate entity. Voila!, They have happily acquired a family’s life long collections, with no reason to pay for it. They have “converted” your property to their property using fraud and deception -and they’ve done it LEGALLY (with the help of legal loop holes)!
That’s right, this form of theft is actually technically LEGAL! (Unless there is a pattern that can be proven; however proving the pattern can be difficult, time consuming and costly).
This con is being run all around the country with a nearly identical script as if there’s a cottage industry where these con men/women share ideas and legal concepts with each other for converting assets.
Our lawyer advised us NOT to sue. He told us that although we would probably win, it would easily cost us over $20-$50,000 for this legal pursuit and we’d most likely get nothing back for our trouble and time. Our attorney predicted the predator would simply declare insolvency, and walk away from any judgment Scott free.
Although our lawyer advised against the law suit, I DID pursue this predator, vigorously, in spite of the futility. I wanted to prove fraud, to do that I would have to “pierce the corporate veil”.
Our lawyer also correctly advised me these types of con men hide their personal assets too and are often referred to as “financial ghosts”. I was advised that “it won’t help financially even if you do “pierce the veil” (another costly and time consuming process) as most likely, there will not be personal assets to attach in the con man’s personal name or other business(s).
My family decided that in honor of our parents lifelong passion and their often times back breaking labor, we could not allow this man to steal their decades of hard work. We WOULD pursue him, not only suing (in spite of the futility), determined to at least begin establishing the paper trailand a record of fraud. But also, to do everything in our power and our level best to have him criminally investigated and hopefully prosecuted with the full weight of the law. We wanted to begin setting an official court record which might eventually facilitate prosecution for the new victims he was sure to target. We prayed he would eventually be brought to the bar of justice with every criminal statute possible.
The plan went well, even better than I believed we might accomplish at the onset. We not only prevailed in Civil Court, but in the process this predator (in trying to cover his tracks) dug his own grave. He himself unwittingly provided me with information that helped us track his previous corporate entities for well over a decade. We in fact discovered OVER 40 PREVIOUS LAW SUITS. MILLIONS in his victims assets, converted to his own property!
We were dumbfounded and AGHAST this had not been prosecuted before us. His court record existed, is long, consistent and clear.
I’ll talk about just ONE of these victims;
An elderly women that was selling her long held art and antique collections so she could enter assisted living, entrusted this very same con man (who embezzled our parents estate) with almost her entire life’s resources. He left her almost penniless, and no longer able to pay for her care. The courts document he took her for nearly 800k in property. This ‘man’ simply claimed to “have no assets”. He dissolved the corporation she hired him under, then re-emerged, going on to target dozens of other people. Among these new victims, was my family, and I lost our parents lifelong legacy along with heirlooms intended to be passed down for generations. All of this is documented in public court records.
With my personal court win and these previous law suits in hand, I enlisted the help of a former federal prosecutor, Robert Goldman, someone who had SUCCESSFULLY tried a very similar case a few years prior in another state.
Robert was enraged this man was not yet prosecuted, he put together a “memorandum” which he said the DA would find impossible to refuse.
And now, after almost 2 years of constant contact from my family (pleading with them to stop this predator, to no avail) the DA in Nassau county NY FINALLY agreed there should be “an investigation”.
Here comes the part that’s mind boggling;
Believe it or not, even with this paper trail of serial embezzlement, they STILL might not prosecute this predator. Yes, even with this paper trail, DOZENS of previous victims and an ongoing scheme amassing millions of dollars in assets, they may not prosecute!
I have devoted this part of my life to seeking justice for my parents lifelong work. I will not rest until this man and his con is finally legally stopped, and he can no longer victimize families and people who are at the most vulnerable and fragile times of their lives.
HOPEFULLY I can also initiate legislation that will put this common con game to an end.
That’s the story. It is ongoing, with hills and valleys of both successes and disappointments. This story won’t be over as far as I am concerned until this man is brought to justice and prosecuted.
How you can Guard Against This Con;
I am NOT a lawyer, I am not giving legal advice. I cannot give legal advice. I can only speak from my own experience about what has worked for not only us, but for the many we have helped who have also been this man’s victims.
The following are suggestions I believe will help guard against the con.
Even if you follow the suggestions below, you STILL might become a victim, this is NOT inoculation, These suggestions MAY help if you or someone you know is faced with a similar situation.
1) THE COMPANY MUST BE BONDED
This is probably the most important safeguard. If they are not bonded you cannot trust them with your estate, period. Not bonded would be the biggest red flag. You MUST have that bond in hand. You MUST contact the bond company and make sure YOU will get compensation if the contractor causes loss, even if he causes loss on purpose, and you MUST get in writing that YOU will be informed IN WRITING if the bond or insurance is going to be cancelled for any reason, at least 30 days before it is cancelled.
The bond and insurance should probably be around 5 times the value you believe your property is worth (which is usually a value placed by the con man). I thought my parent’s store was worth a few hundred thousand (based on the con man’s appraisal) when in fact it was worth millions.
Claiming they are bonded doesn’t mean they are
Yup, you see “licensed bonded and insured” all over the place, many of those claims are false, the ada actually told me (paraphrased); “it’s common for that claim to be made without truth behind it”
2)You CANNOT rely on an internet reputation. Internet reputations can be and are gamed all the time. Nor can you trust recommendations provided by the predator (even though this is an obvious statement, they rely on your trust and this method of recommendation is used successfully).
3) Do NOT trust a + BBB rating, it’s worthless, believe it or not, and I have this in writing from the bbb) they do NOT report negative issues which have been adjudicated in court! EVEN IF THE COMPANY LOST EVERY COURT CASE the Better Business Bureau might STILL give the company an A+ rating and they may even post, in spite of court documentation, that “there are no unresolved claims”.
4) Check their corporate records When the company uses a term like “we have been in business for over 25 years”, c If they exaggerated established dates even a little, find someone else.
5) Their “Insurance” Is NOT insurance for you!!
When they say they are “licensed, bonded and insured” first, CHECK THE LICENSE. Make sure it is in the industry, and that it is a long standing license.
Disregard any existing insurance policy the company might present that does not name you specifically, preferably as “the insured”, if not that, in the least, you must be named as “additionally insured”. Even if their document is authentic, insurance that has their name as the insured means it is for THEIR loss not for yours. You need them to take out an insurance policy with YOU as either insured or additionally insured.
Speak with the insurance company personally
Record the conversation if possible.
These con men can easily create a false paperwork and a false insurance policy, insurance companies can even float a policy without the predator paying the first premium.
DO NOT ACCEPT A CERTIFICATE OF INSURANCE (even with your name on it); it is a worthless piece of paper that gives you NO protection or guarantees.
You need to contact the insurance company personally, and get it IN WRITING, (email documentation should be enough). Have them authenticate the fact that YOU will be compensated EVEN IF THE COMPANY YOU ARE HIRING AND IS PAYING FOR THE INSURANCE CAUSES THE LOSS DELIBERATELY
Maintain your own homeowners insurance
In the event something similar happens to you, there is a good chance your own personal insurance company will entertain the claim, check with them, you might need to get a rider and appraisals for your valuables, the appraiser should come to your home and should not be too expensive.
Do not accept any post dated check
Post dated checks can be legally cancelled, deposit the check immediately, if it bounces, keep those records, there are strong laws against bouncing a check for lack of funds, there are not strong laws against cancelling a check, according to the ADA, there are NO laws against cancelling a post dated check.
The Legislative FIX
I expect to create a web page and make this a permanent public document, and I will begin my campaign getting protective legislation enacted.
The legislative fix is so simple it’s laughable. The only legislation that needs to be passed is “if you are handling other peoples assets without sufficient bond, and there is loss, it is a criminal matter”