Lax Oversight, Snoozing Bureaucrats Make For Easy Ripoffs For Foreclosure Surplus Snatching Rackets

In Fulton County, Georgia, the Atlanta Journal Constitution reports:

• John Nelson fought Fulton County and the private tax lien industry for years to keep his house in Inman Park. He lost the battle and nearly lost much more. After the Edgewood Avenue house was foreclosed in 2000 and sold at a sheriff’s auction, Nelson made the best of a bad situation and filed a claim for the excess funds — proceeds from the sale remaining after overdue taxes and other debts were paid.



• He was entitled to $212,000 under state law. But somebody got there first, the sheriff’s office told him.



• Nelson’s money was in a county fund that now totals $11.9 million, all from the excess proceeds from foreclosure sales. Most belongs to former property owners like Nelson.



• It’s a perfect pot of money to attract con artists, experts say: there’s lots of it — Fulton collected $47.8 million over the last 10 years; oversight is easily dodged; and property owners who are due the money frequently don’t know it belongs to them.



• Fulton has a troubled history with the fund. Seven years ago, it was at the center of a scandal that reached into the highest levels of county government and deposed a Fulton sheriff.



• It’s not clear how often fraudulent claims are made on the fund. The company that filed a claim for Nelson’s proceeds said the claim was made in error. But property tax and legal experts agree cases such as Nelson’s are not isolated and the fund will attract scam artists as long as oversight is lax.



• The county makes little effort to prevent fraud and has demonstrated unwillingness to prosecute fraud even when a property owner brings charges, they say. Other metro area counties have tougher controls on access to the funds.



• Attorneys with knowledge of Fulton’s property tax operations say fraudulent claims on the fund are not uncommon. “I think a lot of people have been ripped off like this,” said Frank Moore, Nelson’s attorney. “You have however-many millions of dollars sitting in a pot and people thinking, ‘well, how can I get a piece of that?’”



• In Nelson’s case, a company named Guishard, Wilburn and Shorts submitted a claim for $212,000 in Nelson’s name, with a photo ID picturing a man who was not Nelson and a forged power of attorney, Moore said. The company has said they believed they were submitting documents provided by John Nelson.



• The signature on the power of attorney was not Nelson’s. The notarization was also forged, according to the Secretary of State’s office in Colorado, where the document was supposedly notarized and where Nelson lives.



• After Nelson filed his claim, the sheriff’s office asked Fulton Superior Court to settle the competing claims and Guishard, Wilburn and Shorts withdrew the claim they filed. Neither the sheriff’s office or the district attorney investigated, although Moore said he and Nelson requested an investigation.



• Nelson took his case to U.S. District Court and a Rome judge released the money to Nelson in October.



• Nelson said he never received notice that he owed $1,669 in taxes on the house or notice of the foreclosure auction.

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Tempting targets

• All Georgia counties collect excess funds and it’s common practice across the country. The funds are collected by the sheriff’s department or the tax commissioner’s office. If a property is sold for more than the value of the tax bill, penalties and other debts against the property, that excess cash is held until someone claims it. Mortgage companies often claim the funds to cover debt.



• Often, ownership is unclear or property owners are unaware they can claim the extra proceeds. As a result, the money can sit for years and becomes a tempting target. Fulton has long-standing issues with the excess funds and with its overall handling of delinquent property taxes.

For more, see Tax lien issues plague Fulton.