Helen starts by creating an LLC in Florida. She uses a fake name (we’ll call her “Jane”) and uses a rented mailbox at a UPS Store for a mailing address. Florida does not require persons forming LLCs to present any identification — the entire process can be completed in one online form and costs only $125. And while it’s illegal for an LLC in Florida to have a registered office that is not the actual location of its registered agent, the Florida Department of State has no procedure for validating any of the information on the registrant’s forms.
Next she goes to sites like www.thoughts.com, www.weebly.com, www.wordpress.com, and others, where she creates single-entry blogs that appear to be unsolicited testimonials for Jane, saying how nice Jane is, how Jane took away all their worries, and how promptly Jane makes payments. Sometimes she poses as someone who has been approached by Jane and has concerns about this too-good-to-be-true offer. She then responds to her own question by posing as Jane’s customers, always giving herself glowing recommendations.
Next is a visit to www.godaddy.com, where she buys a domain name for her new company and creates a quick website. The website often features pictures of homes she has sold, articles about the joys of rent-to-own arrangements for both sellers and renters, a detailed FAQ that assuages all concerns, and copies of her contracts.
Having established an online presence for her new company and with an ample supply of easily discovered gushing testimonials for her new persona, she begins combing the listings of “for sale by owner” (FSBO) homes.
Contact normally begins with a phone call from a number with the caller ID blocked. Jane introduces herself and her company and asks some very basic questions about the home. She says she represents an interested buyer and that she’ll contact the homeowner by email in a couple days if they decide to make an offer.
A couple days later, sure enough, the offer arrives by email. If the homeowner has any hesitation, Jane encourages him or her to visit her website and google her company.
Once she has a contract, she immediately goes looking for a renter. This may not be completely understood by the homeowner. That is, Jane is not going to be occupying your vacant house, but rather someone you’ve never met will be living there. They’ll pay rent to Jane and Jane will pay rent to the homeowner.
The homeowner will probably not get any money until Jane receives a deposit from a tenant. Then the homeowner will get some portion of the down payment; perhaps all of it.
The renter moves in and starts sending rent payments to Jane (usually via PayPal or wire transfer). Meanwhile the homeowner is wondering why they’re not getting paid. Calls to Jane may not get answered or, if they are, there will be excuses such as having to pay for unexpected repairs or a check being sent to the wrong address. The homeowner may or may not get any further money.
Jane’s payments tend to be in the form of multiple money orders that add up to the total owed (so $1200 might be received as two $500 money orders and two $100 money orders). The payee’s name is hand-written. The money orders are purchased from grocery stores (often Publix) in Florida. For some homeowners, this is what alerts them that they may be in the midst of a scam. (Who buys a house with money orders they get from the grocery store?)
Eventually the homeowner discovers there’s a renter in his house. The renter says they have been paying the rent every month, that they’re buying the house from a lady in Florida. They’re surprised to learn that the lady in Florida is not the owner of the house.
Since the homeowner is not getting paid, he will eventually have to evict the tenant, repair any damage to the house, and put it back on the market. The tenant, who thought he or she was buying the house, is now out a large deposit and several months rent. The homeowner has lost several months of marketing time and has no rental income to offset his costs.
If (and it’s a big if) the tenant or the homeowner has the time and means to sue Jane, it will likely be in small claims court. Jane won’t show up (as much because by now she’s abandoned the UPS Store mailbox and was never served any summons as because she simply chooses not to show up) and the homeowner will be awarded the full amount. But there’s no way the awarded amount can be collected.
In the meantime, Helen has started over, forming a new company, creating new testimonials and a new website, and contacting FSBO sellers in another city.
How Does She Get Away With This?
Previous victims have taken Helen to small claims court to get their money back. As mentioned above, that’s a pointless effort and does nothing to stop her.
Some victims have to take Helen to court to clear the title on their home so they can sell it. By the time the court takes the house away from Helen, she’s already pocketed her money and has moved on.
Some victims have filed complaints with the real estate licensing board in Florida. But Helen doesn’t present herself as a real estate agent, so the licensing board has no motivation to investigate. On top of that, she’s impossible to locate because she operates under aliases at addresses that have been long-abandoned by the time her scam is discovered. The result of all this is that these complaints have been dismissed in the past due to a lack of evidence.
What We’re Doing Differently
We’re encouraging victims to pursue criminal charges. The simple act of creating LLCs and corporations using a false identity is a felony. And then there’s fraud. And money laundering. And tax evasion.
Additionally, we’re encouraging each victim to pursue charges in their home state. Operating a business in a state without registering as a “foreign (out-of-state) entity” is seen as an attempt to evade paying taxes in that state.
The goal is to get some justice for the dozens of victims we have identified, by seeing Helen (and her husband Matt) put in jail and bringing this scam to an end.
Click here to see a list of articles documenting the investigation.