Impostor Clients Land Local Lawyers in Hot Water

By Douglas S. Malan
The Connecticut Law Tribune
New York Lawyer
September 18, 2009

Apparently lawyers don't always know their clients as well as they think they do.

Consider a couple of recent cases involving real estate transactions. In both matters, the lawyers have come under scrutiny following allegations that impostors forged signatures on mortgage documents.

What it boils down to is that the lawyers did not check photo IDs or otherwise verify the identities of clients, and now people who claim their identities were stolen are lashing out at the lawyers.

"Good practice says that you're supposed to know who you're doing business with," said Bruce Peabody, a New Haven, Conn., real estate attorney. "From a general practice perspective, it's not like people check for that at every closing."

And that's where problems can emerge.

Part of the bigger picture is that the American Bar Association is resisting attempts by the Federal Trade Commission to require law firms to implement costly identity-theft protection policies. An ABA lawsuit argues, in part, that the FTC has no evidence that identity theft occurs in the context of a law practice, and therefore, lawyers should be exempt from the proposed Red Flags Rule.

But that evidence actually is easy to find.

Greenwich, Conn., attorney David A. Rogers currently is defending a grievance complaint filed by a woman who says she was not the person who signed two mortgages in 2005 and 2006 on properties that went into foreclosure.

Rogers said in his response that the first time he met his clients, Thomas and Maria Karagiorgos, Thomas introduced Maria as his wife. When they got together at the closing, Rogers asked for their IDs. Thomas provided his, but Maria said she left hers at a restaurant that she and her husband operate. Both people signed the $566,000 mortgage on Norwalk, Conn., property.

The same woman came to Rogers with Thomas in 2006 to sign an $88,500 mortgage on a separate Norwalk property. Rogers said the lender in that transaction did not require the borrower' photo ID.

But apparently that woman wasn't the real Maria Karagiorgos. The real Maria came forward when she realized her name was attached to mortgages on properties going into foreclosure. She filed for divorce from Thomas in 2007 and then filed a civil suit against him in January of this year. She grieved Rogers in March.

"[I] never attended either closing as alleged by [Rogers]," the real Maria Karagiorgos stated in her complaint.

Her lawyer, Stephen J. Curley of Stamford, Conn., introduced handwriting samples to support that assertion. But Rogers' lawyer, William F. Gallagher of New Haven, argues that Thomas Karagiorgos was the only one who needed to show identification because he was the sole borrower. Maria Karagiorgos was required to sign the mortgage because her name was on the title, Gallagher contends.

"I see the Rogers case as defensible," Gallagher said. "The bank's instructions did not require [Rogers] to get her photo ID."

Additionally, Gallagher noted, "[Rogers] relied on Karagiorgos' statement. It reaches a point where you have to rely on the honesty of your client."

Attorney Curley disputes that view in his written response, claiming that the Patriot Act of 2003 requires photo ID for such transactions. Connecticut Chief Disciplinary Counsel Mark Dubois also believes that to be so. He said it's not up to the lenders to determine who needs to show ID. "A lot of lawyers don't realize that," he said.

Dubois said real estate transactions that lead to foreclosure are ripe for these types of impostor claims because they often involve a man with a woman who says she's the wife or ex-wife but is actually a girlfriend.

Milford, Conn., attorney Morton J. Dimenstein didn't think he needed to see a photo ID in 2005 when he helped a divorced couple transfer a house from the ex-wife, Mary Ellen Warner, to her ex-husband, Donald, to try to avoid foreclosure. A couple sat together in Dimenstein's office and signed paperwork to transfer the property. Mary Ellen Warner was to continue living in the house.

When the property ultimately went into foreclosure in 2006, someone bought it from Donald Warner. Mary Ellen Warner, however, refused to vacate the house because she said she was never involved in the property transfer.

Neither Dimenstein nor his administrative assistant, Tracy Connors, could prove that they actually sat with Mary Ellen Warner in his office in 2005 because they never saw her photo ID. "Neither of us could recall" what the woman who claimed to be Mary Ellen Warner looked like, Dimenstein admitted to grievance officials.

Dimenstein, who did not return telephone calls for this story, was recently ordered to take continuing legal education courses in legal ethics as a result of the grievance.

A lawyer's responsibility is simple, Dubois said. Part of the notarization process of the documents requires lawyers to be certain of the identities of the people signing their names. "Nothing about this," Dubois said, "is rocket science."