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Brian Lehrer: Brian Lehrer on WNYC. We're going to come back to the Trump indictment again a little later in the show, but it's not the only thing going on in the world. Listen to this. We're going to hear about an investigation that shines a light on a housing speculation scheme that has exploited homeowners in New York City, often Black or Latino, in neighborhoods where housing values have skyrocketed in recent years.

The investigation comes from the nonprofit news organization, The City, the reporting from Samantha Maldonado and George Joseph details how these real estate speculators acquire fractional shares of brownstones and use those to coerce longtime homeowners out of money, or even to evict longtime tenants, take possession of the home, and flip the property for big profits. What a scheme. Yorkers are being defrauded by this.

Samantha and Georgia's reporting also finds that lawmakers, courts, and city agencies have done little to safeguard the estates of homeowners who die without wills, which opens the door to the type of exploitation their investigation details. Samantha Maldonado and George Joseph, join me now. Samantha, George, hi. Thank you for your reporting, and welcome back to WNYC.

Samantha Maldonado: Hi. Thanks so much for having us.

George Joseph: Good morning, Brian.

Brian Lehrer: The first story in this investigative series, the headline, A House Divided: How a Band of Speculators Seized Deeds of Black-Owned Brooklyn Brownstones, begins with an account of Deborah Thomas and her husband Aston Smith in rapidly gentrifying Bed-Stuy. George, do you want to begin there?

George Joseph: Yes, sure. That story was one similar to many stories we've heard where longtime residents are living in houses, brownstones, especially in central Brooklyn and Southeast Queens. All of a sudden some stranger comes up to them and says, "Hey, I'm an owner of this property and you need to leave," or "You need to give me money, otherwise, I'm going to force you to leave by going to court."

A lot of residents are really unsure of what's going on often because their homes have had owners that passed away years ago, either without a will or without really clear estate planning. Because of that lack of planning, these speculators are able to go and find people who have fractional interest in these properties, often elderly people, often out-of-state people, and get them to sell those shares for way, way less than they're actually worth on the market.

Because of that information asymmetry, these speculators are targeting properties in the neighborhoods that you mentioned, Brian, and making a killing sometimes by displacing long-term homeowners or residents and tenants.

Brian Lehrer: It sounds like a crazy scheme. It's amazing that people believe it when someone just walks up to their door and say, "You don't really own this place. We're going to take it." What's the law here, George, or what privileges does one possess as a minority shareholder in a property if they do have just what you call a fractional interest?

George Joseph: Brian, it's something that most people haven't heard of, but automatically, if a homeowner dies without a will, let's say in the '90s or 2,000s, their descendants each get some fractional interest in a property. We're talking about sometimes as little as 4.166%. Even with that tiny fraction, anyone who scoops up that fractional interest, a speculator in this case, can go to a court and say, "Hey, Judge. I want this property to be sold. Then I get a 4% cut of whatever that million-dollar-plus brownstone is sold for."

Because of that threat in court, these speculators can go to the people who actually live in the house and have taken care of it for decades and say, "Look, if you want to stay in your house, give me way more money than the amount that I gave to the unsuspecting heir that I bought from." People are put in this tough position where they want to stay in their house, so they have to give up a lot of equity, or these speculators buy up those small shares one by one, get to 100%, and then flip the house for way more than they actually paid, often evicting longtime tenants in the process.

Brian Lehrer: Before we bring in Samantha and take a step back and look at the citywide issue here, this one particular family that you wrote about that we're using as our way in, Deborah and Aston that couple, did they have any recourse?

George Joseph: In that case, they had some negotiation sessions. For the house that they lived in in Bedford-Stuyvesant, the speculators ended up getting a share for about $65,000, and they ended up having to pay them $235,000 in order to buy that share back, which they had acquired from their estranged relative in order to stay in the house.

Brian Lehrer: Does anybody listening right now think someone may have tried to do this to you? Does anyone listening right now think someone may have succeeded in doing something like this to you? Anybody from law enforcement investigating these kinds of schemes out there, who wants to help George and Samantha report this story, 212-433 WNYC, 212-433-9692.

Samantha, where across the city is this happening, and is there a good estimate of the number of homes that have changed hands in these ways as a result?

Samantha Maldonado: Well, we're seeing it all over the city, mostly in gentrifying neighborhoods that were historically majority Black and Latino. They're often neighborhoods where there's been a lot of gentrification, so therefore the property values are skyrocketing. That's where these speculators can really see that they can turn a profit here.

There's no real good estimate of how many properties have been affected. The City and many other organizations studying housing and real estate in New York City haven't had a count of how many properties are being scooped up this way, or how many properties are being held in joint ownership by multiple, either heirs or just tenants in common.

In other places in the south, for example, there's been a lot of work to really put a number on that. There's almost 50 billion in 11 states in the south that's worth of property that's being held by joint owners. In the urban north, that's really new thing that we're just beginning to see. There's been really no understanding of how far and widespread this problem is.

Brian Lehrer: I see some calls are coming in. Eddie in Manhattan, an estate's lawyer, you'll be our first caller. Stay there for just a second. I just want to get one more step into this with Samantha. You actually spoke with some of the speculators themselves I see for your stories including a guy named Eddie Duran who had acquired that share in Deborah Thomas and Aston Smith's house that we were talking about before with George. It looks like they were remarkably open about what they do. What did they tell you?

Samantha Maldonado: They were remarkably open. That's what got me into this in the first place. They were just super transparent about what they were doing, and they saw nothing wrong with it. In fact, they do think that they are avenging heirs that own partial shares of homes that don't know what they're missing out on. They're getting them the money. In some cases, we've heard from Eddie's associates that they were forwarding the cause of racial justice.

They were saying they really look for properties that are in neighborhoods where they can afford it and where the houses are full of equity. Eddie in particular had said explicitly that a Black lady pays off her mortgage, she just lives in the house, and so it's full of equity. Whereas a white family, he said, would use the house as a piggy bank to get a new car, send their kid to college, take a vacation, so it wasn't as good of a bet.

Brian Lehrer: He is making a racial justice argument for using the law to steal property from Black people?

Samantha Maldonado: Well, he wouldn't call it stealing. Often what we found is these are happening within the bounds of the law. Most of what we found is completely legal.

Brian Lehrer: Eddie in Manhattan, you're on WNYC. Hi, Eddie.

Eddie: Hi, Brian. A long-time listener. Thank you for all you do for the city. We appreciate you. I'm a trust and estates lawyer in New York. One thing that I wanted to comment on that is adjacent to the issue that you're discussing is just the tremendous dysfunction of the surrogates' courts here in New York City.

When somebody dies, either with a will or without a will, you have to go to court either to probate the will or to administer the estate. A lot of these cases that you're talking about happen where there's no will and you have to go to court to administer the estate. The problem is that in New York City, this is a totally dysfunctional process. If any of your listeners have experienced this, they will know what I mean. It often takes months. It's entirely done by paper. Whereas other states, Colorado, Texas, Florida, it's an entirely online process. It might take a few weeks in other states or even outside of the city, but in the city could take a year or more.

What ends up happening is that the heirs of an estate will have to undertake a certain expense to engage lawyers. They have to pay court fees based on the fair value of the estate. If there's, say, a brownstone, it's going to be $1,250 just for the court fees in addition to lawyers' fees. That puts people in the hole. It delays the ultimate administering of the estate. It's just a needlessly complex process.

There's no accountability from the courts. The court clerks will never answer the phone. Try to call the Brooklyn Kings County Surrogate Court. You will never get an answer. If you send an email, you might get a response months later.

All of this puts people in a situation where they are fed up. It sows distrust between heirs because they think the point person is doing something wrong because it's taking so long. They might end up selling their interest in the estate to probate advance or estate advance funds. This is where these investors can prey. They could divide heirs up.

All of that is just to say that I think the City is doing a tremendous disservice to its residents by causing this delay. It causes tremendous financial hardship and it's entirely within the City's control. It doesn't have to be this way and is not this way in other places.

Brian Lehrer: Eddie, that's disturbing, but very clarifying. Thank you for sharing that as an estate lawyer. George, I'm still marveling in a bad way at Samantha describing this a minute ago as being legal, which is part of why you're shining a light on it. Yet it sounds like stealing. Also from your series, at least one of the heirs Leonard Presley, who was supposed to be paid for his share in one brownstone alleges that he hasn't been paid what the speculators promised him. In some cases it isn't just homeowners like Aston Smith being exploited, but the original minority shareholders too, who these speculators are supposedly acting on behalf of.

Question one, that's legal? Question two, talk about how the heirs are getting scammed as well, if I can use the word scammed.

George Joseph: Sure. Brian. What the caller just pointed to is a complete breakdown in New York City and State court system that has allowed this predation to happen. Sometimes in ways which people allege are illegal, but because there's so little scrutiny of these actors, it's often not proven or not even looked at. I'll just give you an example, Brian.

There was a house in Douglaston Queens in which the homeowner died in 2016 that we recently reported on. This house was worth over a million dollars according to city estimates. You would think for an asset like that, the City might take notice of it but right now in New York City, there is actually no system that will guarantee that state authorities learn about such an asset when a homeowner dies without a will. What happened?

The City's Department of Finance continued sending property tax bills to the dead woman. Those bills continued to pile up as the house was sitting there abandoned, even though it was a highly valuable property. Four years later, a group of speculators find two women out of state who they claim are heirs, pay them pittances. Then the City officially registers the speculators as the owner of the property.

By happenstance, one of those heirs got an attorney or one of those alleged heirs got an attorney, who then investigated the situation, went to the Queen's Public Administrator's Office, which is the agency that has authority over estates like this. They looked into it and recently went to court and said these women weren't even heirs at all. There are some people who were ahead of them in line living in Denmark that are the actual heirs. Now they're trying to get those deeds vacated in court.

When we investigated this particular issue, we found that a notary who had supposedly signed one of those deeds telling us that she didn't actually make that signature, that her signature was forged. We found similar signatures that other notaries in other states and other deed filings with these same speculators in which those notaries said they did not recognize or remember making those signatures and they all looked the same. There's a lot of things going on within our court system and within our property recording system that just aren't being checked at all. It's incredible that right now, very valuable properties, properties that were worth more than a million dollars, can just slip through the cracks because New York has no system that requires the automated referral to authorities of properties where people have died without a will.

Brian Lehrer: Earl in Manhattan, you're on WNYC. Hi Earl.

Earl: Hi, good morning. How are you?

Brian Lehrer: All right, thank you. You're in this business, I see.

Earl: I am. I am in this business. To be honest with you, I've been following a lot of these stories which, obviously, a lot of people have something negative to say about. Frankly, being in the business and being a minority, I believe that I can shed some light on why this really happens and ultimately what will happen if people didn't sell their interest.

Brian Lehrer: When you say you're in the business, what does that mean you do? Just to be clear for our listeners.

Earl: To be clear, I actually purchase partial interest.

Brian Lehrer: These fractional interests that the reporters are talking about. Go ahead. What do you think people might be misunderstanding? Go ahead, Earl.

Earl: For starters, a lot of times what happens is, in any neighborhood or with any property, regardless of where its geographical location is, specifically in New York, the law is the same whether someone dies with the will or without. For instance, if Mary dies and she has a will and she says, hey, I leave my property to my five children as an equal shares or to share alike, that means that each one of those children own 20% of the property.

Essentially even owning 20% under a will, the beneficiaries are not disallowed from selling their share. Ultimately, whether she had a will or not, the same rules would apply. The beneficiary could sell their interests under a will the same as they could sell their interests if there were no will.

Often, the heirs that sell their interests are people that have been locked in some family feud with, often, somebody who's occupying the property for many, many years without the financial resources to do anything about it. If a fractional owner wanted to do something to force the property to be sold, then what would happen is they would bring what's called a partition action, which takes many, many, many, many years.

Ultimately, if the property sold their public auction, it's sold to an investor and that investor renovates the property, which is often not a minority, respectfully speaking, and that money is diverted out of the African American community. If I don't step in and buy the interest of those that are willing to sell, often because they're facing some financial difficulty, then essentially that heir or those group of heirs could spend years trying to fight what's rightfully theirs.

Brian Lehrer: Earl, thank you for laying it out that way. I want to indicate to our listeners that George Joseph and Samantha Maldonado from the news organization, The City, are guests on their investigative series on these home purchases. George, we were just indicating that you think that caller is somebody who you actually referenced in the story. Yes?

George Joseph: Yes. That caller is the investor that made a deal with Leonard Presley for his shares of a home, which Presley says he never paid him in full for. In one of my conversations with Earl, the caller, he said that he did owe him money, and I have not heard since what happened with that situation.

Brian Lehrer: I guess he was just doing, Samantha, what you referred to a little while ago, which is putting these fractional interest purchases and distributions in racial justice terms, keeping them in what he called the minority community.

Samantha Maldonado: Yes, that's exactly right. This is something that I've brought up with some of the folks that we spoke to, both some of the advocates and lawyers and also the heirs themselves. They differ in that. I think there's some effects there, like people losing their homes that they've been in for years and years and either have to leave New York or don't know where they'll go. They lose this generational asset that should have been passed down. Also then, there's the errors that do get paid and perhaps they're grateful for the $10,000 or $30,000 or $20,000 that they get for their share, but then when they know that the speculator has flipped the share, or flipped the property for many, many times, that they do feel ripped off and they don't have the information going in about how much their share is actually worth.

Brian Lehrer: As we run out of time, Samantha, last question. Is there anything that any homeowner should do after hearing this and maybe becoming alarmed and maybe thinking, I don't know if my house is in this kind of situation or potentially in this kind of situation? Anything that anybody should do proactively to find out the status of their home or to protect themselves?

Samantha Maldonado: Yes. Well, as Earl said, he was correct that this can happen even if you do have a will, but without a will, it's more likely. Make sure that your estate planning is an order, that you do have a lawyer. You can sign up for notifications from the City Department of Finance to get notified anytime that there is a change in deed or a change on your property any time something is recorded related to your property so you know about that.

Also, I've just heard from different advocates that families should really be talking to each other if they can, just so that way they can protect against this. Oftentimes, these family feuds or dysfunction or people falling out of touch is really what opens the door to this kind of speculation.

Brian Lehrer: Samantha Maldonado and George Joseph from the nonprofit news organization, The City, on their investigative report that shines a light on a housing speculation scheme that they say has exploited homeowners, often Black and Latino neighborhoods like brownstone Brooklyn neighborhoods where housing values have skyrocketed in recent years. Thank you so much for sharing it with us.

Samantha Maldonado: Thank you.

George Joseph: Thanks, Brian.

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