The fraud ring that wants to sell you homes they don’t own

VIDEO: Jesse Jones investigates the fraud ring that wants to sell you homes they don't own

On a sunny Seattle day, Stephanie Lee and her son, Jordy, walk us through their more than $400,000 investment, showing off their vision for the daylight basement, an open second floor living room filled with sweeping views, and cozy bedrooms on the top floor.

“We were getting ready to put tile in. We had everything ordered already, we just need to put it in,” says Jordy.

But what the Lees know now is that the tile will never cover the floors, and the wiring will not fill the walls.

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“I think the house is mine, under my name,” says Stephanie.

The whole time they were pouring their hopes, dreams, and cash into their fixer-upper, it was never theirs.

Police believe a fraud ring run by two men created a scheme to pose as the owners of distressed homes and sell them to unwitting buyers like Stephanie. Five homes in the Puget Sound area were hit over about the last year. And nobody, not even the escrow and title companies, had a clue.

I asked: has anyone shown you a way out of this thing?

“No one. No one. And that’s why I’m very desperate,” says Stephanie.

Police say Erik Blair Williams – a career criminal with five convictions for Identity theft – and Rolando Villanueva are behind the scam that was hatched in the King County Jail in 2014.

Lindsey Grieve, with the King County Prosecutor’s Office, was assigned to that case.

“You can’t make this stuff up. It’s really unbelievable and this case was really true to form,” says  Grieve.

She says Williams, who had experience in real estate, was locked up. Villanueva was not.

“He was aware of the ins and outs of purchasing and selling houses, so he used that background to identify properties that would be susceptible to the type of fraud that he wanted to do,” says Grieve.

This is how the fraud works:

“He identified houses where no one was living,” says Lindsey.

They identified homes that had been paid off, but were in distress of some kind – in dire need of repairs, or owing back taxes and at risk of foreclosure.

Then, court documents say they got fake ID’s with the names and addresses of the real owners.

Next step, get social security numbers.

Finally:

“Create email accounts in their [homeowners’] name so he would have a means to communicate with potential buyers for the properties,” says Lindsey.

Back in 2014, Williams and Villanueva tried to pull off the scam using a home on Yesler Way in Seattle. But their target, Williams’ former boss at a real estate development firm, realized at the last minute that something didn’t add up.

Detectives investigating that case quickly realized the scope of the scheme because they say Williams was using the phone at the jail to direct the details.

“Mr. Williams would ask Mr. Villanueva to place a three-way phone call so it would allow Mr. Williams to directly contact the home purchaser without that person being aware that the caller was calling from the King County jail,” said

When cops busted the operation, Williams got 84 months in prison for attempted first degree theft, identity theft, and forgery. Villanueva was given six months work release for identity theft and first degree attempted theft..

Williams was released last year. And a search warrant filed by Bellevue Police this spring says the two went right back to work, running a crew that would pose as the owners of several homes including the home Stephanie Lee bought in south Seattle.

“I decide to buy and they do all the paperwork. I just go through escrow,” says Stephanie.

Villanueva and Williams have not been charged or arrested. But the search warrant says the crew, involving several other suspects, followed their old playbook: using fake IDs and forgeries, and using mobile notaries from out of town to do the final paperwork.

That’s the weak point in the process, says real estate attorney Christopher Thayer.

“The closing will be handled by a title company and escrow company, and they will ask for the ID of the seller and they’ll make a copy of it,” says Thayer.

Thayer says that meeting is typically the only time in a home purchase that an ID is even checked.

“I don’t believe they do any additional investigation to verify that the person who claims to be a seller is actually the seller,” says Christopher.

Back to Stephanie: investigators told her the home’s real owner had been living out of the country for years. Her deal, like the other victims, could be unwound for the purchase price of the house. However, after meeting the real owner, Stephanie learned she may be out the more than $100,000 she spent on home repairs.

“He says ‘I might – I might reimburse some money to you, but I don’t have to,’” says Stephanie. “So I know the answer that, what I put into that so far until now, I think it totally lost.”

Bellevue Police have sent their case to the King County Prosecutor’s Office for a charging decision.

Now Stephanie wants to know who will make her whole. She’s taking on the title and escrow companies because she can’t sustain a six figure loss.

“So I’m the only one who pays financially, mentally, everything – heart and soul – to the mistake of the company. Only me?” says Stephanie.

Again, Williams and Villanueva have not been charged in the most recent string of frauds.

As for Stephanie, she will receive a $320,000 refund from her title insurance company. But that’s just for the price of the home. The extra $100,000-plus that she put in for repairs – she’s going to have to fight tooth and nail, possibly through the legal process, to get that money back in her pocket.