William A. Miller, Esq.

The meltdown of title-insurance company LandAmerica Financial Group Inc. has left scores of real-estate investors and entrepreneurs scrambling to recover money in what were supposed to be a short-term and no-risk arrangement. The investors, from Arizona retirees to a public company, had $400 million on deposit with the LandAmerica subsidiary to take advantage of a real-estate strategy known as a 1031 exchange. A 1031 exchange, named for a section of the U.S. tax code, lets investors delay capital-gains taxes on the proceeds from recently sold property, as long as the investor lets a third party hold the funds. They must reinvest the money in a new property within six months.

At the law firm of William A. Miller in Phoenix, we often tell client’s to go ahead and pay taxes now because the tax rates are historically low and buying again, may well not be wise. Yet, here is a reputable title-insurance company holding 1031 money until such time as the investor decides to reinvest it and poof, it’s gone.

If a lawyer does this in Arizona he loses his license and likely goes to jail. Why; because in Arizona lawyers cannot co-mingle funds. This is a historic wrong and once again, blood will flow in the streets and the lawyers will make a small fortune. What a mess. Someone needs to serve time based on these poor folks losing their hard earned money.

Have you been the victim of a “real estate con”? A real estate con is normally set up and performed by a confidence man. The first known usage of the term “confidence man” was in 1849; it was used by the press during the trial of William Thompson. Thompson chatted with strangers until he asked if they had the confidence to lend him their watches, whereupon he would walk off with the watch; he was captured when a victim recognized him on the street.

All kinds of real estate cons have been thought up. From the simple, such as selling lots two, three or four times, all the way to securities cons where the unsuspecting is led into investing in bogus real estate developments and deeds of trust.

Seldom will you meet a nicer, more friendly person than a con artist. That is how he or she gets your confidence. I once sued a prominent Phoenician who was selling Grand Canyon lots to Europeans. One problem, he did not own them. Nor could anyone find them. His con worked for years. He protected himself by donating to politicians and charity. I felt guilty suing him. Imagine that, he almost had me.

Arizona and Phoenix are ripe with these cons. Examples of cases I have worked on will be posted soon.