What is Notary Fraud?

Part of the “Robo-signer Fraud” epidemic is notaries are actively participating in the foreclosure fraud (what other sites have called “fraud-closure”):

(1) Not demanding proper identification (ex. social security card, passport, driver’s license) from the person signing the document (ex. the assignment of the Deed of Trust).

(2) Willfully, knowingly altering documents (or forging signatures) with the speecific intent to defraud

(3) Filing false and forged documents with the County Recorder

(4)  Failing to keep, or falsifications in the notary journal required to be kept

(5) Failing to administer an oath for a jurat or having the proper witnesses

There are just a few of the things we have seen in loan documents, notices of deed of trust, notice of sale, substitution of trustee documents and other foreclosure-related documents being recorded with the various county recorders.

If there is fradulent activity perpetrated by a notary, they should be held accountable for money damages, including going after their bond ($15,000 in California).  In addition, if there was fraud by the notary, and a robosigner committing fraud, the eventual foreclosure sale should be deemed unlawful and the Courts should rescind the trustee sale and cancel the trustee’s deed since this is all “fruit of the poisonous tree.”  Under these circumstances, the Court’s should not consider this a “technicality” and they should not require “tender” in order to set the sale aside.  These are our legal arguments, although there is never any guarantee the Court or Judge will rule in this manner.  However, no good title can derive as a product of fraud, so the argument is worth making in the right case.

At any rate, here is a California Notary Public Handbook: http://www.sos.ca.gov/business/notary/forms/notary-handbook-2009.pdf

In this handbook you will see the interplay of the Government Code, Civil Code and Penal Code in regard to notarial activity.  Certain violations by a notary could subject the notary to criminal prosecution (ex. Penal Code Section 470 and 115.5) – defining grounds for fraud or misdemeanor.  Other acts of misconduct or neglect may give rise to civil liability (Government Code Section 8214).  The Civil Code lays out some of the requirements for a valid notarized document.

Here are a few of the California laws and legal requirements (a basic summary) cited in the California Notary handbook:

(1) A California Notary properly licensed can sign in all California counties (GC 8200)

(2) The California notary cannot have a DIRECT financial interest in the transaction (ex. cannot be the principal in a transaction or a beneficairy for example).  CA GOVET CODE SECTION 8224 SAYS:

8224.  A notary public who has a direct financial or beneficial
interest in a transaction shall not perform any notarial act in
connection with such transaction.
   For purposes of this section, a notary public has a direct
financial or beneficial interest in a transaction if the notary
   (a) With respect to a financial transaction, is named,
individually, as a principal to the transaction.
   (b) With respect to real property, is named, individually, as a
grantor, grantee, mortgagor, mortgagee, trustor, trustee,
beneficiary, vendor, vendee, lessor, or lessee, to the transaction.
   For purposes of this section, a notary public has no direct
financial or beneficial interest in a transaction where the notary
public acts in the capacity of an agent, employee, insurer, attorney,
escrow, or lender for a person having a direct financial or
beneficial interest in the transaction

(3) A California Notary must maintain and keep “exclusive and direct” control of their notary stamp (ex. do not lend it to a financial institution or robosigner for their use).  (GC 8228.1).  Such act would be deemed a misdemeanor.

(4) A California Notary must maintain a $15,000 bond with the California Secretary of State (GC 8212-8214)

(5) A California notary must get satisfactory evidence of identity to show the person signing the document at issue is who they claim to be (the Robosigner issue has surfaced in this regard) (California Civil Code Section 1185(a)).

(6) The California notary is required to keep a journal of transaction entries (GC 8228.1 makes it a misdemeanor not to maintain the journal) and respond within 15 days with copies of the journal entry for a specific transaction (Note, that means you can write a GC 8206(c) letter asking for copies of the journal entry to see if there is any misconduct, neglect, fraud, or forgery involved in the transaction).

(7) The Certificate of Acknowledgement must be proper, and made under penalty of perjury certifying the person signing the document identified the identity of the signer and personally appeared before them for signature (if the document is a jurat under GC 8202, the oath must be read and affirmed swearing the documents presented are true).  (See California Civil Code Section 1189).

(8) California Penal Code Section 470 makes the following a crime in California:

(a) Every person who, with the intent to defraud, knowing that
he or she has no authority to do so, signs the name of another
person or of a fictitious person to any of the items listed in
subdivision (d) is guilty of forgery.
   (b) Every person who, with the intent to defraud, counterfeits or
forges the seal or handwriting of another is guilty of forgery.
   (c) Every person who, with the intent to defraud, alters,
corrupts, or falsifies any record of any will, codicil, conveyance,
or other instrument, the record of which is by law evidence, or any
record of any judgment of a court or the return of any officer to any
process of any court, is guilty of forgery.
   (d) Every person who, with the intent to defraud, falsely makes,
alters, forges, or counterfeits, utters, publishes, passes or
attempts or offers to pass, as true and genuine, any of the following
items, knowing the same to be false, altered, forged, or
counterfeited, is guilty of forgery: any check, bond, bank bill, or
note, cashier's check, traveler's check, money order, post note,
draft, any controller's warrant for the payment of money at the
treasury, county order or warrant, or request for the payment of
money, receipt for money or goods, bill of exchange, promissory note,
order, or any assignment of any bond, writing obligatory, or other
contract for money or other property, contract, due bill for payment
of money or property, receipt for money or property, passage ticket,
lottery ticket or share purporting to be issued under the California
State Lottery Act of 1984, trading stamp, power of attorney,
certificate of ownership or other document evidencing ownership of a
vehicle or undocumented vessel, or any certificate of any share,
right, or interest in the stock of any corporation or association, or
the delivery of goods or chattels of any kind, or for the delivery
of any instrument of writing, or acquittance, release or discharge of
any debt, account, suit, action, demand, or any other thing, real or
personal, or any transfer or assurance of money, certificate of
shares of stock, goods, chattels, or other property whatever, or any
letter of attorney, or other power to receive money, or to receive or
transfer certificates of shares of stock or annuities, or to let,
lease, dispose of, alien, or convey any goods, chattels, lands, or
tenements, or other estate, real or personal, or falsifies the
acknowledgment of any notary public, or any notary public who issues
an acknowledgment knowing it to be false; or any matter described in
subdivision (b).
For the official misconduct or neglect of a notary public,
the notary public and the sureties on the notary public's official
bond are liable in a civil action to the persons injured thereby for
all the damages sustained. (GC 8214).
(a) A notary public who knowingly and willfully with intent
to defraud performs any notarial act in relation to a deed of trust
on real property consisting of a single-family residence containing
not more than four dwelling units, with knowledge that the deed of
trust contains any false statements or is forged, in whole or in
part, is guilty of a felony.
   (b) The penalty provided by this section is not an exclusive
remedy and does not affect any other relief or remedy provided by
California Civil Code Section 1189(a)(2) states:
(2) A notary public who willfully states as true any material fact
that he or she knows to be false shall be subject to a civil penalty
not exceeding ten thousand dollars ($10,000). An action to impose a
civil penalty under this subdivision may be brought by the Secretary
of State in an administrative proceeding or any public prosecutor in
superior court, and shall be enforced as a civil judgment. A public
prosecutor shall inform the secretary of any civil penalty imposed
under this section.


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