Two men in South Jersey pretended to be property owners in Atlantic City, using fake deeds to swindle investors from Philadelphia and New York City out of $580,000, state prosecutors said.
Richard Toelk Jr., 54, of Atlantic City was the primary architect of the scheme. He was joined by his attorney and business partner Kevin Smith, 60, of Egg Harbor Township. Together, the men produced at least 20 fake deeds for real estate in Atlantic City, filing them in the city clerk's office from November 2018 through January 2019, according to Attorney General Matthew Platkin.
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Toelk kept some of the deeds himself and shopped the others around to investors from Philadelphia and New York City looking to manage properties in Atlantic City. On Thursday, Toelk and Smith accepted plea deals in connection with the scam just as their trials were set to begin.
Toelk pleaded guilty to theft by deception, and Smith pleaded guilty to conspiracy, according to the Attorney General's Office. Investigators found that most of the properties involved were actually owned by the municipal government of Atlantic City, though a handful were privately owned. None of the land was up for sale, and Toelk and Smith did not own the titles or have the legal authority to sell the properties.
"These investors spent hundreds of thousands of dollars and did not get what they bargained for," said Platkin in a release. "This was a lucrative scheme, with the scammers posing as the owners of what was, in fact, public property, some of which was along Atlantic City's famous boardwalk. Their ruse, along with the paper trail manufactured to support it, were convincing enough that experienced real estate investors became victims."
The fake deeds, which held no legal value or weight, were meant to transfer ownership of the properties — in several cases for just $1 a piece — from the rightful owners to limited liability companies owned by Toelk and Smith, Platkin said. Among the properties included in the scheme was a building valued at more than $1 million along the Atlantic City boardwalk.
Out-of-state investors gave the scammers an estimated $580,000 combined, believing they were acquiring real estate.
"This was a brazen scheme to fraudulently obtain title to properties belonging to Atlantic City, and then dupe unwitting investors into financing the bogus purchases," said Thomas Eicher, executive director of the AG's Office of Public Integrity and Accountability, in the release. "This type of outright fraud, which victimized Atlantic City and the investors, cannot be tolerated and the victims deserve to be made whole."
Toelk could face up to three years in prison when he is sentenced on March 23. Smith's sentencing is scheduled for April 6, and prosecutors are recommending probation on the condition that he serves 364 days in the Atlantic County jail.
Toelk and Smith will both be required to pay restitution to the investors who purchased the fake deeds.