By David Thun
Imagine being sued over a notarization you did not perform. It sounds unlikely, but that’s exactly what happed to one California Notary whose signature and seal were forged on a bogus real estate document.
“I came home the night before Halloween, and there were these letters from law firms telling me I was being sued by someone claiming I’d notarized a forged document", said Tony, who asked that his last name not be used. He looked up the lawsuit. “lo and behold, there was my name, along with a bunch of other people,” he said. “I had no idea what was going on or why.”
Tony, who’s been a Notary for about three years, was caught off guard — he only notarizes documents for established escrow companies and institutional lenders who he has known for years, even before he became a Notary. He’s never had any problems, diligently follows state laws and had never done business with the plaintiffs. After visiting the courthouse to look at the case file, he realized someone had forged his name alongside a fake seal.
Tony’s case is not unique. Forging Notary seals and signatures has been a persistent element in fraud schemes for a number of years.
He was shocked. He quickly filed an identity theft report with the police, but they “weren’t very helpful.” Fortunately, he also had an errors and omissions insurance policy. He called the policy provider, Merchants Bonding Company, and they immediately arranged for attorney Richard Busch to represent him.
“With any case involving a fake stamp, it’s important to make sure you file a police report and then inform the Secretary of State’s office of the forgery,“ Busch said. To help Tony, Busch put together a declaration that included the police report and a comparison image showing how Tony’s actual seal differed significantly from the fake one. The evidence, combined with Tony’s careful journal records, convinced the other side that Tony wasn’t involved. He was dismissed without prejudice from the lawsuit last month.
Tony said he’s grateful the E&O policy covered him — and paid for his legal fees — in this difficult situation. “If I didn’t have the E&O, I would have gone nuts,” Tony said. “It’s stressful enough having something like this happen when you weren’t involved, but if I’d had to try and find an attorney myself, it would have been worse.”
Busch said that without insurance coverage, the costs for legal fees defending against a lawsuit can easily reach between $10,000 and $15,000 even if the Notary did nothing wrong and successfully gets the suit dismissed. He recommended minimum policy coverage of $25,000. “Even if the Notary had nothing to do with the fraud in a case, fees can add up,” he said.
Not all E&O policies cover attorney services, so when selecting a policy, it is a good idea to confirm if the policy includes legal representation. E&O insurance purchased through the NNA does cover legal defense costs.
David Thun is an Associate Editor at the National Notary Association.