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But he that filches from me my good name/ Robs me of that which not enriches him,/ And makes me poor indeed.” � Othello III, William Shakespeare A recent case of identity theft has highlighted what might be viewed as an exception to one of Shakespeare’s classic gems of wisdom. In an unusual factual pattern involving identity theft, the victim came out not poorer, but richer. In that case, CTC Real Estate Services v. Lepe, an unknown perpetrator used the name, personal information and credit of Aurora Lepe to purchase real estate, and then lost the property to a foreclosure. Without Lepe’s knowledge, title to the property was taken in her name, and her name was forged as the borrower on the promissory note and the mortgage. When the “perp” took off, the lender foreclosed, and the foreclosure sale brought a higher price than the mortgage balances on the property. Presumably, the surplus funds resulted from the increase in value of the real estate. The issue was whether Lepe should receive that surplus of approximately $51,000. To some, these facts may invoke the type of creative hypothetical that a law school professor might propose to a first-year class in property law. Lepe argued that she was the only one known to have a claim in the proceeds, even though she was not the same person as the person who bought the property and signed the mortgage. She asserted that she had a right to the surplus funds because her name and Social Security number had been used fraudulently to fund the purchase of the property, and that the foreclosure damaged her credit record and required her to spend considerable time dealing with the consequences. In fact, a proceeding under the Bankruptcy Code had been filed in her name without her knowledge; her credit card accounts had been closed; and as a result of the identity theft, she claimed that she was unable to borrow money for a home she had intended to purchase. Despite these arguments, the trial court ordered that the surplus funds be paid into the Los Angeles County General Fund. On appeal, the Court of Appeals of California reversed the Trial Court and awarded the proceeds to Lepe. That court acknowledged that the “exploding problem of identity theft” is a phenomenon that inevitably creates new issues for our legal system. It then used old-fashioned property law to resolve the issue in favor of the victim. Using Precedents Essentially, the court’s logic may be broken down into two lines of reasoning. First, it cited the principle that a victim of theft is entitled to recover the assets stolen “or anything acquired with the stolen assets, even if those assets have a value that exceeds the value of that which was stolen.” As Lepe argued, a person’s identifying information is a valuable asset, and in Lepe’s case, the misuse of that asset had clearly damaged her. The second rationale involves the underlying principle that a person should not be unjustly enriched at the expense of another. The court pointed out that if the identity thief had continued in the fraudulent activity, the lender would have paid the surplus to the thief. Had this occurred, and had Lepe learned of the circumstances, she would have been able to recover the surplus from the thief because otherwise the thief would have been unjustly enriched. The court went on to state, “the mere fortuity that the wrongdoer has disappeared without receiving the surplus and is not subject to legal action should not, as a matter of equity, preclude Lepe from being able to recover the funds not in the possession of the identity thief.” The court concluded that although one may argue that Lepe is gaining a windfall, a victim is entitled to trace stolen assets into other assets and obtain the final product even though it may exceed the value of the stolen property. In a footnote, the court pointed out that the Federal Trade Commission had reported in 2003 that over 27 million Americans were victims of identity theft in the past five years, including almost 10 million people in the past year. It is interesting to speculate about how many of those 27 million victims were able to recover $50,000 from property that was purchased in their name without their knowledge. Also, one might step back a moment and look at the world from the perspective of William Shakespeare, writing from our parent country in the 16th century. How amazed he would have been if he were told that at some time in the future in the budding new colonies of America there would be 27 million “filches” of people’s good names �- and that at least one of them might even profit from that theft! Harris Ominsky is with the law firm of Blank Rome and is a former president of the board of the Pennsylvania Bar Institute. He has recently published “Real Estate Lore, Modern Techniques and Everyday Tips for the Practitioner (American Bar Association, 2006).”

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