property theft in panama is much more common then you think!

7/27/2019 Property theft in Panama is MUCH MORE COMMON THEN YOU THINK!

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Property Theft in Panama

By Pablo Guzman Reyes

The idea that somebody would steal your

property seems an inconceivable

notion. However, in Panama it can and does

happen more often than anyone outside of

Panama would expect. I will point out how it

happens and what you can do to minimize your

risk should you consider investing in Panama.

In Panama all title to property is centralized and

recorded in the Property Section of the National

Registry of Panama. The Mission Statement of

the National Registry is to protect recorded

rights offering legal security. Every properly

owner places their trust in the National Registry

to ensure that property titles are safe and

secure.

In order to file a property transfer in the National

Registry the general public must rely on the

services of a Panamanian licensed Notary

Public. In Panama all Notaries serve as a

political appointment under the currentpresidential administration.

Both the National Property Registry and

Panamanian Notary Public are under the

umbrella of the Panamanian Ministry of

Justice. This structure should make us all feel

nice and cozy. After all it is the Ministry of

Justice which is overseeing the security of our

most valued possession, our property.

However, making that assumption could be acostly mistake. I was recently asked to help a

client who had discovered that a property that

was recorded in the National Registry and which

they had owned for twenty five years was sold

out from under them. In the past I had read

about isolated cases of property theft in Panama

but never really imagined the magnitude of the

problem until I began to research it further. I

talked to other victims of property theft and a

specific pattern used by property theft gangs

began to emerge. In most of the cases there is

complicity from officials in the National Registry

and the Notary Public that drafts the property

transfer deed or both. Beginning in the 1990s

and continuing until today, there have been

thousands of property thefts, some, like the

murder of the Governor of Cocle province, Dario

Fernandez captured national headlines for over

a year until the group was convicted of land theft

and murder. Unfortunately, most of these cases

are not reported in the media because there is a

sense that if the media reports this type of crime,

foreigners will not invest. It is primarily the

foreigners and the elderly and the poor that are

targets of this type of crime.

Even in those cases where there is no direct

involvement of government officials there is

negligence on the part of the National Registry

system in perpetuating the problem due to their

inability to act promptly. If a property owner is

the victim of a property theft his recourse is to

file a criminal complaint against the individuals

that perpetrated the fraudulent deed, to file a

report with the National Registry and if

successful in a criminal case, to file a civil case

to recover the property. However these cases in

Panama take years to work themselves through

the judicial system. It is not unusual for these

cases to take five to seven years to resolve. As

such, the property owner is victimized first by the

criminals that stole the property and then a

second time by the inability of the judicial system

to promptly and efficiently revert the criminal

acts and return the property to the rightful

owner. To complicate things, the laws in

Panama state that if an innocent third party

relies on a record in the public registry, they

cannot be harmed. This means that the


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property owner who has lost his property to land

thieves can generally not recover his land if it

has been sold to someone who claims that they

did not know that the property in question was

stolen. Therefore, the pattern typically used by

the gangs that steal land is to forge documents

with the aid of a corrupt notary and usually

someone inside of the National Registry and

then flip the property several times.

Panamanian law also states that once a

property has been sold 3 times beyond the theft

and then sold to someone claiming to be an

innocent third party, the property is lost forever

to the original owner. Adding insult to injury, if a

civil case is instituted by the original owner they

must post a bond amounting to one third of thevalue of the property just to initiate a civil suit for

recovery of their own land. Most people simply

cant afford to pay this amount up front and in

the event that they do not prevail after years of

litigation, they will lose their bond to the people

who stole the property in the first place.

How does this happen. Two simple words

Public Faith (Fe Pblica). A Notary Public in

Panama as an officer of the state has Public

Faith which has been delegated to the Notary

Public by law. This means that any

manifestation made by a Notary Public must be

accepted as true unless proven otherwise in a

judicial proceeding. Article 31 of the Notary

Code states that The Notary Public has Public

Faith . As a result all manifestations made by

the Notary Public in documents and instruments

authorized by the Notary Public must be

accepted as true.

What happens when a crooked Notary Public

introduces a fraudulent document into the

National Registry recording

system?. Nothing! - The recording officer

must take the manifestations of the Notary

Public as true and record the document. This in

turn exacerbates the problem because the

National Registry itself has administrative

Public Faith. This means that when you

request a Certificate of Title on a property

recorded in the Property Section of the National

Registry that report has the full Public Faith of

the National Registry that the information

contained there is absolutely true and

correct. If you are familiar with the term

garbage in garbage out it is an appropriate fit

for the scenario that I just described. If the

Notary Public submits garbage in the way of a

fraudulent deed and the National Registry

records it and then turns around and issues a

certified title report on that property guess

what you were just handed more garbage. Theirony of this all is that this garbage is being

validated by the Ministry of Justice which has

the oversight body for both the National Registry

and the Notary Public.

The victims then begin to pile up as innocent

purchasers relying on the certificate of title

issued by the National Registry begin to

purchase the property without knowing of the

initial fraudulent transfer.

The Public Notary system in Panama is adopted

from the civil law system and it is used

throughout Latin America and most of

Europe. However, there are two types of Notary

Systems, the territorial system and the open

system. In the territorial system a country is

divided into different districts and a single Notary

is awarded the right and privilege that goes with

it to act as the Notary for that district. This

system is used in Mexico and Panama for

example. Costa Rica on other hand adopted the

open system. This means that all Attorneys that

elect to be a Notary may do so. The only

current requirement in Panama is that a Notary

pass a Notary Specialization course and be

appointed by the President. In Panama where


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only 23 Notaries are licensed in the entire

country the system is highly geared toward

political favors and that is where the corruption

begins.

In Panama all authorized Notaries mustdocument all property transactions by recording

the transfer deed in their assigned Notary

Protocol book and then having all parties to the

transaction sign the Protocol book. The Notary

then has the power by law to create an extract

called a Testimonio of that entry and certify

that the signatures of all parties were placed in

the original protocol book. As such, when the

document enters the National Registry system it

does not bear the original signatures of theparties only the manifestation (public faith) of the

Notary Public that the original signatures are in

their original protocol book. In my opinion this is

a major defect in the system that facilitates

fraudulent transactions. Notaries often will have

copies of passports for foreigners on file if they

have purchased property in the past and that

makes it easy for signatures to be forged to

illegally transfer land whether it is held by a

corporation or by an individual.

How are the fraudulent documents created?

1. The Notary Public simply lies indicating that

a particular property owner personally

appeared before him and sold the

property. This is a case in many instances

of property theft that I am aware of. Juan

and Long Mocks Chong, a Chinese family

that I interviewed is one example. The

family owned two residential homes inPanama City and while they were travelling

in Thailand in 2007 a Panamanian Notary

Public indicated they were in his office

selling their home. After 7 years that case

is still pending resolution however the

property has been sold at least 4 times and

therefore it is unlikely that they will recover

their home. They have also lost in criminal

court on their original case and their appeal

because the judge found that although he

could see that the property was stolen, he

could not take it away from the current

owner because he could not see that the

current owner was involved in the theft.

In 2007, I also spoke to North American

Louis Avolio from New Jersey. Louis Avolio

had purchased a large tract of land which he

intended to develop. The property was very

large, worth millions of dollars, and was very

close to the international airport. Not long

after he had purchased the land in 2005 hefound people on the property bulldozing over

some of the structures that were there. As it

turned out, the corporation which held the

land had been illegally seized by some of

the same people who later murdered the

Governor of Cocle Provence in 2011. They

filed a change of the board of directors and

then sold the land enough times to make it

impossible for him to recover it. The same

group of thieves to one degree or anotherwere involved in many of the thefts that I

studied and have written about.

There are several similar cases of

corporations owned by foreigners holding

large tracts of land that were set for

development. For example, British Citizen

Mathew Whant lost several properties in

Volcan and Bocas Del Toro on the Western

Caribbean side of the country to the same

group of thieves that have stolen numerous

properties around the country. Mathew

Whant lost nearly 4500 acres worth millions

of dollars. His projects were already

partially developed and lots had been sold to

other foreigners when the theft occurred. To

date, he has not recovered any of his


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holdings.

A group of Irish Investors that included P.J

Daley and David Clark and Adrian Hillard

had invested in a large parcel of land in

Sonadora, Penonome in the middle of Cocl

Provence. A month after their project

received approval from the government to

allow for the sale of close to 400 residential

lots, it was stolen through illegal changes

made to the board of directors which

allowed their corporation to change hands.

Then once hijacked, the land was quickly

sold to a third party. The process is similar

in so many of the stolen property cases and

yet very few of these cases ever make itthrough the courts largely due to the

corruption in the system and control exerted

by the group of insiders who perpetrate

these acts.

These cases seemed improbable at first, but

since then I have literally found over a hundred

similar cases. Typically a foreigner or an older

person who is not able to defend themselves are

the victims because of the complexity and

corruption within the legal system in Panama.

2. The Notary Public revives the dead. In

another case in Juan Diaz the Notary Public

simply indicated that the corporate

representative of a corporation that owned some

land personally appeared before him and sold

the property. The problem is that the individual

had died 5 years before! In yet another case,

the individual whose name appeared on the first

fraudulent transfer was also a dead man but the

other names on the documents showed that the

same notaries and attorneys were involved in

the transaction.

3. In some cases the Notary Public is also

duped by the criminals and not an accomplice in

the crime. In these cases the criminals have

assumed the identity of the property owner and

falsified their identification documents. They

then appear before the Notary Public pretending

to be the property owner and producing the fake

identification documents. My opinion is that this

in not as typical as the bulk of the cases where a

corrupt notary, corrupt registry employee, and

corrupt lawyer carries out the land theft.

In one case the criminals rented a property and

then assumed the identity of the property

owners with identification cards and all. They

then tried to get a mortgage loan from a third

party using the property they had rented as

collateral and without the knowledge of theproperty owner.

Currently, the Economic Crimes Division of the

Prosecutors Office of Panama City has at least

800 active criminal investigations regarding

property theft. Sadly, I have only found one

case where the property was recovered by court

order. This has turned out to be one of those

dirty little secrets that no one will talk about in

Panama because its bad for business in the

country!

So how do I Prevent This?

Most of the targets of property theft are

absentee foreign owners in areas that have high

property values. There are some steps you can

take to make your property less appealing to

property thieves and those include:

1. Keep your undeveloped property well fenced

and with signs indicating a local contact

number.

2. Check your property title every couple of

months to ensure that no registrations have

been filed against the property. You may need

the help of a Panamanian national to get an


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account set up as last I heard foreigners were

not able to have a National Registry account.

3. Check your property every couple of months

to ensure that no one has taken physical

possession of the property.

4. If you intend to purchase land and then

leave the country then purchase in areas or

community where your neighbors or a property

administrator can keep an eye on your property

while you are absent. That said, I am aware of a

property owned by a Chinese family that was in

Hong Kong when their property was stolen by

friends of the property manager.

The Panamanian government needs to place

closer attention to this problem and implement

policies and procedures to deter and punish this

activity. A recent Supreme Court case in 2013

did address the issue and stated that there was

a grey area in the land registry laws that did not

protect the rightful owners rights but fell short of

calling for the legislature to institute changes

that would protect the rights of owners who fall

victim of these crimes.

My opinion is that until the laws are changed, no

property title in Panama is safe. There has

been a lot of noise about fixing the problem, but

then the only legislation that Ive seen passed is

a law that prevents victims of white collar crime

(which technically property theft is under certain

circumstances) from filing charges in criminal

court to recover their property if they are

foreigners.

property theft in panama is much more common then you think!

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