Committee Hearing, September 22, 2010

COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON LAW AND GOVERNMENT Room 400, City Hall Philadelphia, Pennsylvania Wednesday, September 22, 2010 10:15 a.m. PRESENT: COUNCILMAN WILLIAM K. GREENLEE, CHAIR COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN CURTIS JONES, JR. COUNCILMAN JACK KELLY COUNCILMAN JAMES KENNEY COUNCILWOMAN MARIA QUINONES-SANCHEZ BILL 100360 - An ordinance amending Title 2 of The Philadelphia Code, entitled "City-County Consolidation," by abolishing the Office of the Clerk of Quarter Sessions... BILL 100487 - An ordinance amending Chapter 18 2-200 of The Philadelphia Code, entitled "Recording of Deeds," by modifying the requirements for the recording of deeds... - - - 2

Good morning, everyone. This is the Committee on Law and Government. We're going to get started because we got a pretty full agenda here. Just for the record, we have a quorum with myself and Councilman Kenney, the Vice-Chairman of the Committee, Councilman Goode and Councilman Kelly. Ms. Marconi, would you please read the title of the first bill before us today, please.

100360, an ordinance amending Title 2 of The Philadelphia Code, entitled "City-County Consolidation," by abolishing the Office of the Clerk of Quarter Sessions and reassigning its powers, functions and duties; amending Title of The 21 Philadelphia Code, entitled "Public 22 Employees Retirement Code," by providing for pension and retirement rights for certain employees of the Office; and making conforming, technical changes to 3 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 The Philadelphia Code; all under certain terms and conditions.

Thank you. First, I would assume it might be advisable for all to come up together, Deputy Mayor Gillison, Judge Dembe and Mr. Evers. (Witnesses approached witness table.)

And for the record, Councilman Jones, who is not a member of the Committee, is also present. Good morning, sir. Whoever would like to start, identify yourself for the record. I would urge Judge Dembe go first, Mr. Gillison. DEPUTY

I have been -- I always let the judges go first.

And actually there's a better reason. In her earlier day, she was a committee person 4 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 in the 15th Ward. That's an even bigger deal. JUDGE DEMBE: See, I had an important job once.

Good morning, Judge. JUDGE DEMBE: I am Pamela Dembe, President Judge of the Court of Common Pleas and Chair of the AGB of the First Judicial District.

Please proceed. Are you giving individual testimony? DEPUTY

You want me to give the testimony? JUDGE DEMBE: Let me ask Mr. Gillison to give an overview first, and there are a few specifics I would like to do.

Fine. Sure. Mr. Gillison. DEPUTY

Thank you. Good afternoon, Councilman 5 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Greenlee, members of the Law and Government Committee. My name is Everett Gillison and I'm the Deputy Mayor for Public Safety. Thank you for the opportunity to appear before you today on behalf of the Nutter Administration to testify on Bill No. 100360. This bill 9 abolishes the Office of the Clerk of Quarter Sessions and provides, upon agreement with or order of the courts, for the performance of the powers, functions and duties of the Office by the First Judicial District. This bill also amends the Public Employees Retirement Code by providing for pension and retirement rights for certain employees of the Clerk's Office. The Nutter Administration supports adoption of this bill and requests that it be favorably voted out of Committee. This bill will officially codify the changes that have taken place within the Clerk's Office over the past several months and ensure that the 6 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 employees of the Clerk's Office who are now employed by the First Judicial District do not suffer adverse pension consequences. On March 3rd this year, Ronald D. Castille, Chief Justice of the Pennsylvania Supreme Court, issued an order that all duties and functions of the Office of the Clerk of Quarter Sessions of Philadelphia shall be absorbed and assumed by the First Judicial District of Pennsylvania. This order took effect March 4th, 2010. Immediately upon the effective date of the Chief Judge's order, this Administration worked closely with the President Judge of the First Judicial District and the Court's administrative staff to ensure a smooth and seamless transition. We had numerous meetings with Bobby Davis, President of DC 33, Local 696, and the employees of the Clerk's Office. We listened to their concerns and tried to be responsive to 7 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 their needs, while working to implement the mandate of the Supreme Court. Our objective was to ensure that those Clerk of Quarter Sessions employees who desired to continue working in their capacity were transferred to the FJD with no adverse employment consequences. Additionally, we sought to assist those Clerk of Quarter Session employees who chose not to transfer to the FJD find similar civil service positions within the government. I am pleased to say that we were able to achieve our objectives. Of the 106 employees of the Clerk's Office, 93 transferred to the First Judicial District to continue their work, albeit now under the supervision of Joseph Evers, the Prothonotary. Of the 13 Clerk employees who chose not to transfer to the FJD, two retired and 11 filled vacant positions in various other City departments. These objectives were not easily obtained, and many people worked 8 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 hard and developed creative solutions to the many challenges that arose. I want to publicly thank Judge Dembe, the Court administrators, our Law Department and the Office of Human Resources for their assistance. The changes that have taken place were made to streamline the operations of the courts and to promote greater efficiencies. This was accomplished by utilizing the resources of the Prothonotary's Office and taking advantage of their economies of scale. The Prothonotary's Office has done a tremendous job of modernizing the record-keeping function of the Court's civil side. Now, with the infusion of resources from the Clerk's Office, the Court's criminal side will experience the same transformation and modernization. Thank you for the opportunity to testify, and I would be happy to answer any questions from the Committee.

I know 9 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Councilman Kenney had some questions, and there probably are others, but, Judge, did you want to add something before we continue with the questions? JUDGE DEMBE: Yes. If I may, there are three specific areas that I will touch on briefly, and those may or may not address the questions that you have. First of all, the money. 5 million to the City. That's 27 percent more than was distributed to the City in all of Fiscal Year '09. We have been distributing on average a little more than a million dollars a month out of bail forfeitures and the billion-dollar baby. We have, with the assistance of the City, hired part-time workers to do the necessary clerical work so that we could start sending out dunning notices to people with very old bail issues, and 10 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 we're actually seeing some response from this. Just yesterday, I was in court, because I hear cases where people ask to have a bail judgment lifted, if it was issued in error or something like that, and I was literally seeing cases that are 40, 30, 35 years old. So we will actually get some of that money back. Unfortunately, not as much as any of us would like, but we are also looking into other avenues going forward, property that was confiscated or forfeited at the time of arrest that was never really dealt with later. But we are -- we're really, I think, in a position to offer the City some substantial help, and that's terrific. The next thing is something that you may know about. I'm sure that Councilman Jones does, because it's an area of interest to him. On the criminal side, we are moving to what is called a zone court. And the idea is that for most cases, both Municipal Court and 11 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Common Pleas Court, all the cases out of one detective division will be heard on one floor of the Criminal Justice Center. So that way, the lawyers get to know literally the territory that their cases come out of. The police in the police districts within each of those detective divisions who have several subpoenas are going to be running among courtrooms on a single floor rather than trying to bounce up and down all through the building. It will make it easier, we believe, to deal with witnesses. And everybody involved in the justice system has been involved in this very elaborate planning. The District Attorney's Office is working with our criminal court administrators to work on a program so that police officers will be given very early, and there will be rooms where they handle nothing but police, all in an attempt to reduce the need for people to reappear at court, reduce the number of continuances, and we think it will make it easier for people 12 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 to participate in the justice system. As a result of that, we will be needing clerks for 67 operating courtrooms. Many of those rooms -- the majority of them, of course, only need one clerk to record everything that's happening, but there are some very busy rooms where we need two. For instance, we have one judge, bless her heart, who hears almost 5,000 probation violation cases every year, and just the amount of computer work and paperwork that that generates is significant. So we will need -- and we have developed a structure where there are supervisors and trainers. We've already begun active training of the clerks, and very soon we're going to have AOPC, the state court people, come in to do a formal training regimen. So we're looking forward to giving the clerks literally the tools they need to do the job properly, and as they do that, not only will we be keeping better records and getting people moved in or 13 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 out of the county jail and prison faster and more accurately, it's going to aid us in the collection of money. So it's a win-win all around.

Additionally, I think the third issue that's of concern to some members is the issue of unionization of the Clerk employees. We don't care if they join a union or not. That is entirely up to the workers. I have certainly no objection. But what has happened is, number one, we have at this point new employees, and 14 so I don't even know those people well 15 enough to be able to give you a flavor as 16 to whether or not they are pro union or 17 not likely to join a union. 18 Number two, we have been told that there is an intra-union dispute. Apparently, Local 1510 of DC 33 has a charter which gives it the right to organize within the courts and I believe Commerce. The reason that the former union, Mr. Davis' group, was representing the clerks goes way back in the day when 14 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 the Traffic Court was part of the Finance Department and apparently that local has the jurisdiction of the Finance Department and, of course, then the Traffic Court was transferred into the courts and at that time, that local just came along with it. So the issue of which local properly represents -- would have the right to represent the workers, if indeed they want to be represented, is certainly not in my bailiwick and not in yours. I guess that's the union hierarchy that decides that. And then if there are sufficient members who are interested, the Pennsylvania Labor Relations Board presumably will do what they do and supervise elections and the like. And if it comes to that, as is always the case, we cooperate and follow the law. So at this point, we don't know if there is a desire by a majority of the people to join a union. We don't know which union is the proper unit to 15 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 represent them. So we're just going to wait and try not to get in anybody's way.

And just to summarize it, you have no certainly opposition to the workers if they choose to unionize and where they unionize, right? JUDGE DEMBE: Correct.

Thank you. On the same point, Councilman Kelly.

Judge, I just want to know about the employees. 16 Are they in the union now? 17 JUDGE DEMBE: We don't -- 18

Are they compelled or mandated to join the union within a certain amount of time? JUDGE DEMBE: No. 22

They're not? JUDGE DEMBE: Correct.

So it's up to the employee then to join the union or 16 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 not? JUDGE DEMBE: I believe that's so.

Okay. Thank you. JUDGE DEMBE: I am not an expert in labor law. I will tell you that I took the mandatory one semester course in law school and forgot it the day after I graduated.

And just to let you know, for the record, there's some union representatives here and they'll be testifying next. JUDGE DEMBE: Okay.

So there may be some information given there. I just have one other question, and I know Councilman Kenney and I see Councilman Jones' light on. I know you put out -- there's some issues with the folks that are in DROP. I see that there are 13 in DROP. And is there some kind of date requirement here? Is there some 17 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 kind of time issue? Mr. Gillison, maybe you can address that. I just want to be clear. I've heard the date of October 1st thrown around out there and I'm not really clear on that. Could you -- DEPUTY

Basically the way that we -- Everett Gillison, Deputy Mayor for Public Safety. The way that we drafted this is that we had hoped that Council's action would actually go back to -- so that there would be no separation in service. That's the important thing. And this pension bill that you're referring to that's attached to this provides, if Council goes along with it, it allows them to maintain exactly what they have, but we needed action by a certain date. I've heard October 1st, but from what I understood from the Law Department, if Council approves the bill and goes on, then they will be protected.

If 18 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Council approves the bill by that date? DEPUTY

It's not a "by." If Council approves the bill 5 the way that it has been submitted, then they will be protected, because they will not be forced to separate from the City in order to join the FJD.

Okay. DEPUTY

So that's my understanding, and that's why we are, again, supporting this action of Council and hope that Council will support it.

Thank you. Councilman Kenney.

Thank you very much. Just out of curiosity, the employees that decided not to go to the Judicial District and did not retire, what were the reasons? Was there any reason given why they would rather go into another unit of the government 19 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 rather than go into the court? JUDGE DEMBE: President Judge Dembe. Some of them were very fearful of losing the civil service status. I think that initially they thought that they would be able to look around City government and kind of cherry pick the job they wanted. I think what they learned later on is that in civil service, you go on a list, and I think it's fairly complicated what your status is on that list. So I don't know if it has worked out to their satisfaction, but people fear change.

The other issue on the billion-dollar baby, as you mentioned it -- and we have the same problem with our real estate tax issues -- once a number gets out there, the media just kind of latches onto it, and then all the people who listen to the media latch onto that number. So the 5, 6, 7 hundred million dollars in real 20 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 estate taxes that don't exist, the billion dollars really doesn't exist. I mean, it exists on paper. At some point in time, do we -- I've asked this question before of the Administration when it comes to our finances. At some point in time, don't we write that off? Every bank writes off bad debt at some point, because once people get it in their head that this money is somehow floating out there and accessible, we're supposed to go get it, and it's never going to be gotten. JUDGE DEMBE: That's correct.

I mean, what percentage, if you had to guess, would be available? JUDGE DEMBE: If we got ten percent, we'd be doing cartwheels. I think it will be under that.

But I think it's important that we dispel the notion that somehow the government is so inefficient that we can't collect money 21 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 that's 50, 60 years old, where in the real estate side we have a vacant lot that was owned by some estate that the kids are either dead or scattered around the country. I mean, it's just not possible. JUDGE DEMBE: That's right.

But, again, when you read -- and I should stay off the blogosphere, because it's really annoying. When you read those, those folks are convinced that somehow the government, the court is just inefficient and can't get the money. It's just not there. JUDGE DEMBE: You are correct, but we're not prepared to do that until we've at least made the effort to make a collection attempt on these, which is what we're doing now, but then I think it is time to formally get rid of that. And other than that, what we can do and what we are doing is the minute that bail becomes subject to forfeiture, we are on 22 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 it.

Going forward. JUDGE DEMBE: And we are moving -- we're grabbing the money and we're grabbing it from bail deposits. We're looking to see when people come to collect their bail what other fines and costs and restitution they owe. So we are taking that seriously, and I think that going forward, nothing like this will happen again.

That also includes the child support? JUDGE DEMBE: I don't know if we're doing that, but let me look into that.

I would urge you to try to find a way to do that. JUDGE DEMBE: Great idea.

You bring them into the world, you should pay for them. Thank you. 23 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 JUDGE DEMBE: Thank you.

Thank you, Councilman. I agree with your comments on the blogosphere, by the way. Any other questions from the Committee? (No response.)

Councilman Jones, did you have a question?

Yes. Thank you, Mr. Chairman, and thank you, members of the Committee, for staying on top of this issue. It was one of great debate, great agitation, consternation by members of Council and participants in that body, Clerk of Quarter Sessions, but through that confrontation, we've kind of managed our way to at least a comfort level, and I'll wait to hear from the union members before I totally put a period at the end of the sentence. But I do have a couple of issues. One, this body did do hearings 24 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 about bail and the billion-dollar mythical number that is out there, but if I heard you correctly, you said that ten percent of that one billion dollar receivable is real money? JUDGE DEMBE: Maybe.

Which is a hundred million dollars, which just to put into context, our last fiscal deficit was, what, 80 million arguably? And let's say if 50 percent of that hundred million is within the realm of collectible, I mean, that is real money. JUDGE DEMBE: It is.

That's a lot of recreation centers, that's a lot of firehouses, that's a lot of resources to the City of Philadelphia. So I don't want to minimize that out of a billion, we're only talking about ten percent, because that's a hundred million of real money. JUDGE DEMBE: That's a big number. 25 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

That's big money. I am encouraged by the fact that you are aggressively going after that. Now, I, during those hearings, did not want Ms. Johnson, who was the aunt of an accused person that put up her house in good faith, to become homeless because of the misdeed of the nephew or son. But what it will force the public to do is, if I put my house up, I better have faith in this young person they're going to go and do the right thing and go to court. JUDGE DEMBE: Yes.

So it's a part of a bigger justice issue that we're all facing. So that's number one. So I'd love to know when you say "we're on it," what that actually translates to that we're doing differently to aggressively collect that money, number one. 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Number two, you mentioned 8.5 million that is coming to the City. I'd like to know specifically what those dollars represent. JUDGE DEMBE: Okay.

And then what is the savings from this transition from the elected official realm to now being administered by the court system. What savings administratively have we actually realized since that transition or are projected to realize? JUDGE DEMBE: Okay. For a couple of your questions, I would like to call on my team. In terms of -- let me start from the back end of projected savings. We're generating a lot more revenue. We are able to use the FJD's accounting expertise and staff for part of the accounting end of that. We are moving -- we're in the process of developing in-house an electronic document management process so that the 27 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 paper costs are going to go down significantly. We have learned that there are in a warehouse out in West Philadelphia 25,000 of those banker boxes of old Quarter Sessions records. Every night I say a little prayer for the one guy out there who knows how to find things in those boxes. But we have to have a document management system and go out there. We have some big scanning machines that we bought in the court when we went paperless on the civil side, get those out there, get those documents in. Within the next, say, year or so, we're hoping to get rid of -- it may take us a little longer -- to get rid of all the paper files so that never again will cases not be able to go forward because somebody can't find the official file, or never again will a case go forward when they can't find the file, so somebody makes up what we call a dummy file, but the information that goes in that dummy 28 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 file somehow never gets collated with what's in the rest of the file, which leads to all kinds of problems. So I think that on a number of fronts, it's going to take us a while. It's going to take us a year or two, but you will see significant savings. One thing it's not going to do is result in a smaller cadre of personnel. You have, in any organization at any given time, a certain number of people who are out because they're sick or they're on vacation or maternity leave or whatever, and because we're in this evolving computer age, regular training is going to be taking people out of the room. A computer system is no good to us if people aren't being updated and upgraded on what the systems can do now and about the upgrades in the system. So that will pull people out. And because we're moving to this new system of organizing the cases in the courthouse, we will need the clerks in the room, as 29 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 well as obviously supervisors and trainers. So it won't be a lower -- it won't be a personnel savings, but it will be savings in terms of the work that they generate. You wanted to know about the --

Aggressive nature of collecting on bail. JUDGE DEMBE: The what?

Aggressive new bail collection better than before, get that money. JUDGE DEMBE: Yes. For the old money, we hired a number of part-time workers, who have gone through and, file 18 by file, pulled the information. We've hired collection attorneys to go after it. And that's just very time consuming, going through these one by one by one, and then of course trying to track down somebody who from 40 years ago or whatever. So we're doing that. Number two, there was an 30 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 enormous amount of money, about $55, $56 million, just sitting in a checking account, and, again, we've had to go file 5 by file and figure that out. We have released some of that money to the City. That's the $1.1 million a month. The other thing we're doing is that when somebody brings in bail money, rather than just having, number one, cash in a drawer, which was a procedure for a while, or just chucking it in a checking account, we're making sure that the proper file gets tagged, so we know whose bail money that is, how much Joe Smith has posted in the way of bail. And we're telling people at the front end that when you post bail for your nephew, your grandson or whatever, this is serious. This isn't a get-out-of-the-jail-free card. This is if he doesn't show up, you're looking at losing the money. And we're working on making sure that we get some data about the person who posts the bail. There were an awful lot of cases 31 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 where a 19-year-old would come in and go, I'm posting this for -- this is his grandmother's money. You know, when you go to collect later on, you've got a handful of sand. So we're trying to find out who it is. And in addition to that, we are hoping -- and, again, it may take us a year or two --

I don't mean to interrupt and take your time up, but I think that also, when we start thinking about criminal enterprises, that data right there can connect the dots on a number of different kinds of conspiracy, organization, criminal enterprises that might be out there that will give law enforcement better insight to how this thing works. JUDGE DEMBE: I think you're absolutely right. We are monitoring each case so that -- when the trial ends, number one, so that we know that they're then entitled to get their bail back, or if 32 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 they don't show up, you have to go through some formal procedures to declare that bail forfeit and you have to give the surety a certain amount of time to bring them in, and we're making sure that those kinds of notices go out, and then if they don't come in, we're then sending them out to collection. And the big difference is, you're doing it while it's fresh, while you've got a chance of finding people. There's a good deal of luck involved in trying to find somebody that's been floating around out there for 40 years. The other thing we're doing is if -- let me try to do this in a coherent sense. There are a lot of people who post their own bail. Well, before we give them their bail money back, we're now looking to see do they owe fines, costs, restitution not only in this case, because if you owe that money, why should we string it out, just take it right out of the bail money, but also do you owe 33 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 from other cases, which a lot of people do. So we've got the money, bird in hand much better than two in the bushes. So we've been doing that.

Okay. Thank you, Mr. Chairman.

Thank you. Councilman Kelly.

Yes. Thank you, Mr. Chairman. Judge, I just want to follow up what Councilman Jones just questioned you about. The bail money that you receive, does that go into an interest-bearing account or does it just go back into a checking account? JUDGE DEMBE: Well, it goes into -- I'm not sure. I think it goes into a checking account. There is a small interest on it, but there's no big interest on much of anything right now.

Because some of that bail money, I'm sure, is going to 34 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 be laying around for a considerable amount of time before they get it back. JUDGE DEMBE: Yes. As soon as I'm really convinced that we've got a handle on what money we have and how long it's going to be with them, we're going to be having a conversation with our bankers.

Thank you.

Councilman Kenney, to cause trouble.

I just thought maybe you could put it where the DROP money is to get four and a half percent. I just couldn't help it.

Geez. Why not open another problem? Are there any other questions from members of the Committee? (No response.)

Seeing none, thank you all very much. JUDGE DEMBE: Thank you. 35 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

Can you stay in case other issues come up, please? JUDGE DEMBE: Absolutely.

Thank you. Next witnesses, Mr. Davis and members of District Council 33. (Witnesses approached witness table.)

Good morning. Whoever would like, please identify yourself for the record and proceed.

Bobby Davis, Vice-President of District Council 33, President of Local 696.

Go ahead.

Lillian Randolph, Business Agent of Local 696.

Irene Snyder, President, Local 1510.

Go ahead, Mr. Davis. 36 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

First of all, I want to thank the Committee for allowing us to testify today. Thank you, Councilman Greenlee and members of the Law and Government Committee. The first thing I want to do is thank the FJD for the respect that they gave the organization during the time that they were preparing for this. Sometime in January of 2010, I received a call from Dave Lawrence's office to meet with President Judge Dembe and himself to start outlining the changes that were going to take place in this -- from the civil service base to the FJD. Throughout that process, they have kept the local representing these members totally informed of what the changes was going to be. There seemed to have been some questions as to whether members of Local 696 can obtain their civil service status. Once it's been decided that that was not something that was going to be able to be done, they continued to keep 37 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 us informed of the things that were going on to make sure that they pensions and things of that nature was covered, and I think they did a very good job with that and I just want to commend them and thank them for that. The issue seems to be the last part of union representation. Somehow that somehow got confused, and some people said that District Council 33 said that they could not represent those members, and that wasn't true. We had met several times with Deputy Mayor Gillison to try to outline exactly what can be done to make sure that they still obtained their union representation. At that time, the last meeting I believe was sometime late in June, I was told that we would have a memorandum of understanding, and basically that's all we were looking for, and I think that would have pretty much closed the door on the last issue that the members had. They did not want to be over there as free-will employees. 38 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 So I thank the Judge today, and I heard her say that she still does not have a problem with those members becoming union people. So if that's the case, then let's get it done. And I think what the best way we can do that is just ask the members. We are and still believe that those jobs belong to District Council 33. There's no dispute about that part. And so if the Judge is -- certainly we heard her today that she still does not have a problem with that. Then it's just basically a matter of talking to the members. We already know that they still would remain District Council 33 representative, and whatever it takes to get that done, let's get it done before this thing get out of Committee, and then that will conclude our business on this part of this issue.

Let me just say, Mr. Davis, I appreciate your testimony. When you say "let's get it 39 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 done," in all due respect, I don't think that's the FJD or the Council's role to get it done. I guess that's the workers, right?

Well, I mean --

So, I mean, holding up the bill for that reason, I guess I'm not real -- and just for the record, as I think you know, one of the reasons this hearing was not held in June was at your request.

Yes.

We wanted to give time to work out, to answer questions, all that kind of thing. And for the record, I got a lot of heat on that.

Sure. And I appreciate --

But I also want to be fair to everybody, and that's why I made clear on the Judge's statement today, there's no opposition from the courts to unionize. Obviously 40 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 there's no opposition from the Council to unionize. But I think that's the workers' decision, right?

Well, not exactly, because they already unionized. We already have organized them some years ago. And part of this process was that because it was part of the discussion in terms of this bill going through, then that's why we're here today, because throughout the whole process -- and if it wasn't part of getting this bill passed, then we wouldn't be here talking about it.

When you say they're members of the union, are they now presently paying union dues?

Well, the reason why I say that is because some years ago, we had already organized them, and when we went to them throughout all of the process of this bill being formulated, every conversation was that, You will remain union members. And so that's why 41 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 we're here. And you might be right, this is not your problem, but because it was part of the process of this bill, then I think that all of the promises that were made should be carried out before this bill is passed. So this is the last piece of it. So we shouldn't have to go through trying to organize people that we had already organized and we should not have to go through that long process. This was a promise that was made as a piece of the conversation that led to this discussion, and all we're saying is, you heard it here today, that they have no problem with that occurring. The only thing we need from the department is a memorandum of understanding that says that these members are still members of District Council 33.

When you say "department," what department are you referring to? Who? JUDGE DEMBE: FJD. 42 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

All right. I'm looking -- and, again, I just want to try to be fair to everybody here.

Sure.

I'm looking at a letter dated June 18th to one of the employees -- I'm not going to mention her name -- from Judge Dembe, and this is June 18th. After you left yesterday with our meeting, I found this letter, so I should have brought it up to you at that time, but I know we talked by phone. It says -- and this is from Judge Dembe -- "We have been informed by a representative of DC 33, Local 696 that if that you accept the FJD's offer of employment, their union will no longer be recognized by the Pennsylvania Labor Relations Board as your union representative and that a new petition may need to be filed to seek to be appointed as your union representative after you have become employed by the 43 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 FJD." Now, in all fairness, I thought that was always the case, that I thought we were arguing that certainly the workers have the right if they choose to be represented by a union. And I could be wrong on this, and if somebody else wants to correct me, they can. I never thought it was an automatic thing, and I think that's where there may be the disconnect, that automatically they would be in DC 33 and your local. I thought that the whole idea was to give them the ability if they chose to be union members. Am I right?

Throughout this whole process, there's been many questions that has arised about whether they would still be union representatives or not. In a statement from Dominic Rossi that gave a draft of the ordinance -- may I?

Yeah. If you have a copy, you can bring it. 44 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Do we have a Sergeant-At-Arms here?

So no one is disputing this. I mean, the department said it today and they continue to say it, that they will remain union employees.

Just for the record, what Mr. Davis is referring to, I'm looking at the end of a letter from Dominic J. Rossi, Esquire, Deputy Court Administrator, Legal Services. "Finally, as Court Administrator" -- I'm quoting here. "Finally, as Court Administrator David Lawrence had represented to you last year, and as we have represented several times this year, including on April 15th when we met, the FJD will agree to your union remaining as the official Union representative for the CQS employees who are current members of your Union - and we look forward to entering into a Collective Bargaining Agreement (similar to the Traffic Court 45 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 CBA)."

And also when members asked that question, Judge Dembe's response was that you will no 6 longer be civil service employees, but you will continue to have -- no benefits will be lost and no loss of union representation. So we never questioned about whether we were going to continue to be -- you might as well take this one, too, and this is from Joe Evers letting them know that they will be -- so people kept bringing this up in different areas of conversation, and throughout all of the conversation, there was never any question about whether they were going to be union members or not.

I'm looking at also, just for the record, from the Prothonotary. It has Mr. Evers at the bottom. I'm not sure it's actually his thing, but it's titled "Impact of Changes on the Clerk of 46 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Quarter Sessions." "Your union will continue to represent you," and I don't see a date on this. Again, in continued fairness, there does seem to be some questions here. Mr. Evers, Judge Dembe, without taking -- I don't want to take this forever and I don't want to be fighting a battle, maybe it's not our place, but there does seem to be a little bit of a difference. Maybe you could -- because, quite frankly, I didn't see these things before I had seen the letter I read that you had wrote back in June, but there does seem to be a little bit of a difference here. JUDGE DEMBE: Again, we have no 20 objection to unionization. Number two, we have no idea what the desires are of the current contingent of employees. Number three, we thought initially that we would be able to just move DC 33 right along over with the transfer. It became 47 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 our understanding that, not anything that we did nor anything that Council did or could do, that the Pennsylvania Labor Relations Board decertifies the union as -- because there's been a change of employer. If someone has got a labor lawyer who can tell me differently, I would certainly listen, but it's my understanding that there's nothing really that you can do, there's nothing that we can do, except not obstruct. It's a matter of filing a new petition, and if there's the consent of the members, enough votes, then presumably one or the other unit of DC 33 would represent them. We certainly haven't heard of any union other than DC 33 being involved here.

I understand, and what you just said is the way I understood it too, that it would have to be certified. You would have to go through a little separate process. In fairness, though, to the union -- and I know you didn't write this. Mr. Rossi, I 48 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 don't know if he's here or not, wrote it. It does -- I don't know if you saw what was being referred to here. It does look -- I mean, it does say the FJD will agree to your union remaining as the official union representing for the CQS employees. JUDGE DEMBE: Well, that's because we were told by the union in the initial discussions that there would be no problem with their moving. We only discovered later on that the Pennsylvania Labor Relations Board views it differently. And if they would have --

And was that transmitted to the union when you found out that there was a difference? JUDGE DEMBE: Yes. I mean, I can't think that it's that difficult to get the process going.

No. I understand. I just -- and I'm not trying to throw this at you at the last minute. I had not seen this before until 49 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Mr. Davis had brought it in. So it does -- and in fairness, it is two months, almost two months, prior to the letter you wrote. And I know what I think you said when we've met personally, it would be up to the members to decide, and that's the way I always thought it was. It is a little bit different. Mr. Rossi's statement here is a little bit different, in all fairness to the union people. JUDGE DEMBE: I don't doubt it, because, again, at the beginning of the process, we did indeed think that we'd be -- well, we thought we'd be able to -- at the very beginning, we thought we'd be able to maintain civil service status, and it took a while to figure out that that wasn't so, and then it took a while to learn that the Labor Relations Board has its own way of going about things.

And to the best of your knowledge, the union was notified of this, they knew, in your 50 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 opinion, that that was a difference? JUDGE DEMBE: Yes.

All right. JUDGE DEMBE: Okay?

Any other questions on this particular issue with Judge Dembe while she's still here, members of the Committee? (No response.)

All right. Mr. Davis, did you want to say something else? I don't want to get into a big back and forth, but do you have anything else?

Absolutely.

Okay.

When all of this was brought up, as I stated earlier, we thought all of this was worked out and all of the sides had agreed that there would be a memorandum of understanding drafted up to protect these workers. One of the things that I brought up is that 51 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 my concern was the gap that may take place between when this bill goes through and members of our organization not being protected. So in a way of making that happen, Deputy Mayor Gillison and myself said that a memorandum of understanding can be drafted. And throughout this whole process, that had never changed, and I can say as late as June, he said I would have a memorandum of understanding on my desk before the end of business. We also had spoke with Mr. Rossi and also Mr. Flood, who also didn't have a problem with us drafting up something that would be similar to what the Traffic Court thing was. So all we requesting at this particular time, if the Judge has no 20 problem with us maintaining union representation for these people, we would like to just have a meeting as soon as possible to draft up a memorandum of understanding to protect these members and to give them what they want. And we 52 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 have no problem in maybe scheduling -- I know they had a mass meeting also late June. That same kind of meeting can take place and let's hear from the members.

All right.

I mean, Councilman, that's as simple as it gets. If we both are sitting here today before you and both of us are saying that we have no 12 problem in giving the members what they want, then all I'm saying is let's get it done.

I guess the difference, Mr. Davis, is I think still the difference between what the Judge said and what you're saying now is, the Judge is saying, if I'm right, that, in her opinion, the workers have to go through the procedure of deciding. It's not automatically that you are representing them.

We already got around that. Getting around that is 53 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 nothing more than, like I said earlier, coming up with a memorandum of understanding that we will be recognized by FJD.

But I think what they're saying is, they, in their opinion, they can't do that.

I know, but they can. They can. All I'm saying is that we've had no problems in working with Dave Lawrence for a number of years now, and if we come up with a memorandum of understanding that both of us can live with, I see no reason why he will not honor it. It's just a matter of us putting some language together saying that we recognize the District Council 33 being the bargaining unit for these members, and it's done. It's done.

Just one other thing, is there a -- I guess the reverse question is, is there a problem with the workers going through that procedure to say they want to be in the 54 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 union? I'm not saying they don't want to. I have no reason to think --

Meet with them. We said that. We said meet with them. I mean, we're just saying that if you're talking about going through the whole process of notifying the Labor Board and all that, that's a process. Meanwhile, we got unprotected members out there. And these members have already been organized and they were recognized by FJD as District Council 33 being they bargaining unit representation. And I stated earlier that was one of the reasons why Judge Dembe called us out of respect, to let us know that these changes was going to occur and also to assure us that they will still remain District Council 33 bargaining unit members, and she stated here today she has no problem with that happening. So I think all of us are already on the same page. All we need is that memorandum of understanding that says what we all are 55 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 saying.

And I guess this is a legal question. Do you, as the Judge said in June 18th and I think she said again today, does there have to be some action through the Pennsylvania Labor Relations Board or not? And I think -- and I don't know. To be honest with you, I'm not an attorney at all, thank goodness. So I think --

Councilman?

-- what we maybe need to do is get some opinion from somewhere saying whether that has to happen or not.

We've already met with their attorneys and our attorneys, and we understand the latter part of where this discussion is, but it doesn't have to be -- we're looking at something that doesn't have to take place right now. Right now the only thing that have to take place is that some language be 56 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 drafted up through a memorandum of understanding. From all of the people that I've talked with, no one seemed to have a problem with that early on. I don't know when it changed, but I do know this: If we're all saying that we recognize District Council 33 as the bargaining unit and if we hear the Judge saying she has no problem with it, then all we need to do is put the DC 33 and the FJD attorneys in a room, this thing -- I'm going to quote Marc Flood. He said, It can be done in a day.

Before that --

It can be done in a day.

Any questions? Judge -- Councilman Jones. I haven't gotten through one hearing yet and I'm calling you --

Wait a minute. We have elected officials, unions and lawyers all in the same -- 57 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 lions and tigers and bears, oh, my. But as a point of clarity for me, the Labor Relations Board notified you, Judge Dembe, as to a process. How were you notified and what did they say?

Judge, I think you have to come to the microphone so they can hear you. JUDGE DEMBE: We were notified on June 15th, which was after Mr. Rossi's letter, by the union's lawyer that we couldn't do this by way of a memorandum. So we're going to get on the phone to the Pennsylvania Labor Relations Board, find out what the process is, and whatever they tell us, it's fine by us. I'm not sure what the -- if Mr. Davis believes that the former members and the new employees are still in favor of a union, I'm not sure what the reluctance is about just doing a quickie election and getting it done, but we will find out from the Pennsylvania Labor Relations Board, because they're the ones who certify 58 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 unions, not me, not you.

So you can get a -- that's what I was going to say, maybe we can get an opinion from the Labor Relations Board. JUDGE DEMBE: Which I will convey to you.

Pardon me? JUDGE DEMBE: Which I will convey what I learn.

If you will forward it to me, I would appreciate it. Now, it's going to be up to the Committee. I mean, I'm thinking it still would have to be approved -- this bill 19 would have to be approved by the full Council. We'll see what the Committee says. I don't know if holding it up today serves any real purpose. I mean, my inclination -- again, it will be up to the Committee whether we want to move this, and then in the interim, if we can 59 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 get that opinion, and then the full Council can have a decision in this whole thing. JUDGE DEMBE: Let me just say that I am hoping that we can move on this fairly quickly. From the perspective of those individuals who are in DROP, who are still on the old Clerk payroll, these are very nervous people. They really are terrified that they might --

I've heard from some of them. JUDGE DEMBE: -- lose their money. And, boy, if I were one of those people, I would feel that way, and if they see this extending and extending, I think --

No. I hear you, but in fairness, I think we do need a definitive answer, because there's clearly a difference of opinion here. JUDGE DEMBE: Yeah.

Maybe in the end everybody wants to get to the 60 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 same end, but there's a little difference in what route we're taking. Councilman Goode.

Thank you, Mr. Chairman. Judge, is there anything illegal about drafting a memorandum of understanding? JUDGE DEMBE: It would be -- it's my understanding that it would be in effective. It has no -- it's no legal --

But there's nothing illegal about it? JUDGE DEMBE: Yes, it would be illegal for me to make a promise to do something that I cannot do.

We haven't said or you haven't said what would be in the memorandum of understanding anyway. So I'm saying, in general is it illegal to do a memorandum of understanding? JUDGE DEMBE: Oh, no. We do those all the time, but I can only promise to do what I'm capable of doing. 61 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

So you could put something in writing as part of a memorandum of understanding? JUDGE DEMBE: Depends what the something is.

Okay. I mean, will you commit to put something in writing in terms of a memorandum of understanding? JUDGE DEMBE: Depends what it is. I mean, Mr. Davis --

It depends on what you're willing to sign, of course, but are you willing to sign something? JUDGE DEMBE: Sure.

Okay. Thank you, Mr. Chairman.

Thank you. Councilman Kelly.

Thank you, Mr. Chairman. Now, it seems to me that 62 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 everyone is on the same page. You have the union, you have the courts, you have the employees. So I think it's just a matter of finding out what the procedure is to get this thing done, and I think it's up to the union to really take the responsible action here and get those employees on board. It doesn't seem to me the right thing to do is to hold this bill up just for that, since everyone is on the same page and they all agree. Thank you, Mr. Chairman.

Thank you, Councilman. Any other questions, comments? (No response.)

Seeing none, you have anything else? I really need to keep moving, Mr. Davis, because we do have a lot. I don't know how much more we can say on this.

I had one comment that I did want to make. I did speak with our attorney, and our attorney told 63 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 us that there is nothing illegal about entering --

Just identify yourself. I know you did earlier. Just say it again.

Irene Snyder, President of Local 1510. Our attorney, Sam Spear, he made it very clear there is nothing illegal about entering into this agreement. And they're talking about it being very quick. The problem is that you would have to do the entire court system. It's not a matter of just these individuals that we are talking about. And these individuals were told that they were going to maintain their union representation with District Council 33. JUDGE DEMBE: There was never any understanding that the whole court system would be unionized. That was not ever anything we --

We're talking about the 93 employees. 64 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

No. We're not either. I want to make that clear. But to go to and try to get them organized, it's not just a matter of these particular individuals. So that's what the issue is.

All right. But, Judge, you'll get that, whatever, from the NLRB, or wherever it comes from, PALRB? JUDGE DEMBE: Right.

If you could get that to me as soon as possible. JUDGE DEMBE: Will do.

But, again, it will depend on the Committee. I think the majority here feel that at least we need to move this bill today. JUDGE DEMBE: Excellent.

Any other -- Mr. Davis, please, quickly, if you could.

I know. I know. I just want to add this, because Councilman 65 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Goode brought it up. I just want to bring this up only because Councilman Goode brought it up. But this is a memorandum of understanding that was going to go to the Mayor and First Judicial, and if you look on it, on No. 5 we're included in this memorandum of understanding.

We'll make this part of the record, No. 5. Okay. Now, was this ever executed? Was this ever --

I'm not sure if it was executed, but it continues to show that everybody will recognize a memorandum of understanding, including District Council 33, and --

Just, again, for the record, I'm going to make this real quick. Just what Mr. Davis is referring to I want to read into the record. "The FJD and the City of Philadelphia shall meet with 66 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 representatives of AFSCME District Council 33 and AFSCME District 47 with the intent of exploring the feasibility of negotiating a collective bargaining agreement facilitating the representation for collective bargaining purposes by DC 33 and 47 of the former Clerk of Quarter Sessions employees." I'll get copies of all this and we'll make it part of the record.

Thank you. On behalf of District Council 33, thank you for the hearings.

Thank you all for coming. I got one other witness on the record for this one. That's the Committee of Seventy. And, Ms. Kaplan, if I can say while you're coming up, we have your testimony already. I would respectfully -- because, again, I don't want to get off on the other issues here today. We got other bills. We have 67 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 people waiting a long time. You mention some other issues that, quite frankly, are not directly with the Clerk of Quarter Sessions. I'd appreciate it if we could just talk about the Quarter Sessions court. If there's issues that come up later, we'll talk about that if and when a bill is before us. Thank you.

Thank you, Chairman. I will do that. I will just simply say that the Committee of Seventy supports the bill to abolish an independently elected Clerk of Quarter Sessions.

Thank you.

Thank you.

Councilman, did you want to say --

Good morning, Ms. Kaplan. Thank you, Mr. Chairman. In your written testimony -- 68 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

I was trying to avoid that.

I'd like to just say for the record that Councilman Goode is saying this, not me.

"Our larger, and far more significant, objective was to use the elimination of these offices as a springboard for taking a hard look at their various functions with an eye toward adopting efficiencies and lowering costs." It says "take a hard look with an eye toward." Was that due diligence done already or not through the reports that were issued by the Committee of Seventy and by PICA?

I'm sorry. He was standing in front of you. Could you --

Was that due diligence done already? I mean, in your written testimony, it says that this was supposed to be a springboard for taking a hard look at their various functions with 69 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 an eye toward adopting efficiencies and lowering costs. Had the due diligence been done already with respect to the reports issued by the Committee of Seventy and by PICA?

I think what we're talking about here, Councilman, is the fact that if, as in this case, we have a transfer that is about to take place, our concern is that it's not just a matter of transferring employees, that it's a good opportunity to take a look at the kind of cost savings that can happen, and, of course, this is true with the Clerk of Quarter Sessions. I heard some of it today, but I have not seen an audit --

My question is, even before we get to what audit was done by FJD, is in calling for the elimination of this particular office, what due diligence was done that shows exactly what efficiencies and cost savings could be achieved?

Well, the actual 70 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 cost savings as far as all of the offices that were mentioned in the Committee of Seventy's "Needless Jobs" report from March 2009, the financial component of that I think was addressed very clearly in PICA's report that came out in November of 2009, but, again, those were just as to those positions.

I'm pretty much asking what was said in those reports.

In that report?

Yeah. What efficiencies --

Thirteen to 15 million dollars in PICA's report.

No. I'm talking about related to the Clerk of Quarter Sessions.

Councilman, I do not recall the exact figure that was in PICA's report.

So you don't know how much money was supposed to be 71 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 saved by eliminating the Clerk of Quarter Sessions?

I know that in our report, Councilman, we talked about the money that would be saved by eliminating --

That's a direct question. Do you know how much money was supposed to be saved by the elimination of the Clerk of Quarter Sessions?

Of that one position?

Yes.

It was the Clerk of the Quarter Sessions' salary and benefits.

And that's it?

I don't know that figure off the top of my head.

And that's all that was supposed to be saved?

But that was just 72 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 from eliminating the position. Our point had to do with other efficiencies that could happen by taking a look at those functions and see if there are other efficiencies.

My question is, what other efficiencies and cost savings were identified? It's a simple question.

The cost savings from eliminating the one position was the salaries and the benefits of that one position.

And that's all that was identified?

You're asking me the direct question having to do with that position, and that is my answer for that position. But I think, as I said --

No. My question is, you're here testifying saying that the Clerk of Quarter Sessions office should go, with an eye toward taking a hard look -- a springboard for 73 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 taking a hard look at various functions with an eye toward adopting efficiencies and lowering costs. And the question was, if there were two reports issued by PICA and the Committee of Seventy, was there any real due diligence done that really identified cost efficiencies and savings, and what were they? It's a fair question.

Yes, it is a fair question, and I don't have the exact figures in front of me. I will certainly send them to this Committee from PICA's report, but there is a difference --

I'm not trying to be smart, but what exactly were you going to offer as testimony, then?

Pardon me?

If it was not really about what cost savings and efficiencies were going to be achieved, then why should it be eliminated?

The office should be eliminated because -- number one, the 74 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 office is in fact eliminated, because all the functions have already been transferred.

I understand that.

But the reason that it should be eliminated was because we did not feel in the case of the Clerk of Quarter Sessions that there was a need to have an elected Clerk of Quarter Sessions, that that position could be part of the First Judicial District, which in fact it has become, and the functions absorbed into the court system, that it did not -- that position did not need to be an independently elected position. So that was -- that was what we were talking about in the report, but as I said in my testimony, what we said has ramifications far beyond eliminating just the six positions we talked about in the report.

So with 75 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 regard to Clerk of Quarter Sessions, it is simply a matter of it not needing to be an elected position, it is really not a matter of significant cost savings and efficiencies?

I think it does go to cost savings, with all due respect, because it does --

But you can't identify any of them right now?

The cost savings? I think Judge Dembe has already talked about some of the cost savings that have happened from absorbing those offices within the court system.

I'm simply talking about Seventy's position on what cost savings and efficiencies were supposed to be achieved. So far you've said the salary and benefits of one elected position.

Well, that's from -- with all due respect, it's a matter -- yes, there are cost savings 76 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 having to do with the salary and the benefits, but there are other future cost savings from absorbing the office into the court system, and those are things that could not be identified until they happen. But if you look at Allegheny County, where a number of elected positions have been eliminated and consolidated, there have been cost savings, and I would suggest that Philadelphia take a look at those examples to see what the cost savings have been.

Well, are you suggesting that we take a look at it or are you suggesting that we eliminate the offices? That's the question I'm asking.

Pardon me? Could you repeat the question?

Are you suggesting that we take a hard look at it or are you suggesting that we eliminate those offices? 77 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

The Committee of Seventy would like to see those elected positions eliminated because we don't think they need to be, as I said, elected positions. The functions --

But you cannot identify any specific cost savings and efficiencies beyond the elected officials' salaries and benefits?

That's what happens when the positions are eliminated, the salary and the benefits --

I understand that, but you cannot identify any cost savings and efficiencies beyond the salaries and benefits of those elected officials?

I can't identify them because they haven't happened yet, but if you look at what's happened in Pittsburgh --

Then how do you know they should happen? 78 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

How do I think they'll happen?

I said how do you know they should happen?

Well, if you look at Pittsburgh, for example, they did happen.

We can't look at Pittsburgh as an example because Pittsburgh is not Philadelphia.

Pittsburgh is not Philadelphia, but I just -- if you look at the private sector --

I'll end here. In your testimony you also say that these elected positions are not accountable to the Mayor and City Council, which is not true, because the Mayor and City Council has budget authority. The Mayor and City Council can in fact set an appropriation level for these functions that reduces it by the amount of the salary and benefits of those elected officials. We could set 79 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 the budget level where we want. And so the Mayor and City Council does in fact have control over the issue of cost savings and efficiencies by setting an appropriation level for the departments.

Well, it's certainly true that Council does have the budgetary reins and can ask questions, but they do --

We actually can decide how much money they get.

Yes, but, again -- and, again, I do not mean to be disrespectful here, but I have been to the budget hearings for the row offices for the last two years, and I would not characterize those as really looking very deeply into the budget.

So what more budget authority would we have if they were not elected positions? We would have the same budget authority we have now.

What would I 80 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 suggest you do?

No. I said we would have exactly the same budget authority whether they're elected positions or not elected positions.

You do have --

At the end of the day, the Mayor and City Council, if the issue is actually cost savings and efficiencies, can set the appropriation level wherever we want.

But I think the issue is that I believe that the holders of the row offices operate relatively on their own. I think that they, in some cases, the Register of Wills, they --

The question is whether this is political or whether it's actually a fiscal issue. If it's a fiscal issue -- and let's discuss it as a fiscal issue. If it's a fiscal issue, then the issue is whether the Mayor and Council already have the authority to set the appropriation level as we see fit and 81 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 where we see appropriate in terms of cost savings and efficiencies.

Yes, you do have that authority, but I do not believe having gone through -- sat here through the last two budget hearings that those were the kind of questions that were asked. I did not hear any of those being asked.

So what's going to change under your plan?

How will it change?

Yes.

Can I give an example?

Absolutely, if it's a Philadelphia example.

Okay. If, for example -- as I said in the testimony, before City Council was scheduled to consider the proposed budget this year for the Clerk of Quarter Sessions, we wrote a letter to City Council urging 82 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 them to halt fundings until it was clear that the savings were identified and a credible plan was in place for improving the services that were formerly handled by the Clerk staff.

I'm talking about the future. Give me an example of what would happen under your plan.

What would happen under the plan?

In the future under your plan.

Perhaps if there were a plan for how the employees were going to be used, maybe all the employees would not have transferred over to the --

I'm asking about the future under your plan what you envision would be different.

If the Sheriff, for example --

I'm talking about the Clerk of Quarter Sessions.

For the Clerk of 83 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Quarter Sessions? I'm not within the court system. I don't know what kind of efficiencies could be realized, but I believe that Mr. Gillison and --

So you're assuming that the President Judge would come in and ask for more money or less money under your plan?

She might. I think if there -- I mean, people don't tend to ask for less money, but I believe if there were a --

So I'm trying to figure out how your plan changes anything in terms of cost savings and efficiencies.

Because I think if the funding had been withheld with the idea that you --

I'm talking about the future. Things change and --

Well, maybe you have another budget --

Things 84 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 change as you want them to change. We have Fiscal Year '12 budget. Things you want to happen in the Clerk of Quarter Sessions happen in terms of abolishment, transfer of duties and responsibilities. What changes in terms of the budget process?

Well, maybe as you come up to the budget process this coming year, you'll have an opportunity to talk to the First Judicial District about the efficiencies that have occurred, the cost savings that have occurred from the absorption of the transfer of the former Clerk of Quarter Sessions employees.

And the First Judicial District is not independently elected as well?

They are.

So what changes under your plan?

What changed is that the Clerk of Quarter Sessions, assuming this bill passes, will not be an 85 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 independently elected office.

I'm just asking the process by which you achieve savings and efficiencies and how that relates to the budget process and what changes under your plan. There doesn't really seem to be a real answer for that, which is why I pulled out the part of your testimony where it says a springboard for taking a hard look with an eye toward, which doesn't sound like a lot of due diligence has been done, and I think I've proven that by this exchange today. Thank you, Mr. Chairman.

Thank you, Councilman. Any other questions, comments? (No response.)

Seeing none, thank you. Anybody else to testify on this bill regarding the Quarter Sessions Court? 86 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 (No response.)

Seeing none, Ms. Marconi, could you please read the title of the other bill that we are considering today. We finally got to it.

100487, an ordinance amending Chapter 2-200 of The Philadelphia Code, entitled "Recording of Deeds," by modifying the requirements for the recording of deeds, providing for certain fees and making certain technical changes, all under certain terms and conditions.

Thank you. I think we know what this bill 18 is about. We've visited this issue. I'd just like to make a quick statement. Mr. Grosik, if you could come to the witness stand, you'll be our first witness. (Witness approached witness table.)

First, I 87 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 would like to acknowledge Records Commissioner Decker for implementing some policies to protect homeowners under the law that we passed back in 2008, which I sponsored. Unfortunately, those reforms have not gone far enough and unsuspecting homeowners are still having their homes stolen, because a significant number of fraudulent deeds are still being recorded. Hundreds, if not more, have had their homes stolen because of these filings. The time and costs for these people -- and I think this is the most important thing -- who have had their homes stolen to get them back is mind boggling. It costs thousands of dollars and can take over a year to get what should never have been taken from you to start with. The most logical approach, what this bill takes, is not to allow the deeds to be filed. And I know we're going to hear issues about state law, but 88 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 other counties have figured their way around this and we need to figure something out too, because this is just ridiculous that we keep -- that this keeps happening. And at some point, I'm going to talk about another county who seems to have figured it out, but I want to get into the testimony, and I've asked -- I'm going to kind of reverse what we do a lot. I'm going to have Steven Grosik, who is a prime example of why we need this bill. Mr. Grosik, if you could identify yourself for the record and then just as briefly as you can, because we have a lot of testimony, kind of just go over what your problem has been over the last year. I know my office has been real involved with you, just so we give a sort of framework of this thing. And just for the record, the next testimony will come from the District Attorney's Office and if Dina Schlossberg is here, from her. 89 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 So Mr. Grosik.

Hello. My name is Steven Grosik. I'm here because I'm a victim of property theft. It all started around October of 2009. I was notified by the City that the deed to my property was changed. It was a big surprise, of course. So I contacted them, and they gave me a copy of the deed. I came over here for it. And the first thing I see is that my property was taken without even using my name. They used the previous property owner, who I bought the property from, on my deed, which is a real big mistake. The notary seal on the deed also was expired at the time that they did it, and then the person who actually took my property, which is a person named Anthony Mitchell, he uses a non-existent contact address on the deed also. So it's been very frustrating just trying to correct these mistakes that are just so obvious that -- it's 90 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 been frustrating. And I contacted some lawyers, and they told me it would cost anywhere from $5,000 to $10,000 to take on my particular case. And right now I'm still in the process of trying to get the action to quiet title, which already has cost me $343 just to file it, and I'm already almost a year into this and it's still not finished.

And I think one of the things I want to note, that Mr. Grosik has a little bit more wherewithal than maybe some other people to be able to try to find their way through this mass, and it's still taken over a year for something that was as simple as checking to see that the latest deed was not in the name of the man who supposedly sold it; am I right? Is that basically it?

Yeah.

So a simple check to see that that was not the case could have saved you a whole lot of 91 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 time and money.

Extremely so, yes. I was so surprised when -- to find out that they took my property without even using my name, that's not even close to being right.

It seems that way to me. Any questions or comments from members of the Committee? (No response.)

Thank you. I mean, I wanted you to come up here first. Again, for the record, I could parade and Councilwoman Sanchez who is here, who is the co-sponsor of this latest bill, I know could parade a lot of people up here today. We don't want to take up the Council's time and the Committee's time, but I just wanted to give one example of what this is all about and why we need to do something. And also I want for the record to note that Councilman Green, a member 92 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 of this Committee, is also here. Also just to put on the record -- and I don't want to go back to the last bill. As Councilman Goode said, Allegheny County is different from Philadelphia County, but in this case I'm going to use an example to show how Allegheny County has gotten somewhat creative in trying to figure out why fraudulent deeds should not be filed. And I won't read the whole letter. It's on Allegheny County's letterhead, Dan Onorato, Chief Executive. It's signed by Valerie Roberts, Deputy Manager. I'll just read this one paragraph, which I think is key. "The goal of certification of deeds" -- this is from Allegheny County -- was to," in caps, "INSURE ACCURATE PROPERTY RECORDS for the county database and title search purposes. In other words, good deeds were recorded on the front end and not rejected in the back end after recording, for faults on the deed. We have no more recording of 93 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 bad deeds." Now, that sounds real simple, and Allegheny County, the second largest county in the state, has figured it out. And it seems like Philadelphia has worked real hard in trying to find out why we can't do it, and we'll hear from some other testimony to, I think, back that case up and why we can do it. Are there any other questions or comments for Mr. Grosik? (No response.)

I appreciate your time. I know you had to sit here and listen to stuff that probably didn't pertain to you, but I appreciate the time in you coming down and the tenacity you've shown in trying to get something that should have been never taken from you from the get-go.

Thanks for your help for all this, too. Hopefully you guys will be able to write some rules that this won't happen to anybody else in 94 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Philadelphia.

We're trying, and I hope we get cooperation from the other branch of government, sir.

Thank you.

Thank you. Lisa Caulfield or whoever else is here from the District Attorney's Office, and if Ms. Schlossberg is here too, maybe she can come up also. I didn't see you over there, Dina, if you could come up, too. (Witnesses approached witness table.)

Hi. Good morning. Identify yourself for the record and proceed, Ms. Caulfield, please.

Good morning, Councilman Greenlee, members of the Law and Government Committee. My name is Lisa Caulfield. I'm currently the Chief of the Economic Crime Unit over at the 95 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Philadelphia DA's Office. I've been a prosecutor for years and I've been 4 prosecuting solely economic crimes for 5 the last seven. I'm here on behalf of 6 District Attorney Seth Williams, and we 7 at the office very much appreciate the 8 opportunity to discuss with you the 9 problems associated with house stealing 10 or fraudulent conveyancing. 11 We're very appreciative of your 12 efforts to help protect victims from 13 these fraudulent conveyances. At its 14 core, the issue is about protecting 15 victims from criminals who have no regard for those -- for the houses they steal or for those for which they sell stolen houses. It is incumbent on us together to identify ways to alleviate this problem, and we are incredibly pleased that you, Councilman Greenlee, Councilman Sanchez and others, have been working diligently on behalf of victims in Philadelphia. We support your efforts to 96 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 attempt to institute change. We can look toward our colleagues in Allegheny County who have put into place requirements that deeds can be rejected if the name of the grantor and the grantee does not match. So what we're trying to accomplish is to replicate common sense best practices in place in other jurisdictions. What is important is that deeds where the names do not match are not recorded. Now, granted, there are many situations where the forged deed victim, it takes place where there's not an issue of names not matching. It's simply a forgery of the name that does match. In fact, consideration should be given to putting the burden on the party who is coming into the Department of Records with the name that doesn't match to straighten that matter out. I'm not here to discuss what the Department of Records can and cannot do given the current legal restrictions, but I will discuss the impact of change, 97 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 if they're permitted to do so, on investigating and potentially preventing fraudulent conveyances. Gentlemen and Councilwoman Sanchez, rather than read my entire testimony verbatim, especially given, for the most part, a lot of it is known to Council and was testified to previously in 2008 when we first reviewed this ordinance, if permitted by you, I'd like to somewhat summarize.

Please. We'd prefer that. By the way, I appreciate all that you have done in this field. You've worked very hard on this.

My pleasure. Thank you very much. It's important to know how the forged deed problem takes place, and as it was five years ago, it's still very similar. The individual who is planning on stealing a property from someone and forging a deed targets certain properties. They can do that either 98 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 physically, visually by driving around the neighborhood and looking for something that appears abandoned or vacant. They have friends out in the neighborhoods who can refer them to other houses, and they do their homework. They go and they check back taxes, back water bills, and if something piles up, that's a key target to fall subject to a forged deed. Coincidentally, it's also a key target for a house that could get put up for sheriff's sale. So there are two separate entities that are looking at the same type of houses. The individuals then either conspire with a notary or use a notary or, as I discuss at the very end of my testimony, in the recent past we're seeing the role of the notary as not even an issue anymore. They can go to a notary with someone posing as an owner. They can go to a notary and pretend they have a friend who is owner. They can ask for favors. The notary themselves could 99 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 be completely complicit and just sign off, or as we're seeing more and more, the notaries themselves are being victimized. Their stamps are being counterfeited, their notary stamp and seal is being cut and pasted from legitimate deeds or documents onto an illegitimate deed. Once that deed is recorded, we have our first victim, and then that individual can then go on to sell that property to someone else, where we have a second victim, which we call a buyer victim. Most of these victims, both owner victims and buyer victims, are very unsophisticated in the world of real estate. You'll see very little instance of title insurance or even an inquiry at a local real estate office or a title insurance company. We're not talking about a settlement table. Often these transactions take place on the street. As law enforcement, our biggest burdens and -- hurdles, rather, is to 100 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 identify the parties to this. And we go to the notary in a legitimate situation and we go to the Department of Records to help us form our evidence so that we can continue to investigate and prosecute these individuals. The Commissioner's office, as yourself, Councilman Greenlee, has already suggested, has taken a great many measures, and I am confident from my working relationship with the Commissioner herself, that if given the leeway to, she would institute even more measures to try and prevent and assist law enforcement with this. We have the notification letter. The notification letter goes out, and often that is what precipitates a victim from calling the police or my office. Unfortunately, the notification records don't always make it to the true owner. They'll either go to a house where the true owner no longer lives or that person is deceased. They could go to the house at issue, in which case the 101 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 perpetrator might get the letter. And, I mean, ideally, if it were permitted and a deed could be put on hold, that notification letter going out first would save a great deal, not only name match issues but all of the individuals who have had their names forged.

And, Ms. Caulfield, if I can just interrupt for one second, I think the key, though, what you said is that when that letter goes out, by that deed already being filed, the things have -- the bad stuff has already started spinning.

Once the deed is recorded, the damage is done and it can never be removed.

And that means you guys have to get involved or might have to get involved. If that deed was not recorded, you guys could save a lot of time and deal with other things, right, because it would never get to that point? 102 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

I would agree with that. And one other thing as well, I mean, even also prior to even recording the actual piece of paper, an individual could have been victimized, because as they're out on the street exchanging money and drawing up a document, the money is already gone. So if that deed even was not recorded, that person could take off, and the money would still be gone. But, yes, to a definite extent, that would save the problem. The other safeguards that have been instituted are the taking of photographs, the sign-in log, the copying of the photo ID's. All of that is essential to identifying people. There are a few steps that would be helpful along the way. The Commonwealth strongly supports the concept of having the actual grantee on the deed come in in a walk-in situation and record that deed themselves. At this point, anybody can walk in off the street 103 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 with no relation to the property or the parties involved and record the deed, using whatever type of identification that may be fraudulent. If the actual grantee was required to record that deed and then provide identification, sign the log, the number of possible suspects would be diminished extraordinarily. One other suggestion on the transfer tax certifications, for the most part, we do see them filled in completely. However, the parties are able to hide upon duplicate information on the transfer tax. You'll also see the grantor name, which of course is usually a forgery, and the address of the house at issue. You'll see the buyer, whether they be an innocent victim buyer or a perpetrator, using that same exact information. The leads go nowhere from that point. And then, of course, we talked about the notaries at length. If we could do something about the notaries 104 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 that are complicit -- and, again, we're seeing a situation where notaries themselves are being more and more victimized -- that would stop this from happening even before anybody walks in to City Hall and tries to record it. If the notaries had more requirements on them to cause them to stay out of the situation and feel that it is too much trouble for them to get involved with, then it would stop right away. So I thank you again for reading the testimony and listening to my few verbal comments. We're happy to continue to work with the Task Force, locally, statewide, everything we can do to try and help changes in this situation.

Thank you, Ms. Caulfield. And, again, thanks. I know the District Attorney's Office has become even more aggressive in going after these perpetrators, and I think that certainly has helped and sent the 105 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 message. And I also agree -- and I think you've said it a couple times -- that in the perfect world, if the State Legislature could pass some laws that would make it easier for everybody, we'd appreciate that. And I know Representative Manderino for a while was picking it up. I understand Representative Kenyatta Johnson wants to try to pick this up. But I know trying to get stuff through here is tough enough. Get up there, I know is very difficult. I mean, my opinion is, we can't wait. We have to try to do what -- we have to do what we have to do in the interim, like we've done on other problems that has been up here and like Allegheny County and a couple other counties have done. But, again, I appreciate everything you and the District Attorney's Office have done. Any questions or comments?

Thank you. 106 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

Councilwoman Sanchez. I'm sorry.

Yes. Thank you very much. I wanted to know -- and I appreciate Councilman Greenlee's comments that this DA is much more interested in pursuing these. I wanted to know, what additional resources, if any, the DA's Office is focused in so that we can prosecute what we've known for a long time to be some folks who are consistently -- have been consistently stealing some of these deeds? And in particular, this is because of my situation, where we are with the Robert Coyle situation, where we're talking about hundreds of properties. If there's anything that you can report at this point.

Well, I can say at the outset I can't discuss anything that's an open investigation. In terms 107 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 of resources, we do not have any additional resources. In fact, the budget situation has reduced my unit in the recent past.

So you've gone from how many to how many?

I only have four detectives now. I had six.

Six before? That's an important piece for us to know, because we're always debating budgets and priorities, and this is an important matter to us and I want to make sure that the Committee is aware of it and I'm aware of it so as we enter another budget discussion, we talk about this. This is, as Councilman Greenlee, who has been leading this charge for a long time, for many people this is their only valuable asset, and the fact that we have allowed hundreds and hundreds of these cases to happen, we have to take some responsibility in 108 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 helping correct them.

Thank you.

Thank you.

Thank you, Councilwoman. I'm glad you brought up the whole economic thing, because obviously cost of things are important everywhere. Is there any way to estimate -- I know you probably can't do it off the top of your head, but if you could get it -- like how much in manpower and time and eventually money that has been spent dealing with fraudulent deed issues and stolen property issues?

I don't think I would be able to estimate that at all. I can tell you that these cases are unbelievably time consuming. The case that resulted in successful convictions early this year was the result of an investigation that took approximately four years. It started out with a number 109 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 of parties. It grew and it grew. We took it in front of the grand jury. The grand jury testimony took close to a year. We brought returns on 6 individuals. Fourteen of those 15 7 individuals have been successfully 8 prosecuted. There were at least 82 9 properties involved in that one case. 10 The number of victims would have been 11 probably somewhere between 130 and 160 12 given that there are often two victims 13 for a property. That trial took six 14 weeks of this Commonwealth's time and all 15 of those jurors. My desk right now is covered in deeds, approximately 75 houses worth, encompassing different investigations, and those of my five DA's have similar-looking desks.

And I would dare say that Allegheny County, since they implemented their thing, maybe their DA's don't have to be as busy on that. I can't prove that for the record, 110 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 but I could take an intelligent guess.

That I don't know, sir. I'm born and raised in Philadelphia.

That was a comment, not a question. All right. Again, thank you. Any other questions? Councilwoman Sanchez.

What is the number of cases that you currently have?

The number of cases I -- I don't have a number of that. I'm just thinking about my own desk and certain --

You said 7,500?

No, no, no; 75 houses probably make up the piles that are sitting on my desk right now.

Okay. We'll have to ask CLS and then we'll do the addition. 111 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

Just for the record, I think when Ms. Caulfield alludes to two victims per house, I think a lot of people understand, oftentimes these thieves then sell the house to an unsuspecting person, so you have two. And we've been in court many times, and oftentimes the court -- and maybe this is the best they can do -- basically says to the two victims, Work it out, guys. And that's a tough thing to put on people. And, again, I'm a broken record, but we never should have to get to that point. Okay. Thank you.

Thank you.

Ms. Schlossberg, please. And then after her, Mr. Seward of HAPCO, and then the folks from VIP and CLS will be after that. Good morning, Ms. Schlossberg. I think it's still morning. Just about.

Good morning. My name is Dina Schlossberg and I am an attorney with High Swartz, which is 112 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 located in Norristown. I want to thank Councilman Greenlee and Councilwoman Sanchez and the other members of the Committee on Law and Government for allowing me to testify today. My background is both as an attorney, as a law professor, as a former Legal Services attorney and as an active member who has done pro bono cases on quiet title and other kinds of pro bono cases, and I have an active practice here in the City of Philadelphia. I have seen firsthand how financially challenging and emotionally gut-wrenching it is for clients to have to unravel a fraudulent conveyance case. And I too am not going to read my testimony, but I do want to give you one brief example that actually ties in with our first testifier's case, because we have the same fraudulent fraudulator, as Stefanie Seldin and I used to call them. So let me just give you one quick example. I had represented a woman 113 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 who wished -- she wanted to acquire the vacant lot next to her house. The house had been vacant for almost years. It 5 wasn't quite ready for adverse 6 possession, but close enough. She had 7 taken care of this property for years. 8 The property came up and was 9 recognized and she saw that it was on the 10 sheriff's sale list, and she started to 11 investigate it. It turned out that the 12 property had been owned by a couple. 13 They died, respectively, in 1981. The 14 man, his name was Cleo -- I mean Grant, 15 and his wife, Cleo, died in 1988. 16 The property was never properly 17 probated. And I want to say that 18 fraudulent conveyance cases are made more 19 complicated -- they complicate the 20 already complicated tangled title cases that we have that are rampant as well in the City of Philadelphia. When you have a fraudulent conveyance on top of a case that wasn't properly probated or that is what we call a case that's going to end 114 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 up with a tangled title outcome, it just makes it more likely that a pro bono attorney is going to look at it and say it's too much work or it's going to exacerbate an already complicated matter. So in my case, we had property owners who had died in '81 and '88. In '88, the property was never properly probated, and the property was really not under the active control or direction of anyone, and as the woman from the District Attorney's Office just said, the perps know when the properties are sort of not under anybody's care. This property fell victim to a fraud, and in 2006, a deed was recorded with the Philadelphia Recorder of Deeds purporting to show that Grant Madison, who died in 1981, and Cleo Madison, who died in 1988, sold the property to a man named Hye Young. This was years after 23 the death of Grant and 17 years after the 24 death of Cleo. My client decided to undertake 115 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 this case and to unravel all of the mess that came with it so that she could get -- she could have bought the property at sheriff's sale and she chose not to. She said she wanted to find who the rightful heirs were, untangle the tangled title and have the property reverted to the parties who had the rightful heirs to the property and then acquire it from them. As we were going through some of those procedures, the property was flipped again. The person who bought it in 2006 was a guy by the name of Hye Young. The person who bought it in 2009 was the same Anthony Mitchell who went after Mr. Grosik's house. And actually Mr. Grosik had contacted our office, and we've talked to many people now who have been victims of Mr. Mitchell.

In the end, we filed a quiet title action on behalf -- in the end, we were able to have the decedent, the heirs of the people who had died, Grant and 116 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Cleo, established as the administrator of the estate. We filed a quiet title action on their behalf, and in 2010, just about two or three months ago, we had the quiet title action satisfied in the name of the Estate of Cleo Madison. The entire procedure took 9 months. If I showed you the court 10 records, you would see, I don't know, 11 three or four separate independent 12 actions, 14 different motions. We had to 13 hire private investigators to find this 14 Hye Young, who doesn't even exist, and it cost my client upward of $20,000 in legal fees. And I have to tell you that she was sort of getting kind of -- I mean, she started calling me, to be frank, on Sundays saying, I can no longer afford this, this is getting out of control. And we comped probably $10,000 worth of time, because we were in it, we wanted her to get the property back. And it was quite a joyous day on the day that the administrator of the estate received back 117 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 the property and then sold it to my client, and for a legitimate price.

How long was that process?

It was well over months. Well over 14 months. 8 And if you saw the deed from Hye Young 9 when he acquired the property, the 10 signatures of the now dead people were 11 signatures of looked like teenage girls. 12 No matter how you looked at it, you would 13 notice that the deed from the time Grant 14 and Cleo bought the property in 1976, they were already -- they weren't kids. If you looked at the signatures alone, you would indicate that they were not grown-ups. The signature alone made it look like it was fraudulent. I think that my client had some resources and had some ability to pay for this kind of action. Most people do not have the resources to pay for this kind of action. So I'm here to say that I 118 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 support the bill and I support any action that the Committee can take and City Council can take to slow down the bad guys from being able to record these deeds. You'll see in my written testimony that my concern was over the fee that was going to be assigned here for people who are buying properties when there was no title insurance. I see that fee has been removed, so I want to thank the Committee as well, Councilman Greenlee and Councilwoman Sanchez, for recognizing that that might have had a punitive effect on certain people. So I want to just give you a couple comments that I think might be helpful. I understand why you'd want the grantee to come in. The grantee is often the bad guy, and they could -- if they're going to lie on paper, they're going to lie in person. I don't know if that will satisfy anything. Perhaps it will slow down the bad guys, but they can bring in 119 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 false ID.

I guess the short answer to that is, we're at least trying to put an obstacle here.

Right, you're trying to slow them down.

And there's a few who don't have the guts to come in, so if we cut a little bit of that down, we're trying to --

You're trying to slow it down. My concern, there really are legitimate circumstances when grantees are buying property and they're not going to be local, and I'm afraid of the effect on the City by asking people to do something that almost isn't done in most other counties. You'll have to kind of weigh that balance about whether that's a good thing or a bad thing. I would hate to see the City get sort of the same bad flack over this as they got over the blogging tax.

I think 120 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 we have a better argument on that.

You have a much better argument than the blogging tax. One idea might be is, some people are suggesting that you should have the grantor come in. I think that that's a challenge, because once the grants are signed, the deed -- again, if it's legitimate, it doesn't really have a lot of incentive. But one might be to require if there's no title insurance, lawyer, et cetera, that you have to produce photo ID of both parties. Again, that doesn't stop a fraudulent conveyance, but it certainly helps the purchaser -- sorry; certainly helps the legitimate property owner if there in fact has been a conveyance that's fraudulent to be able to confirm that in fact was not them. So you have to show a picture of who the purchaser and the seller might be and record that with the deed. I mean, in my case, for instance, 121 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 this elusive Hye Young who acquired the property, we never located him. I mean, he then sold the property to Anthony Mitchell. But we, after months of 6 hiring private investigators, posting, we 7 had to go back three times to get 8 service -- rights to service of process 9 other than by paper. We could never 10 locate him. His addresses were all 11 fraudulent. If we had to have at least a 12 photo ID, maybe we would have -- I don't 13 know what we would have had, but I think 14 it could have helped. I did have one other comment. I think that's it. So I think the bill itself is very helpful. I think if you can get a certification that is legitimate. And I really applaud also the notice that would go to grantees when they acquire a property if there's in fact no title insurance. And I will say that I think that most of the title insurance agent world is very legal and authentic and 122 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 legitimate. It's not necessarily 100 percent of a way to cure the problem.

I certainly agree. And, look, any law we pass probably doesn't catch everything, but I think clearly now there is way too many that are going through, so at least we're trying to deal with what we can in a reasonable manner. And you mentioned slowing down the process. I think that's why we have in here to exclude from a lot of these regulations ones that do come through title insurance -- and we're going to add the word "title agent," I think, because I understand that might have been a problem -- and income through real estate firms and lawyers, because we found that that's not the predominant amount of problem. Could there be a crook there somewhere? Sure. But we found most of it is in this one-on-one stuff, and that's why we're concentrating on that and that's why we're pretty confident, despite some of the concerns 123 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 raised, that it will not slow the process down very much, because you're not talking about the majority of these things, but you're talking about trying to attack the problem, where the problem exists. And I think that's what we're trying to do. And, again, there's no perfect solution to this. That's why the DA exists, because people break the law, but if we can cut it down a little bit or I think, in my opinion, significantly, if we could get the cooperation, I think it would have a tremendous effect on people.

One other party who you might want to try to get as a cooperator in all this process is Linebarger's office, because, as you know, the City of Philadelphia sold a lot of their liens to Linebarger's. And then our experience, when the property was -- particularly in this case, when the property was in sheriff's sale, there was no negotiating. We would say, Wait a 124 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 minute, this was a fraudulent conveyance, do you understand that this was flipped now twice. You take this to sheriff's sale, the funds that are going to be -- if there's any overture after what's due to Linebarger, who is going to get those funds? It can't be the family who is legitimate heirs to the property, because the property wasn't properly probated. It's going to go to these bad guys or to nobody. And they wouldn't -- they didn't really want to play. They didn't want to help cooperate.

I think we can help there.

It's not just the Sheriff's Office, but it's Linebarger, who owns a whole lot of these liens.

You're right. Councilwoman.

I wanted to add in terms of the insult to injury 125 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 in that, the other thing that we're adding is to have a letter go out to the address of the property if it's different from the grantee and the grantor, because in the case of the Robert Coyle situation, what we found is people have purchase agreements, the houses were being sold and flipped and flipped, and the people who thought they were buying the house were not notified. So that language is being added on here. And just to your point, because we have a particular case that we're aware of where the property went to sheriff's sale, the Sheriff's Office was notified that it was a fraudulent deed, they sold the property, and then our Law Department proceeded to pay the person who sold the property's bills off on the lien, even though both the Sheriff's Office and the Law Department knew that it was illegally transferred. So it gets worse; it doesn't get better.

And I know we 126 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 have to proceed, but in my client's case, we ended up paying the back taxes for 2006 to 2009 when they were owned by a fraudulent owner.

No, no. 7 In this particular case that I'm speaking to, that was the case. The person who sold the property's bad bills, their bills were paid and not the victim's bills, and the City and the Sheriff's Office were aware of it, and now the City is trying to say, Well, it's too bad, you got to take the rest, whatever is left.

That's crazy.

There's a million stories.

There's a million stories. But thank you very much for the opportunity to testify.

Thank you, Ms. Schlossberg. Thank you for all you do in helping people in these matters. I appreciate it.

Thank you. 127 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

Thank you. Mr. Seward from HAPCO, please. And after that, it will be Stefanie Seldin and George Gould. We'll get through this eventually, guys. (Witnesses approached witness table.)

Good morning. It's 11:59. We got you in in the morning, too. Could you identify yourself for the record and proceed, please.

Good morning, Mr. Councilman. I'm Victor H. Pinckney, Sr. I'm the President of HAPCO. I didn't think I was going to have time to make it, but I was able to get here today. I'd like to thank you, Councilwoman Sanchez and the Law and Government Committee, for allowing us to speak, and I'd like to also say thank you to Councilwoman Sanchez. I was at the conference you 128 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 were at yesterday, and you're one of the few people who really understand what is necessary for dealing with blighted property. I'll turn it over to Mr. Seward.

My name is Willie Seward, Vice-President of HAPCO. Privately I've been a real estate broker for more than 40 years, so what we're talking about here --

You know a little bit about.

You'll end up hearing me disagree with some of the points. Not with this bill per se, but some of the things will be a little different. HAPCO, the Homeowners Association of Philadelphia, for the ones that don't know who HAPCO is, represents several thousand Philadelphia property owners, primarily low- and moderate-income residential homes. 129 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Members of HAPCO deal regularly in the transfer of real estate and the recording of deeds. While this Committee is aware that HAPCO always seeks to streamline City processes and not create overly burdensome bureaucracy filing requirements, we appear today to express our support for this Bill 100487. While the Committee is aware that HAPCO always seeks to streamline City process -- I'm sorry. The incidence of fraudulent recorded deeds has become overwhelming, and HAPCO is appreciative that Councilmembers Greenlee and Sanchez have obviously recognized the problems and proposed corrective action. Both as legal counsel to HAPCO and as an attorney in private practice, Mr. Zaslow has been involved in a number of court cases where innocent owners of properties found that some unauthorized person has recorded a fraudulent deed. 130 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 The legal expense to unravel the fraud is significant, and the many months lost in court proceedings is truly burdensome. The forgery of signatures has been aided and abetted by unscrupulous notary public. Inquiries to the appropriate department of the Commonwealth of Pennsylvania as to the discipline of a notary produces uniformly disappointing results. The action of the notaries is failing to either properly ascertain the true identity of the signatory to a legal document or their participation directly in fraud should be subject of further review. We, of course, are aware that the District Attorney's Office is involved in these matters, and we would encourage a further examination of the role in this fraudulent activity by the notaries involved. The proposal in Bill 100487 to subject deeds to a higher level of security when the title insurance has not 131 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 been obtained may contribute toward solving the fraud from which the City is suffering. We should note, however, that in many cases where the would-be perpetrator of a fraud ascertains that a house appears to be abandoned often due to the death of the owner without interested heirs, meaning that the heirs are not interested, they care less and that's it. The mere appearance of the buyer at the Recorder of Deeds and his acknowledgment that he has not obtained title insurance may not be sufficient. In such a case when there is no title insurance to truly solve the problem, it may in fact be necessary for the seller or a duly authorized representative to appear at the Recorder's Office with proper identification. We would be remiss if we did not draw to the attention of the Committee our concern over the very expensive price tag for recording of 132 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 deeds in the City of Philadelphia. The surrounding counties, for example. However, again, HAPCO again thanks the members of Council for undertaking the legislation and letting us appear here. I want to look at this bill, and it's something that we -- that you have here in the recording, and that is No. 4.

What are you on, sir?

Your bill, No. 15 3 -, No. 4.

Okay.

This is what you propose. "Any deed presented for recording, where title insurance has not been obtained insuring the marketability of the title to the real estate identified therein, shall be presented to the Department, in person, by the grantee named in such deed." I want everybody to think about 133 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 something. The grantee is the crook. The grantor or representatives of the grantor should be the one that appear. The grantee has prepared his proper papers. He's already probably signed the deed forge. He done everything. So what we would like to see, if not both, we do believe that the grantor is the person that should show up, because legally that property before it's disturbed is in the grantor's name that it is original and true. Let a representative of that owner be the first one to be there to transfer the deed. As I said, I want you to think about it, and we believe we are right. I will say personally over 40 years, I know I'm right. The grantee is the crook. He is the one that want that property in somebody's name that is not correct.

Well, again, I understand what you're saying and as we had discussed with Ms. Schlossberg, I think one of the 134 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 reasons we have the grantee in there is because we're trying to cut down on some of the people coming in there, that some of them, if they have to come in person -- before they could just send it through the mail and it was easier to be a crook, if you will. So we were trying to, again, put these obstacles. I understand about the grantor. I guess we'd have to think as, again, Ms. Schlossberg said, the grantor oftentimes once they sign the thing there, I don't know how much we can force them to come in.

Every grantor I know, if he want to sell his property, this is the law. If he want to sell his property, he will come down City Hall. Although it could be a legitimate deal naturally, you know, but we're talking about protecting the one that's not in the --

I understand. I agree, it's something to 135 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 think about. I understand. Any other -- and I just want to add, when you say about HAPCO always seeks to streamline City processes, I would argue in the long run we are streamlining this, because we're taking out all these people that then have to go through that whole court procedure and all. So for, I think, a small amount of time for maybe a group of people, we're saving a subgroup of that people a tremendous amount of time. So I don't think we're really even creating in any way an overly burdensome process, and that's why we took out, as I say before, the title insurance companies, the lawyers, the real estate firms, because, again, we didn't find that they would be the problem. Councilman Green, you had a question?

Yes.

Okay. Councilman Green. 136 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

Thank you, Mr. Chairman. I'm just curious as to what you thought of Ms. Schlossberg's idea, which I thought was a decent one, which was requiring a state-authorized picture ID, even if the person coming in with it that has the picture of a person and the name, a copy of that be brought and that could be filed with the property record so that you'd have some identification, like a license, for both the grantor and grantee, if you thought that would help.

Let me answer this. I feel it's a good idea, but I would say both parties, the parties there, their picture ID, not to bringing somebody else's, actually their picture ID, even if the parties could -- what I'm looking for is that they'll send someone. At least you have -- they send an innocent party, say, Do me this favor. But at least you have a trail.

Right. And 137 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 I think the purpose of the grantee going just to -- and I understand what you're saying about the grantor completely. The purpose of the grantee going is that it is usually that person committing the crime. That person has to have their state-authorized ID with them, and there are cameras there. We've got them. And that should be a major deterrent that doesn't exist today.

You're going to take photos of all individuals that come in, you said, or what?

I think we do, right?

Yeah. They do that now, yes. They do that now. But, again, they still file the deed even if there's a problem. We're back to that again.

I think they are checking them now. I think the issue is going back, and I think VIP will have an example of checking that with the 138 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 actual ownership. So people can have an ID, but they're not checking it.

Right. Got you. And, by the way, you're right, notaries or the fraudulent notaries are a big problem here. As much as I'd like to regulate them too, that's clearly the state, so I'm not going to go crazy today and try to do something I know we can't do. But you're absolutely right, and I understand that that is an issue that is being looked into in Harrisburg and they're going through the process up there. But I agree with you, notaries are a big issue in this whole matter.

All right. Thank you very much.

I think -- and, again, it will be up to the Committee. I mean, my desire today -- we have some amendments to do already -- is to get the bill out of Committee, and certainly we can have more conversation. 139 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 If we think there's a couple more things to add, we certainly can do that in the interim before we bring the bill before the whole Committee. So we'll certainly take your opinions and suggestions into note. Okay?

Okay.

Thank you very much.

Thank you, Councilman. Thank you for your time.

Sure. Thank you for coming.

The grantee is the crook.

Ms. Seldin and Mr. Gould, please. And I remind everybody we have another committee hearing at o'clock, so as much as we can get through this as quickly as possible, I'd appreciate it. And I think you both know we have offered some amendments to deal with your concerns. 140 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 (Witnesses approached witness table.)

We do, and we appreciate that.

Very good. Please identify yourself for the record and proceed.

Good afternoon. My name is Stefanie Fleischer Seldin and I'm the Managing Attorney at Philadelphia VIP.

And my name is George Gould. I'm the Managing Attorney for Housing and Energy at Community Legal Services.

Philadelphia VIP provides free legal services to the poor through pro bono attorneys. First, I'd like to start off by thanking Councilman Greenlee and Councilwoman Quinones-Sanchez for the opportunity to meet with George and myself to go over some suggested changes, and, of course, we are grateful that you accepted most of 141 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 our changes, especially the removal of the fees, which would have imposed a large burden on our very low-income clients. And I want to thank the Committee in general for drawing attention to this very serious problem that we have. I will be quick. I recognize that I'm standing between you and your lunch, but I did want to --

If we ever get to that.

But I would be remiss in not thanking Council for their support of VIP in general and in particular for our work in tangled title and the tangled title fund, which pays filing fees, taxes and other fees that are not waivable that our clients face, and that I'm going to speak about those clients a little bit today. Councilwoman Sanchez alluded to the client that I will call Mary Jane, a fraudster, recorded a deed not from Mary 142 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Jane but from Jane Mary to an innocent third party. Yes, the fraudster completely reversed the first and last names and yet this deed was still accepted for recording. Of course now, there are two victims, right? We've got Mary Jane and the innocent third-party purchaser. And Mary Jane will now have to go and seek legal services, if not through -- if they're not free, Dina Schlossberg already told you how quite expensive it will be for her to hire an attorney. This Friday, Ed Hayes, who is here today to testify and whose an extraordinary VIP volunteer, will spend two hours explaining to potential volunteers the quiet title process, and then VIP will provide them with a 60-page training manual and a 200-page appendix. So this is not easy to be undone, it is not easy to understand, and it's not easy to recruit volunteers. And we would be ever so grateful not to recruit as many 143 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 volunteers, and I think this bill will go a long way towards doing that. I want to applaud Council for including the waiver of the $200 recording fee for victims of fraudulent conveyance, and I also encourage Council to reach out to President Judge Dembe about the $360 quiet title complaint fee that is also quite expensive, because despite your efforts today, some frauds will clearly slip through and people will be filing those fees. I just want to take a minute to mention what happens to the innocent third-party purchaser, if it isn't obvious. They lose all of their money. And it's concern for this third party, which I believe was motivation behind requiring of title insurance or a signed waiver. And I think this waiver is really important, and I understand that there are issues of preemption and I hope that whatever happens, that this waiver form will be instituted by the 144 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Commissioner, because it explains the risk of purchasing a property without title insurance or legal counsel and directs them to free legal services, which I think is critical. So even if a fraud does occur, the consumer is at least informed right away and can take action. Once this bill becomes law, VIP looks forward to working on the exact language of this waiver with Commissioner Joan Decker, who has truly gone above and beyond to help VIP clients whenever asked. So I want to make sure that I recognize the Commissioner's efforts on behalf of our clients. Our main objection to the bill 19 is my fear that just like deeds can be created that are legitimate, so can title insurance. So we've had discussions on that with Councilwoman Sanchez and Councilman Greenlee, but I just want to point out the Councilwoman brought up Robert Coyle, who has duped hundreds of 145 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 mostly poor people in Kensington into believing that they would become homeowners. And, in fact, he had mortgaged those homes for millions of dollars, and now he's not paying that mortgage. So what he did as part of his scheme is create a title insurance company, and the risk of sham still exists. So if not today, if this bill 12 goes forward today, then before it reaches Council, we'd like to work with the Committee on some amendments. And if that's not -- if that doesn't progress, then we'd like to work with Commissioner Decker on ensuring that title insurance agents are truly licensed and that what is presented as title insurance is really truly something that these consumers can count on.

And the only other thing -- I'd like to digress from my testimony a bit -- is just express my outrage that Coyle has not been arrested. S. Attorney's hands now. And I do not understand why, when we have wonderful reporters, Isaiah Thompson from the City Paper, the two Pulitzer Prize-winning reporters from the Daily News, who can discover this evidence, why the FBI, who presumably have even more resources than Isaiah or Wendy Ruderman or Barbara Laker from the Daily News, presumably they could possibly have this gentleman arrested, and I use the term "gentleman" loosely. So now that my rant is over, I do want to thank the Committee for accepting all of the changes that we suggest and for working so hard on this issue. VIP will continue to work on the efforts that the state clearly needs to 147 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 take and that others have already spoken about. And we support this bill and look forward to continued work on that.

Thank you. Thank you. Mr. Gould.

Thank you very much. I will be brief. We fully support Stefanie's comments on the bill. We think the bill 12 is extremely important. This is a problem that has been around for a long time. To some extent, it has gone unabated. The problem continues, and I think this bill is a major step forward. And I especially thank Councilman Greenlee and Councilwoman Quinones-Sanchez for their efforts and the work and the Committee in bringing this bill up for a vote. One of the things I think we all have to recognize -- and, Councilman Greenlee, you said this -- this bill is not an absolute cure-all. 148 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

Sure.

There's still going to be problems and there's still going to be debate, do you do this, do you do that. The bottom line is, we have to do something. It may not be perfect, but we have to move ahead and get something in the law and hopefully it will get enforced and hopefully something will get done. We appreciate and support the changes that are going to be voted on, the amendments to the bill. We had a concern that there could be a problem for low-income persons if there was going to be an added fee if there was no title insurance. That fee has been taken out, and we fully support that. I just want to comment. There was some suggestions possibly having the grantor show up. That, in the abstract, seems like a good idea. There may be some practical problems. And what happens if the grantor simply refuses to 149 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 come? They're out of it. They're done. They may refuse to come. What happens then?

That was my concern, too.

Yeah. The second idea -- and, again, this is, I think -- and Dina Schlossberg suggested it -- was the photo ID. For our clients, there are difficulties, and there's actually a bill pending in the State Legislature which would require photo ID to receive any state benefits. They have difficulties getting photo ID. So while on the one hand we think that's a good idea, there are some possible problems that need to be looked into, because there are a bunch of -- a lot of low-income people in the City who do not have government-issued photo ID's. Having said that, again, we fully support the bill. We think it's a big step in the right direction, and it will do a lot, we believe, to stop this 150 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 very, very bad problem. Thanks.

Thank you. Thank you both for all your efforts and for your working with us on this bill. Thank you. Any questions or comments? (No response.)

Thank you. Mr. Hayes from the Pennsylvania Land Title Association, and then it will be Administrative Commissioner Decker and Mr. Abernathy and anybody else who wants to have fun up here. (Witness approached witness table.)

Good afternoon, sir. It's officially afternoon.

Good afternoon.

Identify yourself for the record and please proceed. 151 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

My name is Edward Hayes. I'm an attorney with Fox Rothschild here in the City. I appreciate the opportunity to address the Committee today. I apologize for there not being written testimony from me, as my retention was late in the day yesterday. Let me provide you with just a little bit of background on my involvement in this industry and with this very problem that hopefully will give you an understanding of where I come from on this. For at least 30 years, my prime focus and my practice has been representing title insurance companies, and I've had the pleasure over the last many years to be appointed as Special Counsel for the Pennsylvania Land Title Association in various matters that they have considered of importance to the industry, including the 1997 lawsuit that we filed against the Department of 152 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Records to force them to comply with state law, resulting in the issuance of a mandamus that precluded the City from adopting its own separate guidelines as to how it was going to deal with records, as well as an action we initiated against the Berks County Recorder of Deeds because of the implementation of separate guidelines in Berks County that were only applicable to Berks County and impacted the ability of deeds and documents to get reported in Berks County, also resulting in a mandamus order. My practice also has had me, as Stefanie Seldin indicated, very much involved with VIP. For the last five years, I have in fact been the prime trainer in the tangled title/quiet title program, which is often directed at dealing with transactions in which fraudulent deeds have been recorded. And what I will tell you, members of the Committee, in my practice as a title insurance attorney, I have had any number 153 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 of matters referred to me over the years where in fact I am retained to represent the ultimate buyer down the road in cases where there is a fraudulent deed in the chain of title, because this is a case where there are a series of victims involved once that deed does get of record. You have the correct owner of the property who is a victim. You have, as in the case I presently have, a young couple who have moved into a house, invested their life savings into it and they've now learned that two deeds back in the chain of title a deceased person had the uncanny ability to be able to sign her name in the City of Philadelphia. That's the second victim. The third victim we have in fact is the title insurance company, because in most of these cases, the way the matter is resolved is through the title insurance company issuing a substantial check in payment to one of the parties in order to get the matter resolved. So I do have 154 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 some personal background with this, some personal background with the industry and believe that based on that, I hope you will take to heart my comments. Despite the fact that this particular bill really indicates the importance of title insurance and despite the fact that the bill also recognizes that the involvement of a title insurance company in a transaction lessens the likelihood that a fraud may exist, I appear here today on behalf of the PLTA to express concerns about this particular bill as it is first or at least initially drafted. I mentioned to your office this morning, Councilman Greenlee, one concern I had about language, in that while it is the intent of the Committee, as I understand it, to exclude all title-insured transactions from this legislation, the language that has in fact been used in this bill does not do so. 155 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487

And we're making the amendment that you suggest.

And that is greatly appreciated, because that will in fact create a situation where this bill will not have a direct effect on deals that come in from title insurance agents. But I do raise a concern -- and I'm not here to argue the law -- that Pennsylvania is based upon a statewide statutory scheme for the recording of documents. It sets the minimum requirements for the recording of documents and mandates, in the opinion of the PLTA, that documents that meet those requirements be recorded. In fact, that is all that the litigation with Commissioner Decker was about in '97 and that the litigation with the Recorder of Deeds in Berks County was about, that there were independent and conflicting requirements that had been imposed by those local recorders that created an impediment to the recording of documents. 156 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 We are concerned that the requirements that have been placed into this bill as it applies to those individuals who are not involved in title insurance transactions, those requirements in fact conflict with the requirements of state law. There is no 9 state law that requires the production of the type of evidence that your bill 11 proposes in this case. And while no one can argue that it does not make sense that this type of proof should be required and while no one can argue that a title insurance company, for example, as a condition of insuring might require that, the statutes do not require it. It is an issue that needs to be addressed, in our opinion, at the state level, and we have concern about the legality of this bill, if enacted, as previously -- or as currently stated. We are more concerned, I believe, in two other aspects. Number one, Commissioner Decker's concern as to 157 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 the impact this bill will have on the operation of her office. I must tell you that since our lawsuit against Commissioner Decker in 1997, I've come to know her very well. I applaud her for the manner in which she is operating her office. I believe she is as conscientious a City official as I have met in 30 years, and she understands fully her need to comply with the law. And when she indicates that the burdens of this bill will affect her ability to comply with the law and her ability to comply with our mandamus order, I raise with you concern. I can't say, Councilman, whether or not it will have the effect that she says it will have. That's for you to decide with her, but if in fact it is going to delay the process of recording in any way, if it in fact is going to impact her ability to comply with the mandamus order in any way, we share -- we hope that you will share our 158 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 concern that that cannot happen. And as I said, I leave that with you, Councilman, to address with the Commissioner as to whether or not that's going to happen. She has indicated in the conversation I had with her that in fact she believes that it is going to have such an impact. And, for example, the mandamus order requires that documents be recorded in the specific order in which they are delivered to the Department of Records for recording. As a result, if any one particular deed becomes the subject of any type of investigation or analysis, technically another deed cannot be recorded in that office until that deed has been recorded or the Commissioner will be in violation of the order issued by Judge Cohen. Now, maybe the process will be so short that it will not have an impact. I can't tell you because I'm not involved in the day-to-day --

Sir, just 159 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 to interrupt, that's what we think. We don't think it will have nearly the impact of slowing down the whole process, because we're not talking about the majority of deeds. I think you know that a large amount of them -- I don't know the percentage that comes in -- it does come through title insurance.

No question.

And nothing will change there. That's the whole point. And I guess -- I don't want to cut you off, but I guess I don't understand. What you said earlier was, we have some legal concerns, but we agree in the essence it may make sense. Why don't we try to make sense?

Councilman, what I said was it makes sense to address this problem.

And that's what we're doing.

What I do not believe makes sense is to address it in a 160 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 way that, in our opinion, violates state law or to address it in a way that creates a problem for the very group of companies; namely, the title insurance companies, that this bill seeks to exclude.

How does it do that?

Let me give you a perfect example, Councilman. If in fact a deed comes in that doesn't meet the requirement of title insurance, it is obligated to then undergo some scrutiny by Commissioner Decker. It may require her to look, as I understand it, at records in not only in her office but to authenticate the validity of articles of incorporation, to authenticate letters of administration that might be issued out of an estate. While that happens, Councilman, for the law to be complied with, no other deed can be recorded, and that includes deeds that come in from my clients, because those deeds will then be 161 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 recorded out of order from the manner in which they came into the office. That is a concern. That is one of the things that was addressed by Judge Cohen in the mandamus order, that the state statute requires that things be recorded in a particular order.

Let me just ask you a question, then. Everything that's brought is supposed to be recorded in this order. What if it's brought and it doesn't have the fee included? There's a fee.

The state statute requires the payment of a fee. It can be rejected for that reason.

It was presented.

But it has to be presented with a fee. The state statute deals with that.

All right. Well --

And, again, I'm not 162 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 here to argue the law with you. I'm here to raise concerns of the --

And my understanding of the law, by the way, is that it really addressed the backlog, and we don't have that now, and this doesn't cause the backlog. Other lawyers tell me other things.

I can assure you --

Eight lawyers, 12 opinions, I don't know.

Having been the lawyer who prosecuted that case, I can tell you at least what my opinion is. Let me raise with you, I guess, my concern that I'm not sure this bill is going to have the effect that you really believe it is. Because, for example, the bill requires in a situation where a deed comes in without title insurance and the deed indicates that the property is being sold by an administrator of the estate of the decedent, that it requires the proof that that particular individual has in 163 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 fact the authority to act on behalf of the decedent. The fact is, from my experience -- and, again, I've had a lot of these cases over the years both for VIP and through my practice -- that's not the way the crooks function. The crooks do not function by attempting to sign a deed which indicates that it is Joe Jones as administrator of the estate of Mary Smith. The crooks simply sign Mary Smith's name to the deed. And under your bill, as presently constituted, if the crook signs the decedent's name and if the crook has a notary who either is complicit with the crook or, as so many of the notaries that I have deposed I have found in my case law, make no effort to truly determine the identity of the person before them or notarize the document when it comes to them already recorded, that deed, along with a fraudulent certification that title insurance exists, gets recorded under your bill. Commissioner Decker cannot 164 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 reject it because it has met the bill. That deed is then in the system and it allows what you're talking about happening here to happen going forward.

As I said, sir, we know we can't catch everything in this bill. We know that. We understand that, that there's going to be other things that go through, and crooks are going to get more creative. That's what they do. What we're trying to do is catch what we have seen, like Mr. Grosik and others, and we had other hearings where we had other victims come in, where things obviously are a problem that shouldn't have gone through. That's all. I mean, again, we're not trying to say we're catching everything. And we're trying to deal with the problem, and I guess --

And I commend you for doing that. I'm not here --

The other 165 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 option is just keep sitting back and saying, Well, let the Grosiks pound sand for months and let's wait for the 5 State Legislature to do something, and 6 you have hundreds of these people in the 7 meantime. 8 Let's try to deal with the 9 problem. I mean, we're trying to address 10 the whole problem by we thought 11 addressing your association, by not 12 slowing down the process overwhelmingly. 13 So we're aware of that. 14

I think what Council needs to understand is that to deal with this small number of deeds, you are having potentially an impact on our industry, number one. And, number two, you're also creating an additional set of rules for the legitimate person who is trying to transact business in Philadelphia without title insurance, who now will be dealing with a property as the only county in the City of Philadelphia where they've got to come 166 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 into the Recorder of Deeds' office in order to get recorded.

And the reason we're doing that is because we have seen evidence of a lot of cases. Now, we can all define what a handful is, but it's people's lives out there and people's properties. This has been a problem, and that's why we're making those regulations. Now, the state may say we can't do it. The state tells us we can't do a whole lot of things. But I'm not going to sit back and keep letting it happen. At least I'm going to be able to tell Steve Grosik I tried and I didn't sit there and say, Well, sorry, the state says I can't do it. When we had a problem with guns -- and I'm not trying to compare guns and this -- we worked together with the Law Department to try to figure something out. We just didn't say wait until the state does something. We 167 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 passed something, it went to court, we got some, we didn't get some, but we tried to do something. We just didn't keep sitting back and saying we got to wait for the state. And that's what I think we're involved here. I'm tired of hearing, The state says this, the state says that. Well, let's pass this bill and let somebody sue. I believe the only people that are really going to be impacted by this negatively are the thieves, and I don't think Anthony Mitchell is going to court to sue. That's what I think. Maybe I'm wrong. Maybe for principle somebody like you will do it, will sue. I don't know. If you do, I feel bad for you, because I think that would be the wrong thing to do, but that's up to you.

Well, the other thing that I'll share concern that was raised about the funding that's available to the District Attorney's Office to prosecute these cases, because I will 168 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 tell you, Councilman, I share the frustration of being involved in as many of these cases as I have where you cannot get the criminals prosecuted. And when the District Attorney's Office has to impose a minimum number of properties because of budgetary concerns over which they will not prosecute, that's ridiculous, in my opinion.

And I agree with you there, and that's the reason why we're trying to give them less cases to have to prosecute. That's the whole point of this, is that there will be less cases they have to prosecute. We know they got a budget problem, and we had a debate particularly with the previous DA about how many they prosecuted, and, you know, that's their call and all that. What we think we're doing is, as Councilwoman Sanchez and I said earlier, is saving money in the long run because they don't have to prosecute some of those cases, because those deeds 169 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 won't be accepted. That's what we're trying to do. You know, I mean, to try to deal with it later and while they're dealing with it later, again to use an example, Steve Grosik is out there trying to figure out where to live. That's -- I keep going back to that, and, again, legally I might be wrong and I'll go on record saying, I don't care. All right? I want some of these people get help and quit looking to try how not to do it and how to do it. Allegheny County figured out how to do it. Now, I don't know if they'll be held legal and maybe they changed their thing around and called it the Office of Real Estate. I don't care if they call it the Office of the Bouncing Ball. They're trying to deal with the problem. And most of what we deal with is after the fact. They're trying to deal with something before the fact, and I think that's what you have to deal with, and we 170 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 don't have to have as much District Attorney cases, we don't have as many people running into court. I don't know. Maybe I'm the simpleton here, but --

Well, Councilman, again, I don't want you to misinterpret. Again, we are not saying this is not a problem. We are not saying it doesn't exist.

But you're against the bill.

I'm against the bill because of the concerns that I've raised with you and the impact it may have, number one, on our industry, and, number two, that the fact -- and I hope I'm wrong, Councilman -- that the criminals are not smart enough to get around your bill. But I would like to see things addressed, some of which you can't, which include the increased scrutiny of notaries, because without the acknowledgment of documents, the deed 171 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 doesn't even get to Commissioner Decker in the first place; the increased prosecution; and potentially as a lawyer some streamlining of the fraudulent conveyance court system so you don't have the circumstance that you heard this morning of months and tens of 9 thousands of dollars. There's no reason 10 for that when there's a court, in my 11 opinion, that's in place for that. 12 So, again, we're here to 13 express our concerns about the bill. The 14 PLTA stands ready to work with your office or anyone else, as I mentioned to your aide this morning, in trying to find a way that this problem can be resolved, because, again, the industry is a victim in this also with the hundreds of thousands of dollars that they pay each year in claims resulting from this. So I thank you for your time.

Okay. Thank you. Thank you for coming. Our last witnesses on record 172 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 are the Records Commissioner and the other members of the Administration. Oh, Ms. Caulfield, real quick, if you could make it real quick, because I don't want to keep going back and forth. You have to come to the table, please. I'm sorry. I know you said you wanted to say something. (Witness approached witness table.)

Yes. I'd just like to state for the record that there is not now, nor has there ever had been, any numerical or monetary threshold regarding forged deed cases.

Thank you. And we hope to cut down whatever that number is if we did this.

But there is no 21 number.

All right. Thank you. Good afternoon, Mr. Abernathy, Commissioner. Please come up. 173 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 (Witnesses approached witness table.)

And while you're getting ready, there was made reference talking to my staff a lot -- and I'd be remiss if I didn't recognize the efforts of certainly Noelle Marconi, my Legislative Director, but also Julie O'Connell, who has personally walked about 100 people through this process and I would call as much an expert on this as anybody that has any title in this whole thing. So I appreciate her reference, because she actually helped real people and tried to find solutions instead of finding problems. Thank you. Please proceed. COMMISSIONER DECKER: Good morning, Councilman Greenlee and members of the Committee of Law and Government. My name is Joan Decker and I serve as the Records Commissioner in the City of Philadelphia, and I am pleased to present testimony regarding Bill No. 100487 174 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 introduced by Councilmembers Greenlee and Sanchez. Bill No. 100487 amends the portion of The Philadelphia Code related to the recording of deeds. Specifically, the bill, if enacted, would require the Department to reject deeds presented for recording where the grantor and record owner names do not match, or where certain supporting documentation is missing. Additionally, the bill would impose a higher fee for persons seeking to record a deed without first obtaining title insurance. I understand that there may be some amendments, so I am not familiar with all of them, so I apologize if there are sections here that don't apply. The intent of this legislation is to prevent people from having their homes stolen, a worthy goal which the Administration strongly supports. This office, in conjunction with legislation previously introduced by 175 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 Councilman Greenlee, has been taking a number of steps to help reduce the number of incidents of house theft. Since 2004, the Department has sent a document notice letter to property owners each time a deed or a mortgage is recorded against the property. If the recording was done without the owner's knowledge, this letter will then alert them to that fact. To date, over 900,000 letters have been sent to property owners. Since 2006, the Department of Records captures the photograph and signature for deeds presented in person. At the request of the Department, a Fraudulent Conveyance Task Force has been initiated to address this property fraud issue. This group is composed of members of the Records Department, the Philadelphia Bar Association, attorneys from various non-profits, also representatives from the District Attorney's Office and attorneys from various title insurance industry. The 176 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 primary tool in addressing fraud is really community education. The Department has created a number of informational sheets and also posted numerous information on its website where it can be conveniently accessed. The Department has implemented additional measures pursuant to legislation introduced by Councilman Greenlee and passed by Council in 2008. Pursuant to that legislation, the Department reviews a number of items upon presentation of a deed, including names of the record owner and grantor and available supporting documentation. Discrepancies are noted and forwarded to the District Attorney's Office. As you can see by the information presented, the Department views the fraudulent recording of deeds as a very serious matter and has taken significant steps to address the problem. We appreciate Council's support in these efforts and recognize that despite our 177 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 best efforts, fraud remains a problem in the City. Title insurance should either prevent or insure against most fraud, and the Department welcomes any effort along these lines to encourage its use. Unfortunately, the remaining provisions of the legislation present legal concerns.

First, the bill requires that the Department of Records refuse to record a deed where the grantor and record owner name do not match. Under current law, the Department of Records checks deeds for discrepancies between grantor and record owner and reports any discrepancies to the District Attorney's Office. We record the deed, as state law unconditionally requires us to do. The bill would also prohibit the Department of Records from recording a deed where certain supporting documentation is not present. We are concerned that if implemented, the rejection of deeds would disproportionately affect low-income 178 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 homeowners, homeowners who are less likely to use an attorney or to purchase title insurance. In effect, the very people that we are seeking to protect would be the persons most negatively affected by this legislation. Additionally, as set forth in the legal opinion that has been provided to the Committee, the state law that requires us to record deeds would supersede these new requirements. Moreover, by refusing to record a deed, the City could be found in violation of a standing order in the Pennsylvania Land Title Association versus Philadelphia, which requires the City to ensure that any new document presented to the Department is immediately recorded and indexed in the order in which it is presented. Violation of a court order, similar order by another Pennsylvania county, resulted in a contempt order for the Recorder and also substantial fines and penalties that were levied against 179 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 the county. It is important to note that this legislation, if enacted and implemented as written, will not accomplish the goal of preventing persons from having their homes stolen. At the point that the document is presented for recording, the transaction has already occurred. Any payment or documents have already been exchanged. Additionally, reviews of data collected by the Department of Records indicate that the numbers of mismatches and cases of missing documentation are actually trending downward. One explanation for this is that fraudulent filers have learned how to forge documents and signatures, and those who intend to commit fraud have learned how to play the system. And that holds true as well for the supporting documentation. It is frequently simply replicated from the record and from other similar documents. The Administration understands, 180 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 acknowledges and certainly sympathizes with the pain and trauma caused when someone has their home stolen out from under them. We are committed to working towards a solution, but the solution will not be found in Section 2-200 of The Philadelphia Code. State law binds the Department to record -- the Department of Records to record deeds immediately upon presentation, as has been stated. There is, in addition, a court order that compels this. If any meaningful reform will prevent families from losing their homes and to prevent fraud, it must come from a fresh look at state law. Officials from the Department of Records, the Law Department, the Managing Director's Office and the Mayor's Office have met numerous times over the summer to identify potential reforms to state law designed to address the many concerns for this current legislation.

Potential state legislation would include a requirement that both 181 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 buyer and seller sign the deed; a requirement that the name of the buyer of the last deed of record match the name of the seller of the current deed of record that is presented for recording, or require suitable documentation to ensure that the legitimacy of the transaction where the names do not match; a requirement that a notary captured a thumb print in the notary journal for deeds that are notarized; a requirement that companies that sell notary equipment be prevented from doing so, to sell only to those who are duly commissioned notaries; to provide for criminal penalties for notaries who commit fraud related to land records; to increase the value of the bond required for notaries; and also for additional training and requirements for individuals to become a notary. The Administration would like to invite the opportunity to form a legislative task force with state and 182 9/22/10 - LAW & GOV'T - BILLS 100360 & 100487 city officials and other stakeholders to evaluate these ideas and propose legislation for introduction on the state level. We are prepared to make this issue a part of our legislative agenda with Harrisburg, and we hope that Council will be our partner as we move forward toward a more comprehensive solution. And I thank you for the opportunity to present testimony this morning and would be happy to answer any questions you may have.

Thank you, Commissioner. Mr. Abernathy, do you have anything?