Inside the deed fraud scam that’s rocking Detroit’s fragile housing ecosystem

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If Zina Morgan put her Realtor hat on, there would be plenty of upsides to the two-story brick home she lives in, on a tree-lined block of Mansfield Street near Detroit’s northwest border. She might point out the neighboring well-kept homes and their tidy lawns, or how short of a walk it is to a school and a park with new playground equipment and tennis courts.

But Morgan was court-ordered not to use her real estate license and to leave the Mansfield house next week because of one downside: She has no legal right to live there. Instead, Morgan is accused in a federal criminal complaint of stealing it and as many as 30 other homes, allegedly running a deed fraud scheme over the past two years by exploiting her employment at the United Community Housing Coalition (UCHC).

The nonprofit has worked for decades to protect Detroiters from losing their homes to tax foreclosure, eviction and the kind of predatory behavior Morgan is accused of.

UCHC was one of only a handful of organizations that worked to help residents navigate a tax foreclosure crisis of the 2010s that cost tens of thousands of Detroiters their homes and reshaped the city . In 2017, the organization created a watershed program that has helped low-income tenants and former owners buy their houses after foreclosure rather than the county auctioning them off to the highest bidder.

Operating the program gives UCHC staff unique influence with and access to the Wayne County Treasurer’s Office. Morgan joined UCHC in 2021 and was most recently director of homeownership programs. Federal investigators allege Morgan exploited communication back channels to steal homes with the help of another UCHC employee and an employee of the Treasurer’s Office. All three have been suspended from their positions.

The county Treasurer’s Office and UCHC have not been accused of any wrongdoing. Both organizations say they are conducting internal reviews. Federal officials say UCHC cooperated with the investigation.

“We want our clients and donors to know that the charging document makes clear that the integrity of our programs has not been breached,” UCHC Board President Robert Shimkoski said in a statement on Thursday. “We will do whatever is necessary to ensure that the work with which UCHC has been entrusted continues and any necessary policy changes and controls are updated.”

The scam: Dozens of fake driver’s licenses, deeds and DTE bills

Morgan was arrested last week on charges of wire fraud, conspiracy to commit wire fraud, money laundering and aggravated identity theft. The complaint identifies several others who were allegedly involved, but they have not been charged.

The scheme took advantage of a “safety valve” UCHC helped create for people at risk of losing their homes to tax foreclosure. During the height of the COVID-19 pandemic, the Wayne County Treasurer’s Office enacted a tax foreclosure moratorium. When it resumed foreclosures two years later , the county continued to carve out an exemption for homes that were occupied by their owners rather than homes that were owned by investors or vacant.

That advocacy also led to some employees from UCHC having a direct line to the Treasurer’s Office, which trusted UCHC to identify homes that would qualify for the owner-occupant exemption. The treasurer could then take those properties off the tax foreclosure list.

March 31 is the deadline to pay back taxes for Wayne County property owners at risk of tax foreclosure. Property owners can check their risk of foreclosure on the county Treasurer’s website and find out how to get financial assistance .

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It was this privilege Morgan and her associates allegedly exploited. According to the complaint, they would claim a house was owner-occupied and flag it in the treasurer’s system to get it removed from the foreclosure list. For evidence, they allegedly uploaded documents including fake driver’s licenses and fake DTE Energy bills with account numbers linked to Morgan.

Then they allegedly created fake deeds, appearing to transfer the homes to a fake company or person without the real owner’s knowledge. Morgan then sold some of these homes, the federal government asserts. Of course, any buyers don’t actually have any right to the homes with fake deeds because Morgan didn’t have any right to sell them.

This caught the attention of the Wayne County Register of Deeds’ Mortgage & Deed Fraud Unit last year after the alleged victims who legally owned a few of those homes told officials that somebody else was claiming ownership. The fraud unit reported Morgan’s activity to the FBI, which conducted the criminal investigation with the Detroit Police Department and the U.S. Department of Housing and Urban Development’s Office of Inspector General.

The Register of Deeds’ fraud unit has open complaints for about 31 properties that appear to be involved in the scheme, but the criminal complaint only provides details for five. It does not say how many properties had people living in them.

The complaint does, however, discuss two properties that were owner-occupied when Morgan allegedly created fake deeds for them. Using public records, Outlier Media was able to identify these properties and confirm with one of the occupants, who asked not to be identified due to privacy concerns, that she had been a victim of the scheme.

The occupant has cancer and is undergoing chemotherapy while now fighting an eviction initiated by the “owner” listed on one of the phony deeds. According to the complaint, investigators have video evidence of the UCHC employee recording the deed, which listed Morgan’s phone number.

Two properties mentioned in the complaint are owned by investors, including the property Morgan is living in. Details about the other investor-owned property, a house on Lesure Street, demonstrate the number of fraudulent transactions, the scope of criminal activity she’s accused of and the FBI’s knowledge about both.

Morgan and her associates allegedly created fake deeds for the Lesure property. Then she allegedly sold it and several other houses to a victim who wrote a $33,000 check to ZT Realty. The check was deposited in Morgan’s ZT Realty LLC bank account. The FBI also has records of two $5,000 transfers from that account through Zelle to the Wayne County Treasurer’s Office employee. Finally, it has records of Morgan transferring $12,000 from the account to her personal bank account. Because that money was allegedly from illegal activity and totals more than $10,000, the transfers would qualify as money laundering.

The complaint identifies more than 20 additional transfers through Cash App between Morgan and her associates last year. It also tracked more than 1,000 calls between Morgan and three associates, with many occurring after business hours.

What happens now

Deed fraud scams victimizing buyers and renters are not uncommon in Detroit, but one allegedly carried out by employees at two institutions with such close ties to housing assistance programs threatens these programs’ credibility. As the investigation unfolds, both UCHC and the Treasurer’s Office have condemned the alleged scam and promised to look at what went wrong internally.

“I’m very disturbed to learn that an employee in our office was included in this complaint. We are also conducting an internal review,” Wayne County Treasurer Eric Sabree told Outlier in a text message. “We want to reassure the public that we stand against any wrongdoing and are committed to maintaining the highest standards of integrity and accountability.”

Still, the scope and pace of tax foreclosure before the 2020 moratorium left many Detroiters suspicious of the government. Sonya Mull lost her childhood home to tax foreclosure in 2018 despite trying hard to save it. At the time, she wrote in a Detroit Free Press opinion piece, “I love Detroit and have always defended her virtue, but right now, my relationship with the city is tarnished by resentment and anger.”

Mull is one of many Detroiters failed by a system that increased the risk of foreclosure for low-income residents through years of overassessing home values and upholding barriers that meant few people received state-mandated poverty exemptions . It took advocates — including from UCHC — years of pressure and multiple lawsuits to see reforms to the tax foreclosure process. After the news about Morgan’s alleged fraud broke, Mull’s distrust of the treasurer, the court system and UCHC rose to the surface. “Everyone knew it was a racket,” she told Outlier.

Since the recent moratorium on foreclosures of owner-occupied properties and the creation of more programs for residents who can’t afford their taxes , the relationship between the treasurer and residents appears less fraught.

Detroiters have few options for help with tax foreclosure outside of UCHC and the Treasurer’s Office. But if either can continue to provide effective services, residents need to be able to trust them.

A former employee of UCHC who did not want to be named told Outlier, “Even more sad than 30 people allegedly being defrauded is that hundreds more might miss out on the help they need in the future because of the loss of trust that this may cause.”

The City of Detroit has several contracts with UCHC, including one approved last year for $1.15 million for work on behalf of Detroiters facing tax foreclosure, and one for almost $5 million for eviction defense . City administration is standing by UCHC.

“We have full confidence in (Executive Director) Ted Phillips and the UCHC leadership,” the city’s Corporation Counsel Conrad Mallet told Outlier in an email. “We have been aware of the investigation into the activities of this particular UCHC employee for months. We have been monitoring the situation and have seen no evidence it has affected the quality service the City of Detroit is receiving from UCHC in our Right to Counsel and other programs.”

Morgan is next scheduled to appear in court on March 20. Her release order prohibits her from acting as a real estate agent, buying or selling property, recording deeds, or acting as a notary.

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