Scam that led to surprise $1.5M house in Conn. might have been multi-state scheme, officials say

As legal wrangling intensifies over a house in Fairfield built on land the developer bought as the victim of a scam, the FBI appears to have evidence the fraudulent sale was part of a multi-state swindle, perhaps by the same people.

The 4-bedroom, 5-bath house on a half-acre at 51 Sky Top Terrace in the north end of Fairfield was on the market with an asking price of $1,475,000 last spring. A buyer had it under contract.

Then the owner of the land, Daniel Kenigsberg, a Long Island doctor, returned to his hometown to find that very house, about two-thirds finished, on a parcel his family owned for 70 years -- and never sold.

Kenigsberg sued the local developer and the Trumbull lawyer who handled the fraudulent closing -- both of them victims of a scam just as he was, in my view -- by someone claiming to be Kenigsberg pushing for a quick sale after moving to South Africa.

In his federal court action, Kenigsberg argues the parties should have known it was a scam. He's seeking up to $2 million in damages and/or a return of the land to him in restored condition.

The developer, in turn, sued that same Trumbull lawyer and his firm; the real estate agent with Keller Williams, who, according to court documents, was the person initially contacted by the fraudster; the agent's real estate group, Keller Williams Prestige Properties of Stamford; and the developer's own attorney, who handled the $350,000 land sale.

That case, in state Superior Court in Stamford, and Kenigsberg's federal case in New Haven (moved from Hartford) are both pending. Talks toward a settlement have yielded no results so far but more sessions are scheduled in January. Both cases have numerous motions flying about in which parties are seeking to lessen their liability.

While the house enters a new year covered only by sheathing on a dirt lot, and while the civil court actions move slowly toward what seems like a likely settlement, criminal authorities are investigating what a Fairfield Police report shows as a possible pattern. In the report, Fairfield Det. Brian D. Griffin said he spoke with a special agent in the New Haven office of the FBI.

The FBI special agent, Griffin said in his report, "stated the scammer for this case had the money sent to a money mule in Florida."

The special agent told Fairfield Police that "the Rhode Island FBI office was also investigating a similar case that used the same money mule account out of Florida and the Rhode Island office will be incorporating this Fairfield case into their investigation."

Fairfield Lt. Edward R. Nook Jr., a department spokesman, said local police did not have further information to report publicly, and turned over what they had to the FBI. The FBI did not return my call and does not comment on active investigations.

No easy answer over $1.5M house

Any connection between this "seller-impersonation fraud," which happened in October, 2022, and similar cases would be notable because this type of fraud, in which a person alleging to be a property owner unavailable in-person, is on the rise, real estate industry sources told me over the summer when I wrote about the Fairfield house on Sky Top.

It's still exceedingly rare, if it has ever happened outside this case, for a scammed sale to be followed by full development of a parcel. Typically the fraud unwinds beforehand, creating a legal mess that's sensitive but manageable. The real estate industry has raised its antennae for identity-fraud sales, as many transactions now happen remotely and technology advancements make such scams easier to pull off.

In this case, court documents make it clear there's no easy answer. Even if the FBI catches the scammer and recovers the money -- a total of $265,000 was sent to a fraudulent account as $70,000 went into a tax account and the rest to brokers -- that would do little to settle the case.

The facts in these lawsuits are not in dispute. Kenigsberg, who grew up in a house next door to the parcel that his family no longer owns, is the rightful owner of the land. He said he wanted to pass it on to his children someday.

But the small business that built the house, a partnership of a local builder, Greg Bugaj, and businesswoman Gina Leto, known as 51 Sky Top Partners LLC, or STP, has hundreds of thousands of dollars in the ground along with hopes of a $1.5 million payday if and when the house is sold. And Kenigsberg wants more than just the lost value of the land.

The action is in sorting out who should be liable for damages, who should not, and by how much. Kenigsberg is suing Attorney Anthony E. Monelli of Trumbull, who handled the closing, along with Sky Top Partners. Sky Top is suing Monelli and his firm; its own lawyer in the deal, Mark Clarke of Fairfield; the selling agent, David J. White; and Prestige Properties Keller Williams.

'Working on settlement'

Some of these defendants in both cases have filed motions seeking to dismiss certain claims. For example, Kenigsberg claims a violation of the Connecticut Unfair Trade Practices Act, known as CUTPA, which, if a judge agrees, could increase the damages due to him. The defendants disagree.

"Kenigsberg does not -- and cannot -- allege that any relationship of any kind existed between himself and STP (or Monelli), much less the kind of relationship that CUTPA requires. He was not STP's consumer," STP's lawyer, Jay R. Lawlor of Hoopes Morganthaler Rausch & Scaramozza in Hartford, said in a motion.

Kenigsberg's lawyer, Peter M. Nolin of Carmody Torrance Sandak & Hennessey in Stamford, fired back: "...although his involvement in the 'sale' of his Property to STP was unwitting, fraudulent, and legally void, Dr. Kenigsberg, as a member of the public, was a 'consumer' of STP's business activity in fraudulently acquiring title to his Property and Dr. Kenigsberg was directly injured by such activity for the purpose of standing under CUTPA."

Neither judge has ruled on the motions to dismiss or strike charges. On and on it goes, as the plaintiffs argue that numerous red flags should have halted the sale, including a signature by the scammer that did not match the one on file in land records for Kenigsberg.

Lawlor, the developers' lawyer, declined to comment. Nolin, the lawyer for Kenigsberg, said, "The parties are working on settlement but it's confidential." Lawyers representing Monelli, White, Prestige Properties and Clarke did not return calls and emails seeking comment.

The job of the courts is to sort out liability and perhaps, if the parties can't reach a deal, decide whether the house should be demolished. It's safe to assume insurance companies are or will be part of the wrangling, further complicating matters.

A trial could lead to restoration of the parcel as a wooded lot. That would make no financial sense, as the parties have a $1 million-plus asset in the ground, a large house.

So I'd bet on a settlement with hefty damages for Kenigsberg. But not soon enough for the buyer, whomever it is, to enjoy blooming azaleas at 51 Sky Top Terrace in 2024.

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