|
LEGAL CORNER with ANDREW PINEIRO, Esq.
As a real estate lawyer, we hear about incidents of wire fraud on a regular basis. Usually, that fraud occurs via a misdirected wire transfer.
A wire is the preferred method of funding a real estate purchase (buyer), paying off a seller’s mortgage, and delivering the seller’s proceeds. This is because the transfer of funds is fairly immediate and the transfer of funds is generally irreversible. Generally, once a wire is initiated, it cannot be reversed. Due to this characteristic, the wire process is ripe for fraud.
I have written on this topic in the past. In a real estate transaction, wire fraud involves the deceitful scheme to divert closing funds or mortgage payoff funds by altering legitimate wire instructions, so that the funds are diverted to the fraudster’s account instead of the authorized recipient’s intended account.
The latest fraud scheme to surface is very scary. Fraudsters are creating fake title agencies, often spoofing a REAL title agency name. The fraudsters are also pretending to be the seller and referring the real estate agents and buyer to the fake title agency! A fake title agency then starts scamming the buyers, hoping they will send money to the made-up title agency bank account.
Red Flags for this type of fraud:
*Unencumbered high-value condominium units are being targeted
*Property owned by an absentee Foreign National (typically the person being impersonated)
*Seller makes last second conveyance from the individual to an LLC (often the LLC bears the name or part of the name of the individual owner)
*Loans related to the transaction are from hard money lenders
*The imposter shows up for closing with fake high-quality credentials and ID’s
*The property was recently transferred via quitclaim deed
To protect yourself, only use a known law firm or title company with an established history. Before sending money to a third party, review and confirm the wire instruction document received from the law firm or title agent over the telephone and verbally confirm the information provided, including loan numbers, routing numbers, account holder name, and account number. Be sure to use a known telephone number or one researched independently.
If unsolicited or last-minute changes to wire instructions are received, this is a big red flag. Wire instructions rarely change. Other red flags to look for:
*Emails that are sent outside of normal business hours, especially, if routinely in the past, the emails came during business hours
*Emails that contain poor grammar, misspellings, or unusual fonts
*Emails with a slightly different email address than previously used (watch for character changes like a zero “0” numeral and a capital letter “O”)
*Last second changes to instructions right before a 3 day weekend – if banks are closed on a Monday or Friday, it allows for more time to pass before the matter can be detected
Notwithstanding these risks, when wires are confirmed and all protocols for avoiding fraud are followed, the wire is the best way to fund a transaction. The wire avoids some of the problems associated with checks including the lag time associated with clearing the check, fake checks, washed checks, double deposits (using a phone image to deposit the check in one bank and immediately depositing the same check in another bank), etc.
If you suspect that something just isn’t right with a situation involving a wire, contact your bank or an attorney that has experience with identifying and preventing wire fraud before you send your wire.
Andrew Pineiro, Esq., Pineiro Byrd PLLC,
4600 Military Trail, Suite 212, Jupiter, Florida 33458, apineiro@pblawfla.com
| 
