Stop Real Estate Wire Transfer Scams 100%

Public Service Announcement:

According to FBI statistics, 10's of billions of dollars have
been lost in real estate transactions through email scams since 2015. These
situations affect all involved, as well as all American citizens, but are
especially devastating to the ones who may have lost both their life savings
and the property in which they had hoped to retire.

The incident below occurred in Sparta, Sussex County, but it can happen
anywhere to anyone involved in real estate transactions. There is a simple
way this type of scam can be 100% stopped once and for all -- if the real
estate industry gets on board and adds this one (see below) best practice to
every transaction.

First, for background, my wife and I lost $91,500 back in August
2017 in just such a scheme. We had engaged the services of professionals -
a Sparta NJ broker from a well-known company (she advertises herself as the
“premier real estate expert in Sparta”) and a well-known Newton NJ real estate
attorney - in the purchase of what was to be our retirement home. My wife and I
had not been involved in any prior real estate transactions since 1992, when we
had to bring a physical cashier’s check to the closing.

My wife and I were not aware of the intricacies and machinations
of a fast-paced, bank-owned foreclosure that required cash for closing within
30 days’ time of signing the contract or we would have to forfeit the purchase.
That is why we trusted the “experts” to guide us. Throughout the 30 days
of transactions, emails, forms sent and returned, neither the attorney nor the
broker or her company provided any guidance, education, warnings, or advice
when it came to wire-transferring closing costs – no explanation as to what to
expect or what to do to.

All our attorney told us at the begining of the
purchase process was that there would be an email with directions
sometime before the contractual Sept 1 closing date and to follow those
directions for wire-transferring the final closing costs, $91,500, PRIOR
to our actual “sit-down in the attorney’s office”meeting with the seller’s
attorney.

So, two days before the closing date of Sept 1, my wife and I
received the email with the closing information from (whom we thought was) our
attorney's email:

g.??l@mc??lylawllc.com

g??l@mc??llylawllc.com

The second is the correct address,
the first was the scammer's - the difference very easy to miss
after 30 days of back and forth emails between all parties involved.
The spam email information looked almost exactly like the
writings from the attorney's office in previous emails, and all the
other references to dates, people, etc., even the attorney's address and tel
# were correct.

My wife and I followed the directions as we had been told to do
bu our attorney and we wire-transferred the money to the bank account
routing number listed in the email. The amount in the directions was
exactly what we were expecting to be sending for closing- $91,500.

Two days later, when we sat down at the closing meeting, the
seller’s representative only then asked for proof of the wire-transfer.
Upon looking at it he stated, “That’s not our name, that’s not our bank, that’s
not our account.”

Neither he nor our Newton NJ attorney had known that the money
had not been sent to the proper account, even though they told us it
had to be in the account at least a day prior to closing, or else we could not
be able close. One would think that the seller’s representative or our
attorney would have looked to see if the money had been received before even
conducting the meeting.

When we confronted the attorney that he never gave us any
guidance or instructions, he said, "I know you can sue me", then
he offered us $5000 NOT to sue him and to "go after the realtor and her
company" for neglect. We declined after we were told by other lawyers
that any suit to recover our loss would have to include the attorney as he did
not protect our best interests.

When asked in mediation about his malpractice insurance,
the negligent attorney stated that his "ex-wife forgot to pay the premium
so it had lapsed"; but when asked again later in a formal deposition,
he stated that he "did not believe that having such insurance pertained to
him".

As for the broker's actions, upon our first meeting with her to
look for properties, she stated she was "having problems with her business
email account" and told us to "use her personal email account."
However, she continued to use BOTH her personal and “problem” business accounts
throughout the transactions, sending and receiving our financial information,
attachments, as well as sending and receiving signed contracts and other
documents through non-encrypted, non-third-party verification methods.

She also had forwarded emails / attachments from other parties
to my wife and me. In short, her “problem” email was most likely the cause of a
breach in my wife's email - (malware can be transferred to one's computer from
a sent email itself or within an infected document), which resulted in our loss
of our savings.

The broker and the attorney have blamed my wife and me for
sending the money , saying we should have known better. They said we
should have noticed the difference in the sender's email
address. Yet, upon their first review of the emails, they were not able to
discern the difference themselves!

They said that it was my wife's email that had been
"hacked", since it was her email that was used to interfere with the
transmissions.

However, common sense asks, "Why would sophisticated scammers
be monitoring my wife's email account - someone not in the real estate industry
as compared to the professional realtors and their companies.

Common sense dictates that these criminals monitor the emails of
those who deal with hundreds of thousands of transactions and wire-transfers
daily - such as real estate companies and real estate attorneys.

These hackers enter into a company's server or one of the professional’s'
accounts (such as through a "problem
email"), places a virus program or bug and
monitors for key words such as "closing", "cash",
"wire-transfer", "foreclosure", etc.

Once they home in on those words and emails and find a
transaction occurring in real time, they can interfere and strike at just the
right moment before closing -- in some cases, such as ours -intercept an email
from the attorney, rewrite it and then send it on to my wife's email - all
within minutes, under the guise of coming from the attorney. Then,
similarly, the buyer replies, intercepts it, rewrites it
and sends it back to the attorney and the others.

Because the scammer has been monitoring the back and forth emails, the criminal
can write just like the real person (or simply keep the original email and
substitute their directions for the transfer). All they need to do is
change the one letter in an email address to be in control. Sophisticated
but simple to do for hackers.

Further, this Sparta NJ broker also neglected to send -- and openly admits to
this in her deposition -- her company’s required Wire Transfer Fraud Warning form
along with the contract for the property we wished to purchase. My wife and I
signed what we received (minus the missing form) and returned to her. My wife
and I never learned about closing wire-transfer fraud scams. The broker
never realized the form had not been signed and returned to her until
she was sued.

The Sparta NJ broker’s company has twice tried to have the court
dismiss our case against them (adding to my family's 6 years' legal costs and
aggravation), stating they were under no obligation to warn us - their broker’s
clients - of such fraud because there was no law requiring such.

However, this company had made a business policy of requiring
said form to be included, signed and returned since 2015. Twice the court
refused this company’s request for dismissal. My wife and I are awaiting a June
2023 jury trial - 6 years after losing our savings. We are highly confident
that, once a jury and judge listen to the whole story, they will understand,
and we will prevail.

So, how can this be stopped 100% -- here is a very simple way:

Upon establishing a relationship with a buying client, the broker and the
attorney PERSONALLY (not through email or any other means) give them a WRITTEN
FORM with her / his DIRECT NUMBER listed, with the directions stating:

“DO NOT WIRE-TRANSFER, SEND, or GIVE ANY MONEY TO ANYONE FOR ANY REASON WITHOUT CALLING ME FIRST AT THE NUMBER LISTED HERE TO VERIFY”.

Have everyone sign the form and each receives a copy. Then if
the client loses their money because they did not call, the broker and the
attorney have performed their professional due diligence in guiding,
educating, warning their clients.

Otherwise, the broker, the company, and the attorney should be held responsible
for neglect, lack of best practices, lack of proper procedures, malpractice,
and they should reimburse the clients for losses plus whatever costs the
victims incurred in attempting to be made whole again. It is really very simple
and easy to follow through with my suggestion.

Spread this simple procedure – Stop this scam 100%!