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 America
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.And, 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 we were told at the time from our attorney 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 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@m???llylawllc.com
g??l@m???lylawllc.com
The first was the correct, the second was the scammer's - something very easy to miss after 30 days of back and forth emails between all parties involved. My wife and I followed the directions as we had been told to do and wire-transferred the money to the bank account routing number listed in the directions. 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 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, yet we were told it had to be in the account at least a day prior to closing, or else we could not 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, 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".
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 work in our best interest.

When asked 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 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 because of a falsely sent email. They said why didnt we notice 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!

However, common sense asks "Why would sophisticated scammers be monitoring my wife's email account - someone not in the real estate industry - for her to enter into a real estate transaction?"

Common sense dictates that these criminals monitor the emails of those who deal with hundreds of thousands transactions and wire-transfers daily - such as real estate companies and real estate
attorneys. These hackers can enter into a company's server (maybe through a "problem email") and monitor for key words such as "closing", "cash", "wire-transfer", "foreclosure", etc.

Once they hone 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, when we reply, intercept it, rewrite it and send it back to the attorney.

Because the scammer has been monitoring the back and forth emails, the criminal can somewhat write just like the real person (or simply keep the original email and substitute just the 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 a few times -- 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 wire-transfer fraud scams. The broker never noticed until she was sued that the Wire Transfer Fraud Warning form was not returned.

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 nothing to worry about.

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! Why won't these experts just do this?