- Did you know ... that wire fraud made the news again this week?
- August 16, 2017 | Authors: Matthew D. Alegi; Sarah D. Cline; David A. Pordy; Danielle M. Dolch; Marc D. Lipman; David M. Kochanski; James E. Savitz
- Law Firm: Shulman, Rogers, Gandal, Pordy & Ecker, P.A. - Potomac Office
Did you know ... that wire fraud made the news again this week?
As discussed last week, wire fraud has become a very real risk for consumers involved in real estate transactions. This week, that risk hit close to home, when the news broke that a local couple has filed a lawsuit against their title company based on a loss arising out of a wire fraud scheme. According to the complaint filed in the U.S. District Court for the District of Columbia, the homebuyers allege that they were the victims of a wire fraud scheme earlier this year, resulting in a loss of $1.57 million. According to the complaint, the couple contracted to purchase a home in the District of Columbia for over $1.7 million and placed an earnest money deposit of $200,000 in escrow with the title company. Prior to settlement, the buyers received an email from the title agent asking them to wire the balance of the purchase price for settlement. Unfortunately, when the buyers arrived at settlement, the title company informed them that the funds had never arrived. The loss was immediately reported to the FBI, but to date, the couple has been unable to recover their funds. According to the title company, the loss stemmed from a cyber attack on their systems, and the email with the wiring instructions was sent by a hacker.
The complaint filed against the title company seeks not only to recover the $1.57 million but also asks for punitive damages, including treble damages (almost $5 million!) for an alleged violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal law which creates a civil cause of action for acts carried out as part of an ongoing criminal enterprise. The buyers allege that the title company was so negligent in their processes, specifically their communications regarding wire transfers, that their conduct constituted either an intentional act or complicity with the hacker.
This is yet another reminder of the importance of cybersecurity and the need to verify wiring instructions with careful communication between the consumer and the title company. Always confirm, through a telephone call to an independently verified number, that any email containing wiring instructions was actually sent by the purported sender.