Chicago Title Insurance Company has filed a lawsuit this week in the US District Court for the Southern District of New York claiming that it was the victim of an email compromise scheme that resulted in $4.1 million being diverted from a real estate closing in Newport, Rhode Island, to a fraudster in Nigeria.
Insurance Business reports the transaction involved a property owned by LD Properties LLC, with certain personal property included in the deal that was owned by American Bistro LLC. The buyer, 24 Memorial Propco LLC, was scheduled to close on Jan. 22, with Chicago Title in charge of the escrow and disbursement.
According to the court filing, Chicago Title stated that unauthorized access was made into the computers of one or more parties involved in the deal to send fraudulent communications. Because the closing was conducted remotely, the parties relied on email and phone communications.
On Jan. 21, Sharon Hughes, a vice president and national commercial closer at Chicago Title, received wire instructions from the sellers’ counsel directing the proceeds to an account at Citibank under the name Earnspark Global Concerns. Hughes realized that name was not previously part of the transaction and request confirmation. The sellers’ counsel forwarded the request to the sellers’ principal, David Butterfield, and an email allegedly from Butterfield responded, “The wire instructions provided are accurate. This is my trust account, and I confirm that the wire may be processed accordingly.”
Hughes also called SCS Financial, the sellers’ financial agent, and spoke with an individual who confirmed the instructions. The next day, the closing went forward and Chicago Title released the funds to the account.
However, on Feb. 7 the sellers’ counsel notified Chicago Title that SCS Financial had reported the proceeds never arrived and that Butterfield’s email had been compromised before closing. Chicago Title issued a wire recall to Citibank on Feb. 9, but as of the filing the funds were not returned.
The defendant, Earnspark Global Concerns, is described in court papers as a Nigerian business entity. Citibank N.A. is named as a nominal defendant because it holds the New York City account from where the funds were allegedly transmitted.
Chicago Title asked the court to freeze the account, recover the funds, and hold Earnspark liable under the Computer Fraud and Abuse Act and common law fraud. The company is also seeking a constructive trust over the diverted proceeds and any assets traceable to them.
NEVER WIRE FUNDS AS PEOPLE CAN EASILY CHANGE THE DOLLAR AMOUNT, AS A EX BANKER (NOW RETIRED) WIRED FUNDS CAN BE EASILY CHANGED TO THE BENEFIT OF EITHER PARTY, OR ARRIVE AT THE WRONG BANK. YOU CAN’T CHANGE THE AMOUNT ON A CHECK.
I’ve also witnessed fraudulent cashier’s checks, Dan. Title Companies won’t accept cashier’s checks over a certain amount. Maybe the answer is that everyone meets at the closing table. Period.
I don’t know why there isn’t a mandatory hold on funds wired of a couple days. These hackers can literally receive funds, withdraw, and close the account immediately. That should never happen especially without a legal individual name attached to hold accountable.
I think Johnny is spot on. Banks routinely hold large checks so there is no reason they should not be able to hold a wire transfer 2-3 days.
I agree with the above. I was scammed on a three day weekend, with escrow being given instructions on a Friday to wire funds to a different account. The loss of money hurts bad. I recovered only a fraction of the total amount. Jail is too good for these thieves. I don’t allow wires these days. Be cautious.
These fraudsters have become very brazen and widespread. It is high time the international community formed a task force to find and permanently eliminate these fraudsters wherever they are.
its like transferring money in your own name…the banks have us all doing it ourselves…what could go wrong? there are not enough safe guards in place…remote closings should not be allowed….someone needs to show up representing each party…obviously real estate agent is local and if not, that alone should raise some flags…
That scammer is sitting in a beachfront bar right now telling this story over and over