SCAMS: Fake Short Pay Letters Plague The Real Estate Industry

The December 2009 issue of Fraud Insights warned Realtors about the latest type of advanced fee scam targeting settlement agents (title companies). Since then they published three articles describing the characteristics of these scams: a buyer purchases a property sight-unseen off the Internet, and remits a check representing the earnest money deposit and down payment. The checks are usually drawn off an international bank, although a few have come in from a U.S. bank or credit union. Shortly after we receive the check the buyer requests the amount over and above the required earnest money deposit be sent back to them because, “an urgent business transaction just came up.” These checks are always counterfeit.

Recently one of our offices forwarded the funniest response yet. The buyer sent a check in the amount of $885,000. The bank immediately identified the check as counterfeit and the settlement agent notified the real estate agents. In the meantime, the buyer sent a request to the settlement agent to send him back $400,000 because, “an urgent business transaction just came up,” but promised to send replacement funds in time for closing. The settlement agent forwarded the request to the buyer’s real estate agent who responded with this e-mail:

Since the first article we published on this topic, the Company’s National Escrow Administrators have been notified by settlement agents nationwide on nearly a weekly basis of transactions just like this. Times are tough, sellers and real estate agents want to believe they have an all-cash buyer. When they discover the transaction is bogus they admit all the signs were there from the beginning.

Dear Ivo,

I am so sorry to inform you the bank teller who took the deposit of your cashier’s check, literally took the check, cashed it and then fled the country with the entire $885,000.

But I have good news on how I can make it up to you. I was just informed by e-mail a king from the Congo needs to get several million dollars out of his country and has chosen me to help him. He will be sending me a cashier’s check for $10 million dollars and he will let me keep half as long as I send him back $5 million dollars. As soon as the funds are in my account, I will send you back $400,000 and deposit the $485,000 lost into your escrow account.

If that doesn’t work out, I have also won the Nigerian lottery worth $2.5 million and will be able to reimburse you from those winnings.

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