Escrow Officer Returns From Retirement
A fraudster hacks the e-mail account of a retired escrow officer to open a sale transaction and obtain a $530,000 loan. The fraudster would have pulled off the perfect scam had it not been for the keen eyes of a title examiner.
Patrick Crews, a title examiner from Chicago Title's Ventura County, Calif. operation, was working on files that were recorded on an extremely busy day. He picked up a file for a sale transaction with a price of $980,000. Patrick noted the property was free and clear. The closing was being handled by an independent escrow company from an area unfamiliar to Patrick. This particular file had been opened a week prior as a rush order. The order had been transferred from another title company at the insistence of the private party lender (a long time customer of Chicago Title's).
The lender was worried about funding to a title company he didn't know and was more comfortable dealing with Chicago Title, even though the buyer had a $400,000 earnest money deposit in escrow. At first the parties to the transaction put up a fight, but the lender said he would pull out of the deal unless the transaction transferred to Chicago Title.
The recording package was received by special messenger that afternoon. While Patrick worked on the file he noticed that the signature on the grant deed did not match signatures on documents recorded previously in the chain of title. He went on about his work performing an index search on the grantor's name. He also ran a name search on the notary who witnessed the signing of the grant deed. The notary was an employee of a postal type storefront. Patrick was highly suspicious.
Patrick escalated the file to the title officer and explained that he suspected the grantor's signature on the deed had been forged. The title officer proceeded to e-mail the escrow officer who worked for the independent escrow company and ask for a new grant deed to be executed by the seller at a Chicago Title office in the presence of an employee. The title officer received an unusual e-mail response from the escrow officer saying that she was declining to close the escrow due to suspicious activity. No further details were provided in the response.
The title officer contacted the lender to notify him of the escrow officer's response and to return the lender's $530,000 wire. The lender in turn tried to contact the escrow officer but was unable to get through using the phone number listed in previous e-mails to him. The lender attempted to contact the buyer and seller at different numbers, but received the same voicemail message for each number.
The lender then decided to contact the owner of the property through the telephone directory, rather than through the number provided by the buyer and seller's representative. The property owner confirmed the suspicions of Patrick, the title officer and escrow officer's when he told the lender the property was never listed for sale and that he knew nothing about an opened escrow.
The lender immediately contacted the FBI to report the situation. The FBI referred the lender to the local Sheriff Department's Real Estate Fraud Unit. The Sheriff's Department tried to locate the escrow officer, but found she had long since retired. Apparently, her e-mail account had been hacked by the scam artist and the phone numbers provided to the lender to contact the escrow officer, buyer and seller were actually prepaid cell phones all held by the same individual. The detective assigned to the case also called the notary and discovered the notary's stamp had been copied and the notary signature was a forgery.
The detective confirmed that the independent escrow company was unaware of any possible escrow transaction and that the fraudsters likely obtained the name of their retired escrow officer from their corporate Website. Using the escrow officer's e-mail account, the fraudsters opened the title order with another company and later with Chicago Title Company. Through the escrow officer's e-mail account they confirmed receipt of a $400,000 deposit that didn't even exist!
The fraudsters nearly pulled off the perfect scam. They would have taken ownership of a property worth nearly a million dollars and encumbered it with a lien for $530,000. If it weren't for Patrick's detection of the forged deed and for escalating his suspicions to the title officer, the fraudsters would have made off with nearly $530,000 in proceeds. As a result, Patrick has been rewarded $1,000 as well as a letter of recognition from the Company. It would have been easier to accept the deed and record it by ignoring his intuition, but he didn't. As a result, Patrick saved the Company from a monumental loss.
Moral Of The Story
The detective told the title officer and Patrick that he was worried that the fraudsters might attempt to sell the house out from under the owner again using another fake escrow until they were successful. As a result, the title officer posted the property address to the title plant records to make sure this doesn't happen again and any title provider working on this particular property will be notified of the potential for fraud.
The real lesson of the story is that once an employee leaves the Company, his/her e-mail account should either be immediately shut down or re-directed to another employee to constantly monitor. Had the independent escrow company shutdown the retired escrow officer's e-mail account, it could not have been hacked!