On October 27, 2014 an escrow officer received an order for an Option Money Escrow Agreement via email. The agreement was for the option to purchase the subject property; not the actual purchase of the property. No title transfer was called for in the agreement, only the release of funds in the amount of $95,000.
The buyer contacted the escrow officer by email, never by phone and never in person. Neither the buyer nor the seller was represented by a real estate agent.
The order was opened and the buyer mailed in an Official Check in the amount of $98,000 drawn from a credit union. The Official Check was received on November 6, 2014 and the escrow officer deposited the check, not realizing it was $3,000 more than the agreement called for and not realizing the credit union the check was drawn on changed its name more than two years prior to the date of the check.
The option agreement contained the following provision:
"Escrow holder will release said funds to seller upon receipt by Escrow holder of a written authorisation from buyer that he is satisfied with the inspection of said premises and will complete the purchase."
On November 7, 2014 the escrow officer received an email that read, "You have my permission to release funds to the seller." That same day the seller emailed a disbursement authorization form to the escrow officer, reflecting the wire transfer information for the release of the deposit. The authorization directed the escrow officer to send the wire to an unrelated third party's account, not the account of the seller and property owner.
Coincidentally, the same scam was being perpetrated at the same time at a Fidelity office 1.3 miles down the road. However, Lolly Avant, the manager of the Fidelity's National Commercial Services in Houston, started asking all the right questions and responding to requests:
- Is this strictly an escrow transaction?
- Will you be purchasing title insurance?
- We do not insure Option Agreements in Texas.
When the $98,000 came to the office by mail, Lolly's assistant noticed the check was $3,000 more than the required deposit. The buyer instructed her to refund the overpayment. Before she could process the refund, Lolly called the issuing credit union to verify funds.
Lolly quickly discovered there is no credit union with that name; the credit union changed their name nearly two years ago. The successor credit union confirmed over the phone the check was counterfeit.
For Lolly's crime–stopping efforts, the Company has rewarded her $1,000 and given her a letter of recognition. If it were not for her the Company would have been out another $98,000.