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Had it not been for Shellie Mire, a Real Estate Paralegal in Myrtle Beach, South Carolina, being alert her office would have been the victim of a Business Email Compromise (BEC) scam in the amount of $143,486.39. The sale was proceeding just like any other. It was a split closing.

The seller's attorney sent over the signed disbursement sheet instructing Shellie to wire the seller's proceeds. The seller's real estate agent was very involved in the transaction and with his client. He caters to clients who tend to lean on him for many little things. He emailed Shellie.

The real estate agent confirmed his client had already signed her closing documents and wondered if she could have her proceeds wired to her trade account rather than her personal account.Shellie replied she certainly can if she prefers.

The real estate agent asked if this would change the Closing Disclosure, concerned it could delay closing and Shellie confirmed it would not.Shellie did explain the seller would have to complete and sign a new disbursement sheet providing her trade account information.

The real estate agent asked Shellie to email him a blank disbursement sheet and Shellie did so.He filled it out with the trade account information and stated his client signed it there in his office, and then he emailed the completed form back.

Turns out, those seemingly harmless and non–suspicious email exchanges were actually a fraudster at work. The fraudster appears to have allegedly compromised the real estate agent's email and communicated with Shellie as if he was the real estate agent. Fortunately, Shellie did not fall for the fraud.

There were several red flags:

  • Shellie noticed each email from the real estate agent was a new email as opposed to being a reply to the email chain about the disbursement of the seller's proceeds.
  • She thought it was odd the real estate agent asked if the new disbursement instruction, "will change the CD."
  • The signature on the new disbursement sheet did not match the seller's signature on the other documents. It was electronically signed but it was not eSigned using the technology which is used by the real estate agents brokerage that includes a statement that it was electronically signed.

Shellie decided to pick up the phone and call the seller's attorney to confirm the seller's request and the wire instructions received. He knew nothing of the request so they called the seller who confirmed she had not made any changes with her real estate agent.

Calling confirmed that Shellie had not been emailing with the actual real estate agent's email account, but rather a fraudulent email address that initially looked similar, meaning it was different than her legitimate email address. Shellie put her mouse over his email address and noticed it ended with @gmx.com — not @gmail.com.

Scott Umstead shared this story with his agency representative. He felt there were three good lessons to share:

  • There is no substitute for a good sixth sense.
     
  • Slow down!Transactions get faster and faster; everyone hounds each other for more speed in every phase of a closing.
     
    If one does not find a way to make the transaction go faster the real estate agent does not send any more closings, the bank takes the closing firm off their approved list, and the buyer, seller or borrower give them a 1–star review on GOOGLE™.
     
    Scott says settlement agents must come to a FULL STOP. Yes, a FULL STOP to properly protect everyone including the law firm to make 100 percent sure procedures are followed and everything makes sense.
     
    One more phone call might be the very step to save the customer and law firm; it was the most important step for the prevention in this story.
     
  • Appreciate your employees because they are the ones who actually stop fraudsters in their tracks.

We agree with you Scott. Great job Shellie! The National Escrow Administration interviewed Shellie to ask her how she became familiar with this type of scam in order to recognize the signs. Shellie regularly reads Fraud Insights.

In addition Shellie is keenly aware of the many warnings settlement agents and law firms use in their email signature line such as, "we will never revise our wire or disbursement instructions by email." One phone call is all it took to confirm her suspicions were right.

 

 
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