By Lisa A. Tyler
National Escrow Administrator
We have been reporting regularly about the absentee owner scam and regulators nationwide are now distributing Advisory Messages to the real estate industry, specifically real estate agents, making them aware of the scam.
The essence of the scam is that a real estate agent is contacted about selling a property by a fraudster in an attempt to steal the proceeds from the sale. Initial contact is often made through email. The fraudster is looking to sell the property, usually on an expedited basis, because they need the proceeds for another investment.
In truth, the fraudster has selected this particular property, which they do not own, because it is undeveloped or overlooked by the actual owner. Fraudsters can go to great lengths to appear legitimate in these schemes, such as:
- Contacting brokers via email to initiate the transaction. This might be the fraudsters attempting to cover up having an accent or cover-up not speaking the same language as the actual property owner.
- Avoiding in-person appointments by explaining they are currently working out of state or working out of the country.
- Developing a series of excuses for (1) why they want to sell the property, (2) why time is of the essence, or (3) why they do not want other family members to know about the transaction.
- Emailing doctored documents. Copies, photographs or scanned images of driver’s licenses or other government issued identification, have been presented to real estate licensees which purport to show the fraudster is who they claim to be. It is important to remember that when copies, photographs or scanned images are digitized and delivered, the quality of the image is degraded and, therefore, it is easier for the fraudster to doctor the image.
The last point is illustrated perfectly in the story entitled "RICKY sue racer." Read the story for more details.
Wire fraud is an ongoing threat to the industry. Thieves are attempting to steal homeowner’s down payments, real estate agent’s commissions and loan payoff proceeds. And they are still attempting to steal seller proceeds. Read "$1.9 million reasons" to discover how a title company recently fell victim to the diverted wire transfer scam.
As discussed earlier this year in money laundering and real estate transactions articles, federal laws require that recipients of large "cash" payments report those payments to the Internal Revenue Service (IRS). The regulations require businesses that receive "cash" payments in excess of $10,000 to report the funds received on IRS Form 8300 – Report of Cash Payments Over $10,000 Received in a Trade or Business. What types of deposits fall within the definition of "cash?" To discover what is and what is not reportable read "WHAT is cash?"