FBI: Hackers target homebuyers in $220 million real estate fraud ⇅
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One Northern California family preparing to buy a house got the shock of their lives. Money meant for the closing was hijacked, diverted to China and almost lost forever. It's called real estate wire fraud and is an increasingly common crime, according to the FBI. CNBC's Andrea Day reports. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi.
Aaron and Lindsey Fisher found their dream home not far from where they lived in northern California.
It was a stunning, $1.4 million home with an expansive backyard and nearby trail where they could hike with their four sons.
“It seemed too good to be true almost,” Lindsey said. “Exactly what we wanted.”
And thanks to a family inheritance windfall, they could afford it.
But everything suddenly went wrong.
Aaron, a psychology professor at UC Berkeley, wired $921,235.10, a number to this day he cannot forget, from his account at Bank of America.
Two days later, the mortgage company called asking about the wire transfer. The company inquired where the money was wired to and Aaron nervously said, “Wells Fargo.”
He was stunned when the representative told him, “Aaron, we don’t have a Wells Fargo account. You need to call your bank immediately.”
Aaron called his wife. “We’ve been robbed,” he told her.
The couple was hit by what is known as real estate wire fraud, an increasingly common crime. According to the FBI, consumers have lost more than $220 million in schemes like this thus far in 2020, a 13% increase from the same period last year.
“All of a sudden, everything felt threatening,” Aaron said.
According to documents shared with CNBC, here’s what we’ve learned about how the fraud went down in the Fishers’ case: The home buyer was having an email conversation with his real estate agent and legitimate representatives from the title company. Hackers somehow inserted themselves into the conversation, using email addresses designed to look like one or more of the participants in the deal.
“All of us thought we were communicating with each other, and every time we sent an email, we were communicating with the criminals,” Aaron said.
Documents compiled by the Fishers show the fraudsters emailed digital copies of the real closing documents and wire instructions that looked real from the fake email account
“These were the real closing docs. And so, I opened the PDF. I inspected them. All the numbers were right,” Aaron said.
However, the attached wiring instructions contained the wrong account information.
“Somehow, the fraudsters had got hold of the real closing documents. And so that gave them some comfort, that this was a genuine email,” said Paul Llewellyn, an attorney who represented the Fishers.
The Fishers contacted the FBI, which assigned an agent to the case.
The FBI says this type of real estate wire fraud has been around for years, but now criminals are targeting high-end markets, like New York, Los Angeles and Palm Beach, and expensive homes.
“In certain markets, you could lose tens of millions of dollars with one sale,” said Steven Merrill, the FBI’s financial crimes section chief. “The ones [markets] that are most lucrative are the ones that they’re probably going to target.”
The Fishers’ money was wired to a real account number, but the account name on the fraudulent wiring instructions, Schlossberg & Associate, LLC., appears to have been made up.
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