Title company owner sees education as best fraud deterrent
January 7-13, 2019
By Jay Edwards
Imagine you show up at your title company to close on the home you’ve purchased. Near the end of the meeting, your closing agent looks up at you from behind his desk and says, “That about wraps it up, now all I need from you is the cashiers check for $57,000.”
Surprised, you give him a confused look. But he just stares back at you, obviously waiting. So you say, “No, don’t you remember, I wired it to that credit union per your instructions in the email that you sent me yesterday.”
Now he’s giving you an even stranger look, and the next words out of his mouth make your stomach drop, “I didn’t send you an email yesterday. I wasn’t even at work yesterday, no one was, because of the snow.”
This was the scenario that played out in the office at Pulaski County Title in Little Rock last January. The closing agent was Ryan Roehrenbeck, who immediately went looking for the company’s owner, Billy Roehrenbeck.
“It was the week of Martin Luther King’s birthday, which was on Monday and was a holiday for us, then the next day we were closed again because of snow,” Billy Roehrenbeck told me recently from the company’s offices on Cantrell Road. “Ryan told me that he had not only not emailed her on Tuesday, but he had never emailed her at any time during the transaction. In fact, no one in our office had. He had only communicated with her over the phone.”
The unsolicited and fraudulent email she had received from Ryan read something like, “Hey, just touching base with you since we’re closing tomorrow. I just wanted to make sure everything was in line.”
“The email looked legit,” Billy said. “It had our insignia, and even a logo from a trade association we had previously been affiliated with. It’s not that hard to create using Google and some cutting and pasting.”
But what about the sender’s email address?
“It had a small difference,” Billy said. “Instead of Ryan’s real email, which is, firstname.lastname@example.org, they used email@example.com.”
So the client responded to the email, saying all looked good on her end.
Then the perpetrator emailed her back, saying, “You know, we really need to get you to wire your money so that tomorrow when you come in to close, everything will be funded.”
She answered that she would.
About the same time, she got another email from someone she believed was her lender, with the lender’s logo attached (more cutting and pasting). This email read, “Hey, the title company is trying to reach you about wire instructions.”
She responded, “Yes, I’ve already talked with Ryan at Pulaski County Title.” Then she received the wire instructions.
“It all looked on the up and up,” Billy said. “It appeared even more legitimate because she was receiving the same instructions from what looked like two separate and real institutions that she trusted.”
Back to the day of closing, Billy had gathered enough information to contact a friend of his at the FBI. “He said it would be difficult because it was less than a million dollars, but he told me to go to the website, ic3.gov, which is the FBI’s Internet Crime Complaint Center. There’s a form there to fill out.
“Honestly, I wasn’t optimistic,” Billy said. “I thought it would end up in a stack of papers on someone’s desk and not be seen for a month. But I was wrong, because after we’d filled out the form, within thirty minutes an agent had been assigned. That’s why it’s so critical to go to the site and fill out the form as soon as possible.”
They knew the funds had been wired to a credit union in Delaware. Billy contacted them himself. He got in touch with a compliance officer, who was sympathetic and told him what she could. He learned that after a portion of the $57,000 had been peeled off, and placed in a member’s account at the credit union, the rest was wired to a Wells Fargo branch in California. When it got there, another portion was peeled off and paid out to a homeless man.
After that, the rest and most of the money, would have likely been sent overseas. But the FBI, because of the quick actions back in Little Rock, was able to recover $44,000 for the victim.
“You know, some of these people along the way who are getting smaller portions of the stolen money could very well be victims themselves,” Billy says. “It’s all part of the scam, to cover the trail and slow down the FBI.”
In the end, Billy realized the best protection would come through education. “We have to get the word out,” he says. And that’s just what he’s been doing, through speaking to trade organizations in the industry, as well as private companies.
“Six or seven years ago I was at a convention for the American Land Title Association. They brought in an FBI agent to speak to us about wire fraud and in the following months things began to improve. The saying in our office became, ‘Pick up the phone and verify it (the account information before wiring funds).’
“Well, as title companies began doing a better job of protecting themselves, the criminals turned their attention to the consumer, and to real estate agents. Too often as a society we think of emails as a closed forum. Regardless of what system and software you have, hackers will figure a way in. That’s why it is critical for all of us in the housing industry to educate each other and our clients. So much damage can be avoided by just picking up the phone and calling to double check. And change the passwords to your email, often.”
Law enforcement agencies say that if you do figure out you are being targeted for fraud, to play along, at least long enough to get specific wire instructions for the institution where the money is to be sent. And if you are a victim of fraud, go immediately to that FBI site, ic3.gov. It could save you a lot of money.
“The things that used to keep me up at night,” Billy says, “had to do with title searches and if we’d done the best job we could at researching the historical docs to issue a title insurance policy to protect the customer. Now what keeps me up are the thoughts of all that money moving around. Is it protected?
“This is a message all need to hear. Before you write your offer and acceptance, before you talk to the loan officer, before you issue the loan estimate, before the title company implants the order in our system, communicate with the client that there is not going to be an unsolicited request for a wire in the transaction.
“This is not solely a title company problem. The breach can come from anywhere. We all have to take it seriously and we all have to work together.”
Real estate transactions have become easier thanks to the ease of technology and the internet. That doesn’t mean that there aren’t potential issues, however, as scammers come in all shapes and sizes. This is how one local title company has worked to prevent wire fraud and how you can, too.