Wired Away: Couple loses life savings during home purchase
The I-Team has a warning after a local couple's life savings vanished. They lost more than $300,000 during the purchase of their dream home in a scam that could happen to anyone.
There's very little homebuyers can do to protect themselves against the scam, which the FBI said is a crime drastically on the rise. So far in 2017 thieves have targeted $1 billion in real estate transactions, the FBI said. To do it, they send you a real-looking email telling you where to send closing money, but before you know it your life savings have been wired away.
William and Nancy Skog dreamed of a house on the river in Wilmington, Ill., but now their retirement is in shambles because they followed closing instructions sent to their email account.
"We were in shock. I could barely drive home, ya know," William Skog said, fighting back tears.
The Skogs unknowingly wired away $307,000 - their entire life savings - to thieves who convincingly posed as their real estate attorneys. With no money left, the Skogs' daughter bought the home for her devastated parents.
Jason Knowles: "What was that moment like at the closing table, when they said the money is not here?"
William Skog: "Again, it was like getting hit in the head. Terrible."
Nancy Skog: "As soon as they said it the tears started flowing. What are we going to do?"
WS: "So at that point I said, what do you mean the money isn't there? We sent the money two weeks before, that's what we were told to do. We had never done a wire transfer before in our lives."
Scammers used spoofing technology to make it look like the email was coming from their real estate attorney's assistant's address.
There was also an attachment with the attorney's letterhead, the address of the Skogs' purchase, title insurance company information, detailed instructions and even the exact balance owed.
"They were so good, because the emails, they copied the signatures from the lawyer, from the real estate - perfect," Nancy said.
There were some sentences in the fake letter with poor English like "...and have us set ready your closing" (emphasis ABC7's). Cyber security experts at Chicago's TrustWave said that's usually the only small warning sign.
"In fact, they can look like they are coming from your title company or your lawyer," Shawn Kanady of TrustWave said.
And anyone can fall for them.
"Absolutely, anyone can fall for it. Especially if an attachment comes along that looks like your closing documents. It's almost like another form of verification for you; here's my closing documents and it's coming from this, so it must be real," Kanady said.
The real estate attorneys at Fisher Berardi refused to talk to the I-Team on camera, but sent a statement in which they said they are the victims of criminals stealing their letterhead and logo from a real closing confirmation email that their office sent out two days before the fake letter was sent.
But Fisher Berardi firm denied being hacked, and said investigators found no evidence and that an independent forensic security audit showed "no irregularities" in its email accounts. Fisher Berardi said it uses encryption and anti-spoofing protocols, and puts warnings of wire transfer scams in emails.
Jason Knowles: "And these scam artists are trolling for these closings?"
Shawn Kanady: "Absolutely. They are doing a game of numbers scenario."
Security experts and the FBI said anyone could have been targeted by the hackers: The real estate attorney, the title company Citywide Title Insurance, the realtor. And although experts said consumers are usually not hacked, the Skog's email could have been compromised.
Citywide Title didn't respond to the I-Team's request for comment, and the realtor said she was "...very upset for the family."
"We will find out who was hacked and then we will conduct our investigation," said FBI Special Agent Eric Shiffman.
Shiffman said in a case like this, investigators scour the servers of everyone involved.
"What we want to do is find out where the point of intrusion was; who got the original hack, how did they get in, and what did the bad guys have access to," he explained. "In the vast majority of these intrusion matters involve a bad guy sending an email to your target asking them to click on a link which allows you to gain access to their system."
The Skogs' only slim hope to recover money may be through an insurance claim of whichever business may have been hacked.
Jason Knowles: "What would you like to say to this scam artist?"
William Skog: "I'd like to spend five minutes in a room with him. That's all I want to do. To do that to somebody is terrible."
Some businesses are turning to cyber insurance to protect themselves because regular insurance policies may not always cover these new and emerging threats. However, businesses are not required to maintain cyber insurance in Illinois.
To protect yourself on the front end, always verify with your known contact by phone before wiring a down payment. Most companies now insist on wire transfers because of what's known as a "Good Funds law," but you may still be able to use a cashier's check if it is deposited in advance of the closing.
Cyber Scams and Staying Safe:
General Tips:
You can avoid being the victim of wire fraud and closing money scams by being suspicious.
Always speak to your broker via phone prior to following wiring instructions, even if the instructions appear to be in response to an email chain.
Change your email passwords frequently
Double check all emails and email addresses.
Avoid emailing wiring instructions or discussing any business related to a purchase or sale on an unsecured network (like on public WiFi at a local coffee shop).
Alternate Ways to Protect Yourself
There is a statute in IL that does discuss that transactions involving amounts of money greater than or equal to $50,000 must be in the form of "good funds." This will require wired funds, checks from a closing agent or title company, a cashier's check or a check where the funds have been "collected."
Cyber Insurance
No businesses are required to have cyber insurance. This is a relatively new form of insurance coverage and there are likely as many good companies as not so good ones. If a company elects to purchase insurance that covers against cyber crimes, the company should do substantial due diligence before purchasing.
What is the Real Estate Industry Doing to Protect Clients?
Considerable education efforts by the National Association of REALTORS®, Illinois REALTORS and Chicago Association of REALTORS® have been undertaken to ensure that consumers and REALTORS® are aware of scams such as the closing money wire fraud. We discourage REALTORS® from discussing personal financial information over email, and there is an incredible amount of information available online for access.
