Here's A Scam We Came Across

6 Replies

We are selling one of our properties in New Jersey and decided to try the FSBO route. We've done this before but with much lower value homes. This particular one is much more up market and we listed at $500K list.

Within a few short weeks we were contacted by an investor from Beijing offering to purchase the property for $485K.  A $15K reduction.  

Being very wary of this guy we played along with it.  We looked up the address he gave us and it was the address of a very nice restaurant in Beijing.  He also provided a bank statement from an institution in Hong Kong showing $4 million.  We were not convinced but proceeded with caution.

We advised him to obtain a US attorney for the transaction, which he did.  Contracts were drawn up and he sent a check for $399K towards the purchase.  However, his attorney wasn't convinced the check was valid because it was a third party check.  The buyer  explained that the check was from his investment company.  It also came with a cover letter from his investment broker in Canada.  

His attorney called the Canadian broker and was immediately suspicious because he did not provide any sufficient answers and was very vague.  The attorney then contacted the third party company, the investment firm, and asked about the check.  The firm informed the attorney that they had checks stolen and as such they don't even use that bank account any longer.  The check is fraudulent.

So what's the scam?  It's on the attorneys.  See, had the attorney sent the check in to the bank, it likely would have taken some time to process.  During this time, the investor would have likely pulled out of the deal and asked that his money be returned.  Attorneys often don't wait for checks to clear and would have likely reimbursed this guy from their account.  When the checks fails to clear, the attorney would have been out $399K.

My own attorney admitted that reimbursing monies prior to checks clearing, is a normal practice.  After this incident, however, he said he will never do that again.  Thank God, no one lost any money to this scammer...this time.

Thanks for the warning. I bet ya'll are glad you followed your gut, and the attorney did too.

Yeah, a 5 or 10% deposit might have got returned.  Scammer got too greedy.

@Annette Hibbler  

  Maybe in some markets but every closing I have done for years the only funds that Attorney or title co will accept is wired funds not even cashiers checques .

Personal check would have to clear the bank before the attorney would convey title or he would be out of trust...

I do find it amazing though in the east coast wet closings were well known investors can walk in with personal checks an the attoney then cuts checks off his or her trust account to the seller and agents.. I personally would never do this. and like I said I have not closed a deal in many years with anything other than a wire.

A large percentage of checks are now cleared electronically.  Also, I find it hard to believe an attorney would reimburse funds from a deal that doesn't go through.  I have to believe there was a different angel to this scam.

Did the proof of funds look like this:

http://activerain.trulia.com/blogsview/3706285/high-end-property-scam-with-chinese-buyer

I had some guy going by Marcus Irman Lee from Toronto with some BS story about a sick kid in Hong Kong and how he wanted to make an offer on a house, but couldn't get to a bank because of his location. He sent me the proof of funds and it looked EXACTLY like the one in the link. Same balances and all. I emailed him back with the link and asked him if it looked familiar. Then I started emailing him horribly absurd pornographic photos. This was his email handle:

macusimranlee2014

I'm sure they catch a few every year in this scam. If the Nigerian's are so hell bent on getting me to believe some long lost dead relative left $48M in an account and they are contacting me to split it with me, I'm sure they catch a few greedy fools too.

Account Closed   I know what you're saying. Had I not heard it directly from my own real estate attorney, I would not have believed it either!

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