CBS 58 Investigates: Homebuyers exposed to down payment deception
MILWAUKEE (CBS 58) -- Potential homebuyers are at risk of falling to a $26 billion scam. Fraudsters send legitimate looking e-mails to homebuyers ready to wire their down payments during the closing process. The instructions end up having the homebuyers wire their downpayments to accounts held by the crooks, not title companies. The homebuyers, suspecting nothing wrong, often don’t find out about the fraud until it’s too late.
THE PROBLEM
Every day hundreds of Wisconsinites buy new homes, and the risk of fraudulent transactions keeps real estate industry executives on edge.
Wisconsin Land Title Association President Cheri Hipenbecker said, “This wakes me up at night.”
More and more unsuspecting homebuyers are wiring their down payments to fraudsters. CBS 58 Investigates obtained F.B.I. data showing Wisconsin victims lost nearly $2 million in 2018. Victims across the country lost $150 million that same year.
Hipenbecker said, “There’s no end to this.”
THE SCAM
Realtor Kel Svoboda said, “It’s disastrous for some.”
He described the scam like this: Thieves break into someone’s e-mail. It could be a homebuyer, a real estate agent, a title agent, anyone connected to the real estate process. Then the thieves sit back and wait until they see a conversation about a closing and down payment appear.
Svoboda said, “And then they jump on it.”
The crooks will send an e-mail with wire instructions, but the instructions wire the money to a bank account the thieves control, instead of the title company’s. The FBI said these crooks are very convincing.
Milwaukee FBI Supervisory Special Agent Eric Burns said, “They’re excellent.”
Burns said the thieves match the words, the language, even the tone of all the emails they’ve watched.
He said,” They get it down to the most minute detail to make sure when they take their opportunity that it’s going to be successful.”
CBS 58 Investigative Reporter Mark Stevens asked, “For the people that lose their money, is it most likely that money is gone for good?”
Burns said, “Yes. Mainly because people don’t know they’re victimized until it’s too late. Until there’s nothing really we can do, the money has, the money is wired, it’s gone.”
Most of the money is sent out of the country. The crooks target anyone and everyone. It happened to a Wisconsin Foxconn executive in February 2019. He wired $260,000 to an account he thought was his title company’s. It turned out he wired the money to an account controlled by Charles Kuti.
Court documents reviewed by CBS 58 investigates show Kuti scammed at least four other victims from his Chicago apartment. He stole more than $640,000. Much of the money was transferred to other accounts and is likely overseas. Kuti used a fake passport and fake immigration documents to open the accounts.
Hipenbecker said, “They just believe that the email can’t be wrong, it has to be right.”
THE SOLUTION
Hipenbecker said her association supports a potential reform, make banks match the account number and the account name on wire transfers. Congress sent letters to the Federal Reserve asking if that was possible. CBS 58 Investigators obtained the Fed’s response. It said that solution isn’t workable in the current wire system.
TIPS
If this happens to you, call the FBI immediately. They may be able to get some of the money back.
To prevent this, if you get an email with wire instructions, the best advice is to ignore it. Call the business you’re supposed to wire any payments to directly and confirm where to send the wire.