Commercial Loans Blog

Commercial Loans and Wire Fraud

Posted by George Blackburne on Thu, May 9, 2019

Wire FraudAs I handed my dad his 50th birthday card, he looked at me with tears in his eyes...  Then he said, "You know, just one card would have been enough."

Yesterday I took my seven-hour annual update course for my NMLS license.  During the class, my wonderful NMLS instructor shocked me with a statement.

The FBI received last year on the order of 3,150 complaints about con men who had stolen - using wire fraud - over $1.2 billion!

 

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Here is how the con sometimes works.  A prospective real estate buyer receives an email from the title company containing wiring instructions for the downpayment.  The trusting buyer wires his $60,000 ... and then discovers to his horror that the email didn't come from the title company.  It came from a con man, who used a fake email account that had a URL that was just one letter off from the real title company.

Of course, the dough is gone.  The bad guys close the account shortly after the money arrives.  The victim has no recourse.  He is totally and completely screwed.

Our instructor then opened the discussion to the other students to tell their own wire fraud war stories.  One lady told the tale of what happened to the large real estate brokerage firm for whom she worked.  One of the firm's clients wired FIVE-HUNDRED THOUSAND DOLLARS to one of these con men.  Poof!  All gone.  No recourse.

 

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As a result of the con job, none of the hundreds of real estate agents for this big real estate brokerage are allowed to deliver wiring instructions to the buyer.  The wiring instructions now have to come directly from the title company because of the legal exposure.

I could easily see a similar con job and wire fraud happening to a hard money mortgage company like mine.  Yikes!  Angela, Justine, Jesus - be very, very alert!

Many years ago, right out of college, I worked for a personal finance company.  We made personal loans secured by vacuum cleaners, furniture, and used auto's.  I got to actually go out and repossess vacuum cleaners and sticks.  Sticks were the borrower's furniture, stereo, and other personal property.

 

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My boss would say, "Go out and pop the sticks."  Obviously, pop meant to repossess.    You have never had an adrenaline rush like popping someone's car.  The loan officer meets the tow truck driver and together you follow the debtor.  The moment the debtor parks his car and goes into McDonalds, you rush into the parking lot, hook up his car, back out, and try to get away before he comes running out threatening to beat the crap out of you.  "Hey, dude, someone is hauling away your car!"  Some of these debtors were pretty big.  Yikes!  Haha.  It's funny now that I survived, but at the time your heart is pounding like a drum.

Here's an interesting legal fact.  Would I have been allowed to physically restrain the debtor while the tow truck driver drove off with his car?   Could I have pushed myself into an apartment to repossess a vacuum cleaner?  No.  A lender is only legally allowed to repossess personal property if he can do so without breaking the peace.

And then there were leg loans.  A leg loan is a loan made when some pretty young thing comes into the loan office, bats her long eyelashes, tells her sad story, and implicitly suggests to the branch manager that he may get "kissed".  Now the thing about leg loans is that the pretty girl never, ever makes a single monthly payment.

 

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I remember being sent out after work to collect a leg loan made by my boss.  She tried to feed me this this nonsense that she was not the debtor, but rather just the debtor's roommate. Uh-huh.  After working for a personal finance company for a year, you see the wrong side of hundreds of lowlifes.  The experience in the gutter proved to be very helpful later in life.  Therefore I didn't buy what she was selling, including possible romantic favors; but I still failed to collect a dime.  The law didn't permit me to go all Tony Soprano on her (shapely tush).  

My branch manager had to pay off the leg loan from his personal pocket.  The big finance company for whom I worked actually had a "leg loan policy".  Haha!  Apparently it happened to branch managers all over the 60-branch system.  If you make a leg loan, you either collect it or repay it yourself.

 

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I was surprised that my branch manager got conned.  He was a finely-tuned bullpucky detector.  He once taught me a VERY important lesson about con men.

"George," he said, "here is how you spot a con man.  If you are in a room full of 100 people, pick out the one person who you are absolutely SURE is not the con man.  He will be your con man."

On a beautiful sunny Saturday afternoon my buddy and I stood on the first tee of our golf club.  He had just pulled out his driver when a young woman in a wedding dress came running up to him, crying.  She slaps him in the face, turns, and runs away.  My buddy turns to me and says calmly, "I don't know what her problem is.  I distinctly told her only if it rained."

 

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"My ex drove me nuts.  She was awful.  We're watching a television show once, and it was about euthanasia - you know, mercy killings.  And she said, 'Would you do that for me if I was really sick?'  I said, 'I'll do that for you if you get the flu.  Just let me know.’” — Mike Destifano

 

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Topics: Wire fraud