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Phony check is main lure in realty scam

With Internet scams on the rise, agents are urged to approach offers with caution

POSTED: March 6, 2011 12:29 a.m.

The deal sounds like a real estate agent's dream. An international oil man e-mails his interest in a Lake Lanier property listed around $800,000. He offers to buy the house, sight unseen, then asks for instructions on sending an earnest check for $640,000 to place the home under contract.

What does the agent do?

Calls a lawyer — just in case the offer is real.

"He sounded quite legitimate. But it sends off bells when they want to pay cash and it's in the high price range like that," said Monica Crenshaw, a Realtor with Gainesville's Jack Waldrip Real Estate.

"Immediately, we think this is probably not legitimate. But you don't know. You have to follow up."

Crenshaw sensed the bogus buyer when he first contacted her several weeks ago. Gainesville attorney Scotty A. Ball cornered the scam from there after the property firm's referral.

He communicated with the "businessman" named Leo Sung and his supposed lawyer, identified on documents as Erich Thompson.

Ball insisted on the earnest monies being wired.

Instead, the Canadian buyer and his agent sent a check.

That's where the scam has to stop, if it's to stop at all, said FBI Special Agent Stephen Emmett, spokesperson for the bureau's Atlanta field office.

"They expect you to take a check. But yet when the money starts flowing from you back to them, they want it to be a Western Union or MoneyGram," Emmett said. "What they're doing is playing on the bank's lag time in determining the validity of these checks, which averages from 10-15 days. They're exploiting that gap in the banking system."

Such Internet crimes are an increasing category nationally, with more than 300,000 complaints made in 2010 alone, according to the Internet Crime Complaint Center, a national agency partnership known as IC3.

In Georgia, 6,563 complaints were reported to IC3 in 2010, with each one costing the actual victims an average of $1,350. "Overpayment fraud" schemes, such as the one discovered in Gainesville, usually cost Georgia victims about $2,890 on average, an IC3 report said.

While estimates guess at how much money the public loses in such scams, since many cases may go unreported, what authorities know well are the vulnerabilities these thieves tap.

The Gainesville example exploits the banking system's procedural delays in handling checks, Emmett said. He also mentioned the international root of the inquiry as big clue.

"If an individual in Arizona did this we could track them down and they're committing wire fraud," Emmett said. "It is a real logistical deal to go after an international scammer. They're taking advantage of the international borders."

There is no rhyme or reason as to who is targeted with any number of e-mail addresses included in one blast.

"It's easy enough for them to put their scam in motion in terms of high volume," Emmett said. "They only need a few to bite for it to be lucrative for them."

Despite the waste of time and energy caused by the attempted ruse, Kerstin Crawford, managing broker for Jack Waldrip Real Estate, embraces Web technology as a valuable business tool. However, she advises her agents to be on guard.

"We've seen more questionable things since we've come up with Craigslist and social media," Crawford said. "Today's technology is awesome with what we can work with, and the buyers are well informed. But there is always somebody out there trying to take advantage of someone. That's what we have to be aware of."

Even Ball was surprised by the real look and feel of the supposed check. The stationary was headed with "Royal Bank of Canada." The check included a watermark along with squares for fingerprint identification on the back, near the endorsement line.

In addition to sensing a fake, he learned about the details of what would have happened from other Georgia real estate lawyers who have encountered the same dupe.

If Ball had made the deposit, a U.S. bank conceivably would have posted the funds. The Canadian "buyers" would have requested a series of wire deposits to offshore accounts in figures such as $10,000 and $15,000. Their excuse for the cables: house-related expenses like furniture, Ball said.

Soon enough, the U.S. bank would've realized the check was phony. And someone in Gainesville would have been out thousands of dollars.

"It is kind of an unusual scam that looks legitimate on its face, but apparently it's happening around the state and around the country. Once you've fallen into the trap you're out of luck," Ball said. "They are preying on people who may not really know, because for most real estate agents this type of transaction is their dream come true."



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