NAPLES, Fla. – Oct. 31, 2018 – When Maryland residents Roger and Shirl Lynn Butschky sold their home in East Naples more than a year ago, they didn't get their money after the closing.
Every dime – more than $450,000 – went to a fraudster who sent bogus new wiring instructions to the couple's title company at the last minute without their approval or knowledge, according to court documents and a report filed with the Naples Police Department.
The Butschkys sued Dunn Title in Naples and several of its employees for negligence and breach of fiduciary duty in 2017, seeking damages and a jury trial. The lawsuit is still pending in Collier Circuit Court.
Real estate wire fraud, a form of cybercrime that intercepts money transfers in home sales, is nothing new. It can take many forms.
Local experts say Southwest Florida is ripe for such scams because of its wealth and plentiful supply of high-end homes.
Title fraud is common
"It's common. It actually happens all over the country – this title fraud," said Amanda De Medeiros, fraud line coordinator for the Lee County Sheriff's Office.
Last year the FBI's Internet Crime Complaint Center received more than 300,000 complaints, with reported losses of more than $1.4 billion. The real estate sector was heavily targeted with 9,645 victims, who lost more than $56.2million.
In 2016, the number of fraudulent wire transfer scams reported by title companies and closing agents to the Internet Crime Complaint Center increased by 480 percent. The crime has been reported across the country – in every state.
Many title companies, Realtors, real estate lawyers and banks have tightened their rules and procedures for closings to try to fend off fraudsters. Still, sellers and buyers should stay alert, especially as a sale draws closer.
"Just stop for a minute and think about things and double check and triple check. Pick up the phone and have a conversation with your title agent," said Bryan Oglesby, director of public relations and outreach for the Better Business Bureau serving West Florida.
In the Butschkys' case, the FBI got involved after the couple's money came up missing.
After investigating the fraud, the FBI recovered less than $30,000, so the couple still lost more than $421,000 on the sale of their home, according to court documents.
"It's very unfortunate. They lost a lot of money," said their attorney Michael Petruccelli, with offices in Naples and Fort Lauderdale.
Wiring instructions changed
According to court documents, the scammer posed as a legal representative for the transaction in an email sent to the closing agent and asked for a change in the money transfer instructions, claiming the request came from the Butschkys' son.
No such directions came from the couple's son. "That was from the fraudster," Petruccelli said.
In their lawsuit, the Butschkys accuse the title company and its employees of not having the proper policies and procedures in place to avoid such scams and failing to meet industry standards in their handling of the closing.
Additionally, the couple claims Dunn Title's employees should have spotted red flags that ought to have put them on high alert before following the new wiring instructions.
Court documents show there were three attempts at changing the instructions for the money transfer. After two other banks refused to clear the funds because the sellers' names didn't match up with the bank account numbers, Iberia Bank finally accepted the money anyway, which then quickly disappeared.
In a report filed with the Naples Police Department, Michelle Roman, the closing agent for the transaction, said she didn't suspect anything until she learned the Butschkys hadn't received their money a few days after their home sold. She said that's when she contacted the IT department at Dunn Title, which looked over her computer and concluded her email had been hacked.
Roman reported Dunn Title was "a victim of a scheme to defraud" to the Naples police and she wished to prosecute on the title company's behalf.
In a court filing, Roman and the other defendants argue the lawsuit should be dismissed for several reasons. Their arguments include the suit wrongly lumps the defendants under a single count of negligence and assumes a fiduciary duty that doesn't exist between Dunn Title and the sellers.
Omega Title Naples LLC – doing business under the name Dunn Title – had a contract with the buyers, not the sellers.
Roman no longer works for Dunn Title. She chose to leave the company, but she's still in the title business in Naples. She declined to comment.
Title company too busy
In sworn testimony, Roman said mistakes were made at Dunn Title because it didn't ha