The Attorneys Insurance Indemnity Fund (AIIF) started receiving notifications from conveyancers about a particular conveyancing related scam at the beginning of 2012.
Since then, we have been notified of a number of such matters, some where the scam was successful and others where the conveyancer became suspicious and did not fall victim to it.
- The scammer strikes at a time when a property is about to be transferred and all the relevant documents are with the deeds office or on the day that the transfer goes through.
- These are all cases where, once the property has been transferred, the seller will be entitled to the proceeds of the sale after settlement of mortgage bonds, etcetera.
- The scammer telephones the person dealing with the transfer at the conveyancer’s office, pretending to be the seller of the property.
- He telephonically instructs the conveyancer to change the details of the bank into which the proceeds of the sale must be paid. Various excuses are used as to why these details are to be changed.
- He undertakes to send the conveyancer an e-mail confirming the instruction and the banking details.
- An e-mail with the banking details is later received from the scammer.
- Typically, the e-mail will be from a Yahoo address. It will provide a cellphone contact number (which, if phoned, is usually not answered). There is sometimes a request to contact the writer via e-mail.
- The conveyancer thereafter arranges for the proceeds to be paid into the ‘seller’s’ new account – which turns out to be an account in someone else’s name.
- The money is almost immediately withdrawn from the account.
- The problem is that banks do not have a facility whereby they can check the names of the account holders against the name used for the transfer where payments are made via the internet.
- The new bank account does not, therefore, have to be in the name of the seller. As a result, the person doing the transfer has no way of checking the veracity of the account holder’s name.
- Subsequently, the real seller queries why the proceeds have not been paid into his bank account (the details of which were initially provided to the conveyancer). It is only then that the conveyancer realises that this is a scam.
- In some cases the conveyancer becomes suspicious when he calls the scammer and asks more questions. The telephone is then put down. In other cases he telephones the real seller once he has received the e-mail, at which time he realises that this is a scam and does not pay the proceeds into the incorrect bank account.
Clearly, the fraudster would have to have – at the least – the following information at his disposal:
- the seller’s name;
- the name and contact details of the transferring attorney; and
- the date on which the transfer/bond documents were lodged at the deeds office for registration.
The question is: Who might have this information? The people who would fit into this category would be –
- the transferring and bond attorneys;
- the new bond and old bond cancellation banks and their attorneys;
- the seller;
- the purchaser;
- the estate agent;
- and the deeds office.
Links between the matters
In the earlier matters, the e-mail addresses were all the same or similar, for example Systel Root ([email protected]) or [email protected]
In more recent matters the address is similar to ‘recep/reception’ ([email protected]).
The cellphone number in most of the earlier matters was 076 832 5950. In more recent cases the number is 071 961 6142.
In all but one case that the AIIF has been notified of, the bond cancellation bank is the same bank. For this reason, the AIIF believes that there is collusion with employees at this particular bank and has had preliminary discussions with its forensic services.
In most earlier cases the fraudulent bank account is a savings account with another bank. The AIIF has also met with a forensic investigator from this bank, who has been looking into this situation. It seems that many of these accounts were opened by people with addresses in a particular suburb.
In more recent cases, the fraudulent bank account is one with yet another bank.
These incidents have occurred in various jurisdictions with different deeds offices attending to the transfers. The AIIF has therefore concluded that it is unlikely that the information could have been obtained by the scammer from the deeds office.
Likewise, various estate agents have been involved – and in some cases no estate agent at all. It therefore seems that there is also no link in this regard.
The sellers and purchasers are different, so there can also be no link there.
The transferring attorneys differ and various banks are involved where the purchaser had obtained a new bond over the property. These parties can, therefore, also be ruled out.
In one particular matter, the conveyancer advised that she was called on her cellphone and that only one bank and its attorneys would have had her contact details. When her client investigated further, he discovered that the account holder worked for this bank.
Ann Bertelsmann BA (FA) HED (Unisa) LLB (Wits) is the legal risk manager for the Attorneys Insurance Indemnity Fund in Johannesburg.
All is not lost, however, as the deceived conveyancer can start proceedings to recover the money from the account holder into whose account the money was transferred. This apart from preferring criminal charges. Of course this does not obviate the immediate loss.
We also experienced an attempted fraud by a cancellations employee in a Home Loans Office which is located in Johannesburg. When we reported this attempted fraud to the Home Loans Liaison Manager, we were really surprised that the bank seemed so indifferent to the problem and allowed this fraudulent practice to continue putting many conveyancers and sellers at great risk. Only a year or two later did the bank decide to do something about it.
This is how the fraudster operated:
The person obviously was aware of the fact that our firm had been appointed as the bond cancellation attorney. We suspect that the person was a bond cancellations clerk sitting in the cancellations department of the bank. Once the matter had come up on prep and/or had been registered and we emailed the refund payment details to the bank clerk. Specifically, these were the actual and original bank account details of the seller whose bond had just been cancelled.
Probably, then was it was no coincidence that after we had emailed the original account refund details to the cancellations clerk, did we receive a telephone call from somebody who pretended to be the seller to advise that any refund must now be paid into a different bank account. The reason given, was that because the seller was moving, she had now changed her bank account and had moved to a different bank. Therefore, we as the cancellations law firm must tell the bank to pay the refund into this new bank account; different from the original one that the seller originally gave. As this was a telephone request, my secretary requested the caller to send the new bank details to us in writing, which the caller said she would do; but then did not do.
Later, the same person repeatedly telephoned trying to give us new bank details over the phone, obviously trying to pressurise us into sending an urgent email to the bank to organise a quick refund into the bogus bank account. She clearly tried to skip the written instructions request, that my secretary had made.
Happily my secretary suspected the fraud and rather reported this incident to the bank and nobody suffered any losses. At least a year or two have passed without any effective prosecutions having been completed. Denoon Sampson
There is one obvious but vital factor which has not been referred to in this article. That is the DOTS system which is now available to every Tom, Dick and Harry with a computer, making it possible for anyone to track the transaction through the examination process - at any time. If this process were restricted to conveyancers only it would make these schemes much more difficult to pull off.
Another source which has all the information including telephone numbers etc is SARS. It is also worrying that very personal details including tax numbers are freely available to all on the Transfer duty document lodged in the Deeds Office
Leave a comment: