Delays Turn Into Dismay

Nicole Andrews, an escrow officer with Chicago Title Company of Washington, in Tacoma, opened a sale transaction on April 3, 2020, with an anticipated closing date of May 15, 2020. The earnest money check in the amount of $1,000 was deposited and cleared the bank.

The buyer kept negotiating contract extensions past the May 15th closing date with the seller. The buyer and seller had signed all the closing documents; the escrow officer was waiting on the buyer’s funds to close, as well as loan funding from a private hard money lender.

The buyer told his agent, the escrow officer and the lender that the down payment and closing funds were in his account on hold and a wire would be sent as soon as, “…they were clear.” On June 1, 2020, an unexpected “test wire” appeared in the escrow trust account in the amount of $49.54. The incoming wire referenced the escrow number for the file; the funds, however, came from an entity called “Right on Shine” — which was not a party to the transaction.

The next day, the buyer appeared at Chicago Title Company and gave Alex Tarin, escrow assistant extraordinaire, what looked like a business check with the individual buyer as the remitter. The check was in the amount of $101,380.

Alex thought the check looked odd because it did not contain issuing bank information, such as the city, state or routing number or other identifying bank information that would normally appear on the check. Alex stepped away with the check and showed it to the escrow officer, Nicole Andrews, who quickly captured a picture with her phone. Alex returned to the buyer and handed the check back to him. Alex let him know it was not acceptable for closing and he would either need to provide a cashier’s check or to wire transfer the funds.

The buyer left with the check and Nicole sent the picture to the issuing bank to verify if the check was valid. The representative at the bank quickly confirmed the check was not valid. They asked Chicago Title to turn the check over to them, but Nicole told the representative the buyer left the office with the check in his hand. The banking representative stated they would monitor the account (which was a valid account — but did not belong to the buyer) to see if the check was deposited elsewhere.

Nicole and Alex resigned from the transaction, letting the listing agent, selling agent, lender and title officer know the buyer had attempted to deposit a counterfeit check. The title officer performed further research and verified the organizational documents the managing member had presented for the purchasing entity were altered and forged. Nicole requested the accounting center reject the $49.54 wire transfer; the $1,000 earnest money deposit was returned to the depositor.

Due to their instincts and high degree of professionalism, Alex and Nicole saved the Company from depositing a counterfeit check and refused to do any further business with the buyer. For their efforts and expertise, the Company has rewarded them $750 each.

Moral of the Story

Checks deposited into escrow should always be examined for irregularities. The moment an escrow officer discovers funds deposited into escrow are counterfeit or returned for non–sufficient funds, everyone involved in the transaction needs to be notified.

It is disheartening that due to the buyer’s action the seller had taken the property off the market during the most valuable market time of the year, but Alex and Nicole acted swiftly to make sure everyone was aware of the scam the buyer was perpetrating. By notifying all parties through a resignation as escrow holder, they enabled the seller to terminate the contract and put the property back on the market. Bottomline: The Company does not tolerate criminal activity of any kind.

-Lisa A. Tyler, Delays Turn Into Dismay, Fraud Insights September 2020 issue