Nigerian fraudsters sell a Aussie House

As some of you may have already heard, it looks like the Nigerians scammers have learnt a new trick.

A South African who had two investment properties in Western Australia had his email broken in to, and they managed to capture documents relating to the properties. Then using a combination of email, telephone and fax they sold one property and nearly sold the other and funnelled the money to Chinese bank accounts.

The unfortunate landlord only found out when he was contacted by a neighbour. To stop the second sale, he had to fly to Australia to block the transaction, whilst the first house was sold in June.

REIWA’s Brian Greig has said that the real estate agents involved in the sale did not do anything wrong and followed the correct process. “If they are sophisticated as they seem to be, identity checks will not be enough — they can forge them.”

Since the number of property transactions without any face to face contact is increasing, its very difficult to clamp down on this type of fraud. No one seems to be sure how to stop it which could cause serious problems if this becomes more popular with fraudsters.

Show CommentsClose Comments

28 Comments

  • Ryan O'Grady
    Posted September 22, 2010 at 8:30 am 0Likes

    Hi Nick, welcome to Business2. Look forward to your future posts.

    Glenn Rogers found this story http://www.abc.net.au/news/stories/2010/09/21/3018035.htm which provides further information.

  • Glenn Rogers
    Posted September 22, 2010 at 8:37 am 0Likes

    As I said –

    How can a mans home be sold fraudulently and the new owner gets to keep it ???.

    The real owner didnt sign anything surely the buyer has no rights against the real owner to keep the property.

  • Craig
    Posted September 22, 2010 at 8:51 am 0Likes

    I read this the other day and it seems incredulous that the contracts would not be considered null and void after being signed fraudulently.

  • Emily Sim
    Posted September 22, 2010 at 8:53 am 0Likes

    I think this case adds weight to the argument that email can not be replied upon when taking contract altering instructions from vendors and landlords.

  • Vic
    Posted September 22, 2010 at 8:55 am 0Likes

    Raises lots of questions:

    – How did the agent confirm the veracity of the vendor?- who witnessed the signature to the agency agreement?
    – Was the property offerred for sale at Market price? – if not this would be an indicator to the agent that something was not quite right.
    – How did the conveyancer confirm veracity of the transfer document?
    – How did the agent get a key for inspections? or were there not any inspections?
    – Is the agent liable to pay back his commission?
    – How did the Lands Title office verify the signatures to the tranaction- or do they have an obligation to do so and if not why not?

    It seems so easy to say that the agent did all the right things, but what were these “right things” that he did?

  • Nick
    Posted September 22, 2010 at 9:04 am 0Likes

    Thanks Ryan. 🙂

    Emily, email is valid for legal documents. If everyone used digital signatures on their email this would be a lot more difficult to pull off though. You’d have to either guess the password or trick a certificate authority which isnt easy.

    My main question is why the agent never gave the owner a call?

  • Vic
    Posted September 22, 2010 at 9:21 am 0Likes

    and more questions.

    – who held the title?
    – if the Bank held the title deeds, under whose authority did they release it?
    – If it was a bank involved, why did they not verify signatures on their authority to release and settle?– which they must do.
    – if the real owner had the title deeds then how were they produced for the transaction?- or were the deeds declared lost, then this would have required a fairly structured process for applying for a new title deed.

  • Peter Mericka
    Posted September 22, 2010 at 9:36 am 0Likes

    I would like to know how the real estate agent came to be saddled with the blame, when the lawyer/conveyancer representing the “vendor” would have had carriage of the matter in terms of preparation of sale documents and the transferring of legal ownership.

  • Glenn Rogers
    Posted September 22, 2010 at 9:40 am 0Likes

    Seems to me the real owner should have nothing to fear, and it’s the buyer who should be suing his lawyer for allowing him to buy a property fraudulently.
    It’s not good enough to give the real owner compensation, he didnt sell his property and it is still his in my opinion.

  • Greg Vincent
    Posted September 22, 2010 at 10:54 am 0Likes

    I can’t believe my eyes…Peter Mericka are you on the side of the agents now?

  • Peter Fletcher
    Posted September 22, 2010 at 11:52 am 0Likes

    Glenn

    Under the Torrens title system a purchaser who acquires a property as a result of a fraud (so long as they weren’t party to the fraud) receives an indefeasible title on registration of the forged or fraudulent instrument. The former owner has no recourse against the buyer.

    Whilst this fraud is the first time in Australia a person has lost their house, cases involving mortgage fraud are common. For example, Australian Rugby House was “stolen” in 2006 and cheque for $14.4 million was paid out as a result to buy 606 kg of gold bullion. Only quick thinking by staff at the Perth Mint foiled the crime.

    For further reading download Fraud in Conveyancing by Paul Watkins (PDF download will start immediately). The paper outlines a number of instances of mortgage fraud and left me in no doubt whatsoever that what happened to Mr Mildenhall should come as no surprise to industry regulators.

  • Terri Cooper
    Posted September 22, 2010 at 12:06 pm 0Likes

    Lots of unanswered questions here .. the news this morning said that the original instructions came via email from Nigeria with a bad command of English – surely either the agent or the solicitor should have been immediately suspicious and not proceeded without futher detailed investigation which should have included communication with the owner on the Title deed. I can;t understand why such a contact can be legally enforced – in my experience, many contracts are rescinded when there is evidence of negligence or misinformation from either party to the contract. If I was the registered title holder, I would be taking this further! Terri

  • Glenn Batten
    Posted September 22, 2010 at 6:15 pm 0Likes

    Nigerian scammers are cunning buggers… but these guys are better http://www.419eater.com/

    They scam the scammers…. Have a read of how they turn the table on these guys.. they provide copies of their emails with the scammers and photos they trick them into providing.. A fantastic belly laugh!!

    I remember replying to one of their scam emails one day asking if there emails actually worked as their story was just so unrealistic. I used a few expletives and let them know what I thought of them!!!

    They wrote back with an offer… If I would write a more believable email that would convert better they would offer me a percentage of the action… unbelievable!!!

  • Glenn Rogers
    Posted September 22, 2010 at 6:42 pm 0Likes

    “””””””””””Under the Torrens title system a purchaser who acquires a property as a result of a fraud (so long as they weren

  • Glenn Rogers
    Posted September 22, 2010 at 8:04 pm 0Likes

    This means that you can be sitting at home and someone can knock on your door and announce the house is now theirs and move your stuff onto the nature strip and move in.

  • George Rousos
    Posted September 22, 2010 at 9:56 pm 0Likes

    In the U.S it’s actually mandated that every title transaction carries title insurance so if this does happen both the homeowner and/or the bank which owns their mortgage are covered.

    On another note, here is the relevant web page to do with identity fraud http://www.lpma.nsw.gov.au/land_titles/identity_fraud.

    The landtitles website in NSW, only recommends that stringent processes be adopted in verifying the identity of person(s) claiming a right to deal with the land. I think it should be the lawyers responsibility to arrange for a personal reference that must be done using the LPI approved form at http://www.lpma.nsw.gov.au/about_us/faqs/proof_of_identity and be provided by an Australian citizen certifying that they have known the person being referenced for at least 12 months.

    This form must also be supported by other documentation (excluding a personal reference) that identifies the referee as an Australian citizen.

    The referee has now consented and ackowledged that the evidence of identity in the personal reference maybe checked with the relevant issuing authority.

  • Peter Mericka
    Posted September 23, 2010 at 5:02 am 0Likes

    Greg Vincent, you must understand that I have never been against real estate agents. I am against behaviours that are wrong, no matter who commits them. If a lawyer or conveyancer prepared the sale document, I do not see why the real estate would be carrying the blame.

  • Vic
    Posted September 23, 2010 at 5:30 am 0Likes

    Peter,

    Whilst I agree that the conveyancer has a great deal to answer in this transaction, surely the agent had a resposibility to verify that he was selling something that actually “belonged” to his client.
    And also, whoever held the Title deeds must be culpable in some respects. I cannot believe that the Nigerians held the deeds and passed them over to the purchaser’s conveyancer at settlement.

    A lot more answers to questions yet before anyone can say who should bear the brunt of the blame.

    But it does add to the debate, you generated, on whether agents can also be conveyancers.

  • Glenn Rogers
    Posted September 23, 2010 at 9:03 am 0Likes

    Lawyers/conveyancers are where the blame should rest, they have the job of ensuring all the legal docs are OK, not the agent, he might do a contract but it’s up the the legal people to do their searches and make sure all is OK before small fortunes are handed over at settlement.

    I still don’t accept that a sale under these circumstances is binding on the real owner of the property, that is just ridiculous.

  • Vic
    Posted September 23, 2010 at 9:27 am 0Likes

    So, an agent is allowed to sell a property without verifying ownership???
    Is that what your’e saying Glen?

  • Nick
    Posted September 23, 2010 at 9:31 am 0Likes

    These guys were extremely good, they arent the low level scammer you get lots of emails from. These guys knew exactly what they were doing and what needed to be done.

    I wouldn’t fault any of the parties involved without more information.
    As far as I can tell, the sales were just two normal sales by a absent landlord and the fraudsters did everything perfectly so the sale went through.

    What needs to be figured out is how to stop this without hindering absent landlords from selling property.

  • Vic
    Posted September 23, 2010 at 12:32 pm 0Likes

    Nick agree… no blame game until all questions are answered, which includes: can an agent sell a property/place it on the market, without verifying the rightful owner (s)?

    Recently a family member split with her partner.The partner went to an agent to place their joint property on the market for sale. The agent accepted the partner’s signature without seeking consent from the other party. The agent had to, under legal advice rescind the agency agreement.

    And until answers are provided for questions that I have raised, and other will raise, you cannot put in place systems and or proceedures that will minimize the risks of it happening again.

    Did you see the US senate enquiry into the deepwater oil spill. Many questions were raised and many answers given.. only then will the committee issue a report/recommendations.

    Now is a good time to raise all the questions we can instead of taking uninformed defence positions before answers are given.

  • Glenn Rogers
    Posted September 23, 2010 at 3:38 pm 0Likes

    Vic what I’m saying is the agent can sell a property with reasonable proof that who he’s dealing with is the owner but the lawyer has the final word and has to ensure everything is ok before settlement.
    Agents arent qualified to take on responsibility to the point of someone handing over a cheque for half a million $ or whatever it may be.

  • Glenn Batten
    Posted September 24, 2010 at 11:21 am 0Likes

    Peter Mericka,

    *********Greg Vincent, you must understand that I have never been against real estate agents. I am against behaviours that are wrong, no matter who commits them.***********

    Surely you jest? Honestly who do you think you are kidding making that statement on a blog for real estate agents??

    You have committed in writing far too many times attacks on the whole industry specifically nominating all agents. It’s this broad ranging attack that everybody despises. If you were only attacking the corrupt individuals then most in the industry would join you but that’s not what you did.

    Now you want to back down from all your rhetoric because your being attacked in the media and questioned by the courts and may have to apply for a real estate license yourself to operate your business.

  • Aryan
    Posted September 29, 2010 at 1:00 pm 0Likes

    I am really not into law but using common sense since the agent sold it for whatever reason should be asking for compensation from the agent?

    Who owns the property now?

  • Vic
    Posted September 29, 2010 at 3:45 pm 0Likes

    Agree with you Aryan….. How can the Agent be absolved from blame..on the face of it has sold something they had no authority to sell or had incorrect authority.

    However, I’m not laying blame yet because the facts on how the agent got to do the listing and what action did he/she take to confirm the true ownership of the property he/she was selling, have not come to light yet.

  • Craig
    Posted September 30, 2010 at 8:01 am 0Likes

    Aryan, the law has nothing to do with common sense.

  • Vic
    Posted October 8, 2010 at 12:40 pm 0Likes

    Nick,

    Can you throw any further light on this case?

Leave a comment