Thread: Money Laundering Scam

Don’t know if this is going on in other areas, but we have encountered this twice. Appears to be a money laundering scheme from somewhere in Asia (Hong Kong or China). Also don’t have enough details to be authoritative. A buyer contacts Realtors via email with offer to purchase a house, usually new or almost new, and in a moderately high price range. Part of the tip-off is that it is a full price offer (unusual for buyers these days). The buyer offers no mailing address or phone number (or if there is a phone, it is not answered). Primary means of contact is via email only.

A substantial amount of money is actually deposited as escrow funds in a local title company, sometimes with the name of a lawyer in Canada to act as secondary agent. The money may not be enough for the entire purchase, but is substantially larger than required for earnest money and down (maybe up to half the purchase price).

The scam is that before the sale goes to closing, the offer is canceled by the buyer, with demand for return of funds, or to transfer funds to a lawyer in Canada. Normally a buy/sell contract does have a provision for the seller to keep any earnest money, but typically these deals are for properties that are foreclosed, or the agents don’t enforce the return of earnest money. Either way, that money from the Far East is sent to the US, and then returned or forwarded, essentially cleaning or laundering the original funds.

Point of this is to warn you that any home inspections where the realtor can only offer an email address for initial contact should obviously be suspicious. Both of the deals we were called to do home inspection were picked up by the FBI for fraud investigation.

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Same sort of deal was going on around here a few months ago. I'm not sure of the money laundering part but definitely fraudulent intent/activity and a warning letter was published by the area Realtor associations.

Terry,
Did you obtain a signed contract to preform the inspection? If so, how?

Properties in foreclosure held by bank that take 3 to 6 months to get a response for and offer should be easy to track. I never had the pleasure of dealing with a Canadian lawyer, but I would think that no US company would accept and escrow act from other than US attorney/company. Have had deals long ago dealing with European buyers, but all money flowed through US concerns and US banks. Even then we did not trust money outside of the US.

Similar to the rental scam, where the deposit money is returned before the original check actually clears, because the check was issued from outside the USA.

Gary,

No, we never did an inspection. I would have sent an inspection agreement via email (like we often do with our out-of-town clients). We were informed about the scam by someone early in the process. The other tip-off that it was a scam was that several realtors in the same office had received emails from the same buyer. In both cases, it was realtors that tended to not come into the office very often that responded to the buyer's offer.

Terry,
You stated that you would send an agreement via email.
I have thought about that myself for out of town buyers.
But, if the deal falls through and the buyer does not pay, what do you do?
If the buyer lives out of state, it seems that there is not much we could do as far as collecting our fee.

Originally Posted by wes owens

Terry,
You stated that you would send an agreement via email.
I have thought about that myself for out of town buyers.
But, if the deal falls through and the buyer does not pay, what do you do?
If the buyer lives out of state, it seems that there is not much we could do as far as collecting our fee.

Cash in hand is worth two in bush.