If you witness a crime, here’s what to do
A Lawrence dentist lost nearly $90,000 after falling victim to a notorious fraud scheme that has plagued the real estate industry for several years.
The $88,338 that Howard Ritchey Jr. wired for a down payment on a home last year ended up in the hands of hackers, according to a lawsuit filed by Ritchey in U.S. District Court in Kansas City, Kan.
The suit alleges that the title, mortgage and real estate companies involved in his transaction failed to warn him of the scam or take precautions to prevent it.
“They failed to adopt easily employable safeguards against unauthorized access to their email accounts and computer systems,” the lawsuit alleges.
Ritchey’s attorney, Michael Barbee, said the companies involved were well aware of the scheme.
“They have a duty to tell their clients about this well-known cybercrime,” he said Tuesday.
The email instructing Ritchey where to wire the money looked like it was from the title company he was working with on the purchase of his home.
But according to the lawsuit, the email actually came from hackers who used the legitimate title company’s letterhead, signature blocks from all of the involved parties and email addresses that were “confusingly similar” to legitimate addresses.
“So apparently your email account was hacked,” Ritchey was told when he asked his lender about the payment.
Thinking that he had lost the money as a result of his email being hacked, but determined to complete the transaction, Ritchey was assessed penalties to withdraw money from a retirement account to make the down payment.
The suit, however says there is no evidence that Ritchey’s email account was hacked. He has not recovered the lost money and has experienced financial hardships as a result.
The kind of scam that targeted Ritchey has been the subject of warnings by the FBI and real estate industry groups.
The real estate scams are part of a wider type of crime called business email compromises.
The FBI has reported that victims lose hundreds of millions of dollars every year through such email hacks. And the number of complaints the agency receives about such crimes is growing.
Since January 2015, the FBI said there has been a 1,300 percent increase in such losses.
In June, the FBI announced a worldwide enforcement effort that resulted in the arrests of 74 suspects.
Barbee, the attorney for Ritchey, said the emails used to target his client looked legitimate.
“The criminals who perpetrate these kinds of scams are very intricate and know what they are doing,” he said. “It can happen to anyone.”