At the recent Securities Exchange Commission and Department of Justice Enforcement and Litigation Update Conference, speakers included the Director of the SEC Regional Office, Chicago, The Chief of the White Collar Unit of the US Attorney’s Office, Detroit, the Detroit Supervisory Special Agent of the FBI, as well as in-house counsel for local businesses. Much of the discussion was about the rise of cyber crime. The FBI agent said “There are two types of companies, those that have been hacked and those that just don’t know they have been hacked.”
As attorneys we are seeing this crime wave first-hand, and we have recently seen an increase in the number of clients who have been victimized by cyber criminals. For example, we obtained a favorable settlement in a matter in which our clients were closing on the purchase of a condo in Detroit when they received an email, ostensibly from their realtor, stating the closing had been rescheduled. They also received a separate email stating that the wire instructions for the down-payment for the condo had been “updated and corrected.” In fact, the “updated” instructions redirected the payment for the condo to a fraudster’s account, which then immediately transferred to an account in Hong Kong. (At the conference, the FBI said the rate of recovery for these crimes is 34%).
In speaking with the FBI, we have learned that there is a ring operating out of Hong Kong targeting Detroit for cyber crime. They hack the computer system of banks, brokers, title companies, and other transaction participants, and then watch as the transactions develop and strike just before closing. They are invisible until they send the fake payment directions. An easy way to prevent this type of fraud is to verify the wire transfer directions by a phone call to the office which ostensibly sent the wire transfer instructions. Do not trust the phone number on the email. Be sure to obtain the phone number independent of the wire instructions.
If you believe you have been the victim of a fraudulent scheme to redirect your down payment, or other cyber crime, it is important that you act quickly. Immediately contact the regional office of the FBI, your bank, and your legal counsel.
Robert J. Hahn is an attorney in the Livonia office of Cummings, McClorey, Davis & Acho, P.L.C. where he focuses his practice on business law, utility law, and litigation. He assists business clients with matters relating to corporate and commercial litigation, collections, securities, and real estate. He may be reached at (734) 261-2400 or firstname.lastname@example.org.