FCC Publishes Scam Glossary

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FCC Seal

The Federal Communications Commission recently published a Scam Glossary, which you can access here. The glossary provides a helpful description robocalls, spoofing scams and related consumer fraud.

The FCC tracks these nefarious items through consumer complaints, news reports and notices from other governmental agencies, consumer groups and industry sources.

The glossary includes links to more detailed information posted in the FCC’s Consumer Help Center and trusted external sources.

Here are a few of my least favorite schemes from the glossary:

“Can You Hear Me” Scam: Scammers open by asking a yes-or-no question, such as: “Can you hear me?” or “Is this X?” Their goal is to record you saying “yes” in response. They then may use that recording to authorize charges over the phone.

Flood Insurance Scam: After floods, scammers may target hard hit areas with fake calls about flood insurance to steal private information or money. They may spoof a legitimate flood insurance company to appear more convincing.

Google Listing Scams: Some scammers claim that they can add or remove you or your business from Google searches or similar services. These callers, unaffiliated with Google, seek payment for services they can’t deliver.

Jury Duty Scams: Callers pose as local law enforcement, claiming they have a warrant for your arrest because you missed jury duty. They may instruct you to pay a fine by wiring money or using gift cards.

Porting: A scammer gets your name and phone number, then gathers other identifying information that can be used for identity theft. Pretending to be you, they then contact your mobile provider to report your phone as stolen or lost, and then ask for the number to be “ported” to another provider and device. They can use your number to gain access to your financial accounts and other services with two-factor authentication enabled.

Smishing: Short for “SMS phishing”, smishing often involves text messages claiming to be from your bank or another company. The message displays a phone number to call or a link to click, giving scammers the chance to trick you out of money or personal information.

Wangiri/One Ring Scam: When your phone rings only once, late at night, you may be tempted to call back. But the call may be from a foreign country with an area code the looks deceptively like it’s in the U.S. If you dial back, international calling fees may wind up on your bill. Such cons are known by the Japanese term “Wangiri”.

Check out this useful list, share it with your office and your family members. And be careful out there!

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Matthew Cox, notorious fraudster, resurfaces

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Check out the August issue of The Atlantic

matthew cox

Picture courtesy of The Atlantic, August 2019 issue

I’ll never forget the name, Matthew Cox or the telephone call that tipped us off that we had a serious mortgage fraud situation here in Columbia. Long before the housing bubble popped, an attorney called to let us know what was going on that day in the Richland County ROD office. Representatives of several closing offices were recording mortgages describing the same two residential properties in Blythewood, as if the properties had been refinanced multiple times in the same day by different closing offices.

At first, we thought our company and our attorney agent were in the clear because our mortgage got to record first. South Carolina is a race notice state, and getting to record first matters. Later, we learned that deeds to the so called borrower were forged, so there was no safety for anyone involved in this seedy scenario. Thousands of dollars were lost.

Next, we learned about the two fraudsters who had moved to Columbia from Florida through Atlanta to work their mischief here. The two names were Matthew Cox and Rebecca Hauck. We heard that Cox had been in the mortgage lending business in Florida, where he got into trouble for faking loan documents. He actually had the guts to write a novel about his antics when he lost his brokerage license and needed funds, but the novel was never published. With funds running low, Cox and his girlfriend, Hauck, moved to Atlanta and then Columbia to continue their mortgage fraud efforts.

We didn’t hear more from the pair until several years later, when we heard they had thankfully been arrested and sent to federal prison.

For a much more colorful account of these criminal activities and Cox’s attempt to write “true crime” stories from the Coleman Federal Correctional Complex in Florida, I refer you to the comprehensive and entertaining article written by Rachel Monroe in the August issue of The Atlantic magazine. Please enjoy the full text of the article here.

Ms. Monroe said she had been contacted by Matthew Cox by email telling her he was attempting to write a body of work that would allow him to exit prison with a new career. He described himself as “an infamous con man writing his fellow inmates’ true crime stories while immersed in federal prison.”

The crimes perpetuated by Cox and Hauck were made easier by the housing bubble itself. Everything was inflated and values were hard to nail down. And closings were occurring at a lightening pace. This excellent article made my heart skip a beat as I was reminded of those times. I hope all of us in the real estate industry have learned valuable lessons that will similar prevent mortgage fraud in the future. Those of us who made it through the economic downturn are certainly older and hopefully wiser!

Commercial lawyers: you’re not immune from fraud!

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This high-dollar scam was reported to our company

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Our company publishes an excellent newsletter entitled “Fraud Insights”. The Editor, Lisa Tyler, National Escrow Administrator, deals mostly with residential transactions. It’s unusual for her to report on a scam involving a commercial transaction, but the edition that hit my in-box today outlines the story of a chilling scam involving a commercial transaction in New York. Fortunately, the scammers were not successful despite their best efforts.

Here are the facts. On April 10, 2019, an attorney at a large, prestigious New York City law firm sent a settlement services office in Lake Success, New York, a payoff letter for a private mortgage. The payoff letter said $1.7 million should be wired to a bank account in New Jersey.

The afternoon before the closing, the settlement office received an email purportedly from the payoff attorney’s office with revised payoff instructions for a bank in the Netherlands.

The closing was postponed for reasons not involving the loan payoff. When the closing was rescheduled, the settlement office emailed the lawyer and his assistant inquiring about the change in the wiring instructions. The responding email confirmed that the change was legitimate.

Reviewing the emails carefully, the closer noticed the domain name for the lawyer’s office contained an extra “s” beginning with emails dated April 16. The attorney’s email signature was also partially cutoff beginning April 16.

Two hours before the closing, the attorney’s assistant purportedly sent the closer an email asking if the wire had been sent. The closer did not want to alarm her that her email had been compromised, so he responded that the closing was happening shortly, and he would be in touch. The closer then searched the law firm by Internet and called the main telephone number, asking for the assistant directly. She answered the phone and said the original payoff letter was the only payoff letter, and she had not sent the recent email. She was, of course, alarmed.

She said her attorney was in court and she would relay the distressing information to him immediately. She was asked to refrain from using email for that notification because the emails were clearly being watched. Regardless, she emailed the attorney. At that point, the scammers were tipped off that their scheme had been uncovered.

While the legal assistant and the closer were discussing the situation by phone, the closer received another email purportedly from the assistant demanding that he call the lender to confirm the payoff information. Immediately following that exchange, a man called the closer office to confirm the altered wiring instructions.

At this point, everyone involved with the closing knew for sure that they were dealing with attempted fraud. The closing took place, but the payoff was accomplished via bank check.

The closer said his office tries to remain on the cutting edge of technology and industry news. His sharp eye in pinpointing the email discrepancies kept the closing from being another cybercrime news story. Commercial lawyers may feel somewhat insulated from the rampant cyber fraud that plagues residential practices, but this cautionary tale is an example of penetration into a sophisticated law firm. Be careful out there!

Nat Hardwick ordered to pay $40M in restitution

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Nat Hardwick

Nathan E. Hardwick IV

This blog discussed Nat Hardwick, a name familiar to many South Carolina real estate lawyers, last fall when he was convicted of embezzling more than $25 million from his former companies, including his former law firm, Morris Hardwick Schneider. He was discussed again in February when he was sentenced to 15 years in prison. His co-conspirator and controller, Asha Maurya, was sentenced to seven years after she cooperated with the government. On May 9, Hardwick and Maurya were ordered to pay $40 million in restitution.

Nathan E. Hardwick IV, 53, described himself as the face of Morris Hardwick Schneider, an Atlanta residential real estate and foreclosure firm that grew into sixteen states, including South Carolina. The firm once had more than 800 employees and boasted of offices in Charleston, Hilton Head, Columbia and Greenville.

On October 12, Hardwick was convicted in federal court in Atlanta of 21 counts of wire fraud, one count of conspiracy to commit wire fraud, and one count of making false statements to a federally insured financial institution. In federal court, sentencing is typically delayed, and the convicted person is released and allowed to get his affairs in order. In this case, however, Hardwick had been released pending trial on bond. After his conviction, he was described by the U.S. Attorney who prosecuted him as a flight risk and was handcuffed and taken to jail immediately.

This story hits close to home. My company was one of the victims of the crimes and one of the parties awarded restitution because it funded the firm’s escrow accounts when the losses were discovered.

The prosecutor described an extravagant lifestyle that Hardwick enjoyed at the expense of others. The case was said to be particularly troubling because the illegal activity was orchestrated by a lawyer who swore an oath to uphold the law and represent his clients with integrity. The U.S. Attorney said he hoped the case sent the message that the FBI and the U.S. Attorney’s office will not tolerate this type of white-collar crime.

According to the evidence, from January 2011 through August 2014, Hardwick stole more than $26 million from his law firm’s accounts, including its trust accounts, to pay his personal debts and expenses. The firm’s audited financial statements showed that the firm’s net income from 2011 through 2013 was approximately $10 million. During that time, according to the evidence, Hardwick took more than $20 million from firm accounts.

Asha Maurya, who managed the firm’s accounting operations, reached an agreement last May with the U.S. Attorney’s office and pled guilty. She was expected to testify at the trial, but was unexpectedly not called as a witness. Her lawyer argued at the restitution hearing that she should be liable for only $900,000, the amount she admitted taking from the firm for her own benefit. She had agreed to pay restitution in that amount as a part of her plea bargain.

During the trial, Hardwick did take the stand in his defense and attempted to blame Maurya with the theft. He said that he trusted her to his detriment, that he was entitled to the funds, and that he was unaware that the funds were wired from trust accounts. Hardwick testified for more than a day and explained that he believed Maurya followed proper law firm procedures.

On the stand, Hardwick, described as the consummate salesman, said that he gave his cellphone number to almost everyone. He said he returned calls and messages within a few hours and instructed his employees to do the same. He apparently believed himself to be a master in marketing and customer service and prided himself in focusing on the firm’s expansion strategy. He hoped to expand to all fifty states and make money through a public stock offering.

With his ill-gotten gains, Hardwick bought expensive property, made a $186,000 deposit for a party on a private island, spent $635,000 to take his golfing friends to attend the British Open in 2014, paid off bookies, alimony obligations, and sent more than $5.9 million to various casinos, all according to trial evidence. Hardwick’s activities lead to the loss of his law license and the bankruptcy of his firm.

Hardwick’s former partners, Mark Wittstadt and his brother, Gerald Wittstadt, were each awarded $6 million in restitution, and Art Morris, a retired member of the firm, was awarded $5 million.  All claim damage to their reputations in addition to substantial monetary losses.

Nat Hardwick sentenced to 15 years

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Nat HardwickThis blog discussed Nat Hardwick, a name familiar to many South Carolina real estate lawyers, last fall when he was convicted of embezzling more than $25 million from his former companies, including his former law firm, Morris Hardwick Schneider. Last week, he was sentenced to 15 years in prison. His co-conspirator and controller, Asha Maurya, was sentenced to seven years after she cooperated with the government.

Nathan E. Hardwick IV, 53, described himself as the face of Morris Hardwick Schneider, an Atlanta residential real estate and foreclosure firm that grew into sixteen states, including South Carolina. The firm once had more than 800 employees and boasted of offices in Charleston, Hilton Head, Columbia and Greenville.

On October 12, Hardwick was convicted in federal court in Atlanta of 21 counts of wire fraud, one count of conspiracy to commit wire fraud, and one count of making false statements to a federally insured financial institution. In federal court, sentencing is typically delayed, and the convicted person is released and allowed to get his affairs in order. In this case, however, Hardwick had been released pending trial on bond. After his conviction, he was described by the U.S. Attorney who prosecuted him as a flight risk and was handcuffed and taken to jail immediately.

This story hits close to home. My company was one of the victims of the crimes.

The prosecutor described an extravagant lifestyle that Hardwick enjoyed at the expense of others. The case was said to be particularly troubling because the illegal activity was orchestrated by a lawyer who swore an oath to uphold the law and represent his clients with integrity. The U.S. Attorney said he hoped the case sent the message that the FBI and the U.S. Attorney’s office will not tolerate this type of white-collar crime.

According to the evidence, from January 2011 through August 2014, Hardwick stole more than $26 million from his law firm’s accounts, including its trust accounts, to pay his personal debts and expenses. The firm’s audited financial statements showed that the firm’s net income from 2011 through 2013 was approximately $10 million. During that time, according to the evidence, Hardwick took more than $20 million from firm accounts.

Asha Maurya, who managed the firm’s accounting operations, reached an agreement last May with the U.S. Attorney’s office and pled guilty. She was expected to testify at the trial, but was unexpectedly not called as a witness.

Hardwick did take the stand in his defense and attempted to blame Maurya with the theft. He said that he trusted her to his detriment, that he was entitled to the funds, and that he was unaware that the funds were wired from trust accounts. Hardwick testified for more than a day and explained that he believed Maurya followed proper law firm procedures.

On the stand, Hardwick, described as the consummate salesman, said that he gave his cellphone number to almost everyone. He said he returned calls and messages within a few hours and instructed his employees to do the same. He apparently believed himself to be a master in marketing and customer service and prided himself in focusing on the firm’s expansion strategy. He hoped to expand to all fifty states and make money through a public stock offering.

With his ill-gotten gains, Hardwick bought expensive property, made a $186,000 deposit for a party on a private island, spent $635,000 to take his golfing friends to attend the British Open in 2014, paid off bookies, alimony obligations, and sent more than $5.9 million to various casinos, all according to trial evidence. Hardwick’s activities lead to the loss of his law license and the bankruptcy of his firm.

Nat Hardwick convicted on 23 counts

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Nat HardwickMany South Carolina real estate lawyers know the name Nat Hardwick.

Nathan E. Hardwick IV, 53, described himself as the face of Morris Hardwick Schneider, an Atlanta residential real estate and foreclosure firm that grew into sixteen states, including South Carolina. The firm once had more than 800 employees and boasted of offices in Charleston, Hilton Head, Columbia and Greenville.

On October 12, Hardwick was convicted in federal court in Atlanta of 21 counts of wire fraud, one count of conspiracy to commit wire fraud, and one count of making false statements to a federally insured financial institution. In federal court, sentencing is typically delayed, and the convicted person is released and allowed to get his affairs in order. In this case, however, Hardwick had been released pending trial on bond. After his conviction, he was described by the U.S. Attorney who prosecuted him as a flight risk and was handcuffed and taken to jail immediately.

This story hits close to home. My company was one of the victims of the crimes.

The prosecutor described an extravagant lifestyle that Hardwick enjoyed at the expense of others. The case was said to be particularly troubling because the illegal activity was orchestrated by a lawyer who swore an oath to uphold the law and represent his clients with integrity. The U.S. Attorney said he hoped the case sent the message that the FBI and the U.S. Attorney’s office will not tolerate this type of white-collar crime.

According to the evidence, from January 2011 through August 2014, Hardwick stole more than $26 million from his law firm’s accounts, including its trust accounts, to pay his personal debts and expenses. The firm’s audited financial statements showed that the firm’s net income from 2011 through 2013 was approximately $10 million. During that time, according to the evidence, Hardwick took more than $20 million from firm accounts.

Asha Maurya, who managed the firm’s accounting operations, was also charged. She reached an agreement in May with the U.S. Attorney’s office and pled guilty. She was expected to testify at the trial, but was unexpectedly not called as a witness.

Hardwick did take the stand in his defense and attempted to blame Maurya with the theft. He said that he trusted her to his detriment, that he was entitled to the funds, and that he was unaware that the funds were wired from trust accounts. Hardwick testified for more than a day and explained that he believed Maurya followed proper law firm procedures.

On the stand, Hardwick, described as the consummate salesman, said that he gave his cellphone number to almost everyone. He said he returned calls and messages within a few hours and instructed his employees to do the same. He apparently believed himself to be a master in marketing and customer service and prided himself in focusing on the firm’s expansion strategy. He hoped to expand to all fifty states and make money through a public stock offering.

With his ill-gotten gains, Hardwick bought expensive property, made a $186,000 deposit for a party on a private island, spent $635,000 to take his golfing friends to attend the British Open in 2014, paid off bookies, alimony obligations, and sent more than $5.9 million to various casinos, all according to trial evidence. Hardwick’s activities lead to the loss of his law license and the bankruptcy of his firm.

A scary Halloween story to keep real estate attorneys up at night!

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This South Carolina man’s criminal conviction will stop you in your tracks!

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BOO!

A South Carolina man made a name for himself this year in Washington, DC, and not in a good way. Robert McCloud, a 39-year old former resident of Warrenville, in Aiken County, was sentenced in federal court in Washington, DC, to 18 months in prison followed by three years of supervised release including six months of home confinement. He also forfeited almost $60,000 and will be required to pay restitution in an amount to be determined later. Finally, he will be required to perform 150 hours of community service.

The charges were based on wire fraud statutes and involved real estate transactions. McCloud pled guilty in June in the U.S. District Court for the District of Columbia. His sentence was imposed October 19.

McCloud and co-conspirators identified residential properties that appeared to be vacant and abandoned. They prepared and recorded fake deeds into fictitious names and later fraudulently sold the properties, using fake drivers’ licenses, to legitimate purchasers. McCloud and his co-conspirators involved unsuspecting title and escrow companies in the subsequent closings.

In his guilty plea in June, McCloud admitted to participating in two of these fraudulent transactions in 2015, which generated a total of around $580,000.  Of that total, law enforcement officials were able to seize almost $370,000 in administrative forfeiture proceedings. In both cases, the properties were unencumbered. The true owners of both properties are elderly owners and have been involved in difficult proceedings to have the properties re-titled in their names.

The harm caused to the true owners and the legitimate buyers was covered by title insurance, and the restitution represents funds owing to the title insurance companies. Dirt lawyers, when you need an example of why your clients should be protected by title insurance, you can use this story! And I have many others if you need them.