Southern California couple lost $160,000 in a rapidly-growing down payment scam

Two years ago, Pat and Marisa Lawlor looked at 50 homes for sale.

The market was tight and interest rates were low. They were outbid three times. So, the Lawlors were relieved when they finally snagged a house in West Hills. 

“It was very difficult, it was challenging, it was a seller’s market and we were a buyer, not much inventory to choose from,” said Pat Lawlor.

The escrow process went without a hitch, until the very end. 

“It’s like a shock. Like psychologically your brain is protecting yourself from the trauma of what’s going on right there,” said Lawlor.

Lawlor received wire instructions for the down payment in an email that appeared to be from the escrow agent. So he wired the money – $160,000. Then a few days later, he received another email from his escrow agent. 

“He said, 'We’re clear to close, we’re all set here, just need your down payment,’” said Lawlor.

The Lawlors money was gone. The email that appeared to be from the escrow company wasn’t. Instead, it was from a scammer, with an email signature exactly the same as previous emails, and a friendly note that addressed Lawlor by name. 

“We were just trusting the process as we were told to do,” he said.

Dr. Clifford Neuman, a computer systems security expert at USC, said the scammers likely breached the escrow company’s email system. 

“So there are a lot of vectors that an adversary could use to get their way into the email system of a small company. That might have been because an employee of theirs did something to allow the adversary to get in. It could also be that the system itself was breached,” said Neuman.

It’s called business email compromise. And the I-Team learned it’s a huge problem. According to FBI data, money lost to these scams, which includes down payment wire transfers, has skyrocketed over the past several years. In 2022, victims lost $3 billion. 

Escrow companies are required to report fraud to the state. But that does little to help victims, as the money is long gone. Many escrow companies carry errors and omissions insurance, but that doesn’t cover wire fraud. 

The I-Team reached out to the Lawlor’s escrow company, Jade Escrow in Temple City, but they didn’t return our emails or phone calls. 

“You just have to be careful. Beyond careful,” said Lawlor.

The Lawlors considered suing Jade Escrow, but they didn’t have the money – the scammers took their life savings. 

In the end, they got the house, only because they borrowed the money from a family member, putting them deeper in debt. They’re trying to raise money to help them pay the debt.

“I think the mindset, there’s a prevailing mindset that this is an abstract thing that happens out there sometimes to some people. But it’s not. It’s a real thing that happens to real people. And it’s devastating.” said Lawlor.

Tips when conducting financial transactions:

• Confirm wire instructions verbally with someone you’ve been working with. Don’t rely on information in an email.
• If you’re told in an email to call for wire instructions, be sure you’re calling a number that you know or have been using.
• Never email financial information.
• If you’re sharing financial information on the web, be sure the site is secure by looking for the “s” in the URL.