In a shocking turn of events, a negligence lawsuit has been filed against a Connecticut lawyer who inadvertently sent a portion of the proceeds from a home sale to a fraudster’s bank account instead of the designated mortgage holder. The plaintiff in the case, Lesley Moody, claims that the seller’s mortgage now burdens the title to the home she purchased due to this costly error. The lawsuit, filed on April 24 in a Connecticut superior court, has garnered attention from the legal publication Law360.
The defendant in question, William Cote, had been representing the seller in the real estate transaction. Allegedly, Cote wired over $159,000 to the wrong account after his paralegal presented him with what appeared to be a legitimate payoff statement. Still, it turned out to be a clever forgery. The intended recipient of the funds was supposed to be Freedom Mortgage Corp., the designated mortgage holder.
According to the lawsuit, Cote had initially received a correct payoff statement with accurate wire transfer instructions on August 10, 2022. However, before making the payment, his paralegal received an email from an unknown third party who falsely claimed to be the seller. This email contained a purported new payoff statement instructing the funds to be wired to a different bank and account controlled by the fraudster.
Despite the new statement exhibiting multiple material differences compared to the original, the paralegal forwarded it to Cote. Tragically, Cote followed the new instructions and sent the funds accordingly. It wasn’t until several weeks later when the seller received a statement from Freedom Mortgage Corp. reflecting an outstanding balance on the loan, that Cote became aware of the grave error.
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Currently, Cote has not responded to the ABA Journal’s request for comment. Both Cote and the seller of the property have been named as defendants in the lawsuit, as Moody seeks to rectify the situation and ensure that the title to the home she purchased is free from any encumbrances caused by the mishandled wire transfer.
This case serves as a stark reminder of the risks associated with wire transfer fraud and the need for heightened vigilance in real estate transactions. It highlights the sophistication of scammers who exploit vulnerabilities in communication channels to deceive even seasoned professionals. Legal professionals must exercise caution when handling sensitive financial transactions, ensuring the authenticity of all documents and thoroughly verifying any changes in wire transfer instructions.
As the lawsuit progresses, it is expected to draw significant attention within the legal community, prompting discussions on best practices for preventing similar incidents in the future. The outcome of this case may also have far-reaching implications for liability in cases of wire transfer fraud within the legal profession.
In an era where cybercriminals are becoming increasingly cunning, it is crucial for lawyers, paralegals, and professionals across various industries to remain alert to potential fraudulent schemes. Taking proactive measures, such as implementing robust security protocols and conducting thorough due diligence, can help mitigate the risk of falling victim to such scams and protect the interests of clients and stakeholders alike.