Real estate company sues firm after falling victim to scam

By Brian Huber - Freeman Staff

March 8, 2018

WAUKESHA — Does a title firm have the responsibility to protect its customers from potential scammers?

A Milwaukee company is arguing that is indeed the case, filing a lawsuit after sending a $162,000 check to a scammer instead of the Brookfield title firm it had been working with on a real estate deal.

Geils Home Wisconsin LLC filed suit in Waukesha County Circuit Court on Tuesday, alleging that Merit Title of Brookfield breached its contract and was negligent in failing to protect Geils from a real estate scam.

Messages left at Merit Title and for Geils attorney Joe Abruzzo seeking comment were not returned Wednesday.

According to the suit, Geils offered to buy a home from a resident on East Wilson Street in Milwaukee last fall, and selected Merit Title to be the closing agent. But, prior to the closing, Geils alleges Merit “had knowledge or should have had knowledge of a cybercriminal epidemic whereby hackers target title companies to learn about real estate transactions occurring and the hackers then send fraudulent wire instructions to the buyers prior to the closing” and should have known of preventive steps to protect buyers, the suit said.

In September, a Merit representative emailed Geils with instructions on wiring the funds; that and a closing statement were received as unsecure attachments, the suit said. The next month, Geils got an email from an address “substantially similar” to that of the Merit agent, with the exception of one fewer “T” in the “merittitle” domain name, giving wire instructions that were similar in format, structure and design to the ones sent by Merit, the suit said.

Following the advice on the fraudulent email, Geils wired $162,433.24 to the account identified within it, only to learn at closing the funds were not received by Merit. Geils was able to recover about $80,653 of the wired funds, with Geils out another $81,779, the suit said, adding that Merit had a “duty to use reasonable care” in managing the closing that entailed “undertaking steps to protect Plaintiff from foreseeable harm,” the suit said.