Scam hooks lawyer, but owner pays
Attorney transfers sale cash to fraudster and refuses to take the hit
● A conveyancing attorney fell for a scam e-mail purporting to be from her client and making a last-minute request to transfer the proceeds from the sale of her house into another bank account. Now she is refusing to take responsibility for the loss.
Lynne Marshall and her partner Rick Lawrence engaged Botha & Venter Attorneys of Tygerberg to transfer their Muizenberg property to a new owner.
The property was registered in both their names, meaning they both had to sign all the sale-related documentation, including a written instruction to the conveyancers, on June 23 last year, to pay the proceeds of the sale into their Absa account, Marshall says.
After their bond was settled, and all fees paid, that amounted to R420 000.
In mid-September, Marshall e-mailed the conveyancers to say she had not received the money as expected. In response, she received an e-mail from an assistant to attorney Ronelle Botha with proof of the payment that was made — not into the couple’s Absa account, but into a Nedbank account in her name.
Botha & Venter had received what it thought was an e-mail from Marshall, requesting that the money be paid into the Nedbank account. The e-mail was sent hours after she had called the conveyancer without mentioning a change in her banking details.
“Ronelle Botha immediately opened a case of fraud at the Bellville police station and promised to keep us in the picture,” Marshall says.
“She said it would take about three weeks to get information and that Nedbank had frozen the account.
“But that was the last we heard from her. “We found out through our attorneys that the money had been taken out of the account immediately and there was no trace of it.” There was more bad news.
The couple discovered that the Attorneys Insurance Indemnity Fund — a nonprofit company established by the Attorneys Fidelity Fund to provide a level of professional indemnity insurance to all practising attorneys in South Africa — excluded cybercrime from the cover in July 2016.
That’s because conveyancing attorneys are an obvious target for cyber-criminals, given that they hold in their trust accounts the purchase price paid for a property by the buyer, pending its transfer, and then pay the relatively large proceeds to the seller.
In the fund’s Risk Alert publication, published last August, just a month before Marshall’s R420 000 made its way into that fraudster’s Nedbank account, the fund’s general manager, Thomas Harban, wrote: “Since that exclusion, we have been notified of more than 50 cybercrime-related claims with a total value of more than R25-million.
“All fell within the exclusion and have been rejected.
“The firms will have to bear these losses themselves, should they not have appropriate cybercrime cover under another policy.”
Harban told Money that the fund had used every platform available to warn attorneys of the risks, including in lectures and seminars to the profession, in its annual reports to the various law societies, on public platforms such as radio stations, as well as on its Twitter account. It had an almost year-long communication drive before the 2016 cybercrime exclusion was implemented.
A December 2016 circular from the Attorneys Insurance Indemnity Fund included a practical piece of advice: ‘'Whenever a client that you are providing legal services to provides or changes an account number to pay into, insist on a bank-stamped proof of that account.”
That did not happen in Marshall and Lawrence’s case.
The Cape Law Society has also repeatedly warned its members of the e-mail scam.
Its September 2016 circular described a similar scam to the one that resulted in Marshall and Lawrence’s money being transferred to a fraudster’s account.
“Members and their staff are encouraged to call and confirm with all clients on receipt of such e-mail requests, and to verify banking details before effecting any payments to clients,” the circular says.
That didn’t happen in Marshall and
Lawrence’s case, either.
The law society also reminded its members that the onus was on them to ensure that they protect their firms’ trust funds, as well as themselves, from personal liability to make good on any shortfall due to scams.
In other words, to take out their own insurance to cover such losses.
Marshall and Lawrence’s attorneys have demanded that Botha pay the missing R420 752 to the couple.
They told Botha “the e-mail request to transfer the funds into an entirely different banking account with a different bank, should have raised numerous alarm bells and accordingly been investigated”.
“Some form of due diligence inquiry should have been conducted as to whether the request was legitimate and had properly emanated from one or other of my clients.”
Failure to do so amounted to an “unequivocal and blatant dereliction of your duty of care to our client, amounting to gross negligence”, the attorneys say.
They point out that the e-mail in question contained classic characteristics of a scam e-mail, including bad spelling and grammar.
Botha, who has failed to pay the money, told Money: “Throughout I corresponded with Ms Marshall on her chosen e-mail address.
“In due course I executed all instructions received from this e-mail address. At no relevant time did the particulars of the e-mail address change.”
Money has evidence that appears to contradict this statement — there was an exchange featuring an e-mail address slightly different from Marshall’s.
Says Lawrence: “In any event, we were co-owners of that property, and both signed the paperwork when we provided the attorney with details of the account into which the proceeds were to be paid, so any request to change those details should have been checked with both of us.”
The Cape Law Society’s disciplinary committee dealt with Marshall’s complaint against Botha’s firm at a meeting this week. At the time of writing, the matter had not been finalised.
Meanwhile, Marshall, who had planned to retire fully at the end of last year, has had to keep working, thanks to the loss of that R420 000.
“I can’t believe that the attorney expects us to suffer that loss,” she says.
“To add insult to injury, the estate agent and the conveyancing attorney took their fees out of our money before it was transferred to the fraudster,” Lawrence says. “So everyone got paid except us.”
‘The e-mail request to transfer the funds . . . should have raised numerous alarm bells’