Blog Corporate Real Estate / 05.10.2019

Even Church Can’t Save You From Wire Fraud

By Matt Viola & Amanda Lauer

Just last month, two churches made national news when they became victims of a crime that is rapidly on the rise: wire fraud. The churches were both duped under similar circumstances that are becoming more and more common.

Saint John XXIII in Milwaukee, Wisconsin lost $510,000 in donations for a school expansion project. How did it happen? The church received a letter from the scammer, posing as the local construction company performing the work on the expansion. The letter included “new” bank account information for the wire of the construction payments. The scammer, then pretending to be a representative from the construction company, contacted the church to make sure the letter was received. When the next construction payment was due, the church wired the payment funds into the scammer’s account. The scammer was able to gain the trust of the church through continuous phone and email communications until the next construction payment became due.

Similarly, St. Ambrose Catholic Parish in Brunswick, Ohio suffered the same fate when it was scammed out of $1.75 million dollars. The church was working with a local construction company on a $4 million dollar church renovation, known (now ironically) as “Vision 20/20.” In this case, the scammer hacked into the church’s email system, orchestrated a bogus email string between employees of the church to convince them that the construction company’s bank account changed. As a result, the construction payments from the church were wired to the scammer’s bank account instead the construction company’s bank account.

These are just two examples of countless organizations and individuals who have fallen victim to this type of fraud. Whether these churches will be able to recover the stolen funds remains to be seen. Scammers are becoming increasingly creative and sophisticated. So, what can you do to protect yourself and your clients from becoming a victim of this trending fraud?

  • Stay vigilant – and skeptical! Think as though you are being targeted for wire fraud. Take extra steps to ensure that you are sending the wire to the correct account;
  • Verify the wire instructions verbally with the bank in which the funds are to be wired into. Do not rely on confirmation from a new point of contact providing you with new wire instructions;
  • Stay educated – Keep up to date on the current scamming trends. Not only do scammers infiltrate email systems, but they are also capable of sending emails that look as if they are coming from an important person at an organization that would have capability to change wire instructions; and
  • Check your business insurance to determine whether it covers financial loss from wire fraud, and whether the policy requires you have a protocol in place to prevent this type of fraud. If you need assistance, KJK’s Cybersecurity professionals are available to help.

Taking these proactive steps and learning from others that have fallen victim to wire fraud scams can potentially save both yourself and your clients from the loss of substantial amounts of money and time and additional money spent on recouping these losses, if recoupment is even a possibility.

If you have any questions, please contact Matt Viola at mtv@kjk.com or 216.736.7253, Amanda Lauer at adl@kjk.com or 216.736.7231, or reach out to any of our Real Estate, Construction or Corporate professionals.

 

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