Forged Proof of Funds. What would you do?

Question

We've been running all over creation showing a client $1M+ properties and finally put one under agreement for over $1.5M.

All sorts of tiny red flags start showing up.  Earnest money check never arrived at the seller's agent's office.  The buyer dodged questions about the source of the money.  Googling his name comes up with some involvement with Motocross, but nothing else.  Proof of Funds is a screen shot of his online banking - and looks good, until you look closely.  It shows a single deposit for over $50M, but it's not a round number (an obvious clue if it was).  The colors are off on the screenshot.

After several phone calls, the bank told us this morning that this guy is not a client.  The "buyer" has no idea why the bank would say that.  Pressed to provide his account number, he said he would - but later said he would mail it rather than email, text of phone call, due to "security concerns".  He is, of course, stalling for time - and wants us to show more $1M properties.

(Lesson learned - even when we don't think there's any reason to validate proof of funds - and we initially didn't with this one - we will moving forward)

Worse, the buyer's fiancee is a childhood friend of my daughter / business partner.  If this guy has actual delusions and she doesn't know it, do we tell her?  If we tell her, are we exposed legally?  If we don't are we dirtbags for letting someone marry a lunatic?

The seller is probably going to sue for at least the amount of the $5000 earnest money check.

Given that the "buyer" entered into a contract that he knew he could not perform to, there seems to be a viable claim for fraud.

The attorney is going to invoice for his time.  I'm considering an invoice for our time and expenses.  I think we'll have a hard time collecting on it.

Obviously, we're not going to spend another minute with him without a proper proof of funds, which we will vet.

Charlie MacPherson · Answer

@Christopher BrainedWe actually have our own attorney on staff.  He feels that we did everything reasonably possible to vet the PoF.

We did call the bank, who initially said that they couldn't give us any information due to privacy concerns.

We also shared the PoF with the seller's agent, who didn't see anything wrong with it.

We acted in good faith, having no reason to suspect the forgery, but the second we uncovered it, we notified the seller instantly.

Neither I nor our attorney think we have any exposure here.  Our attorney was clear on the second question though.  As to whether we tell the woman that her husband-to-be is lying about being a multimillionaire, he say an emphatic NO.  If we did, we might be opening ourselves up to liability.

Jeff B. · Answer

IMO; Fraud is still fraud and as slander and liable pertain to misstatements by you and you are speaking truth, you have nothing to fear.

Christopher Brainard · Answer

@Charlie MacPherson

You should speak to an attorney about this matter.

In my opinion, you should not say anything to anyone about the situation outside of the principals in the transaction. There is no reason for you to create liability for yourself with no upside. His Fiance either knows and doesn't care, doesn't know and won't believe you, or he isn't mentally ill and has some other agenda. None of these situations help you in any way, shape, or form.

Additionally, I don't see how you can sue him for damages to your reputation, when it could be easily argued that you didn't properly vet your client for this price point. I would be far more concerned that the seller may file a grievance with the real estate board and hold you responsible, as your client is probably broke and has nothing to lose and you are not. The minute a red flag goes off, you needed to stop and evaluate the situation. I wouldn't take a screen shot as proof of funds - at this price point you need to confirm the funds through the bank contact on the POF. I also wouldn't present an offer without the earnest money in hand. Even if the entire situation was totally legit, people change their minds all the time and not having any skin in the game makes that very easy.

So lesson learned - I hope you make it out of the situation whole.

-Christopher

Charlie MacPherson · Answer

Yes, we did inform the seller's side instantly to minimize damages. We have an ethical obligation to inform them and we are not interested in the slightest in helping this knucklehead cover up his bad deeds.I'd consider suing for damage to our reputation, but that sort of thing is pretty hard to prove.  Harder still to come up with a dollar value.

Jeff B. · Answer

"Given that the "buyer" entered into a contract that he knew he could not perform to, there seems to be a viable claim for fraud."

So sad.  Your assertion is true.  I would report it to any/all that participated with you in this effort.  At least you could give is reputation a black-eye.

Charlie MacPherson · Answer

Oh - by the way - the "buyer" informed the seller that he wanted to back out 90 minutes before the home inspection was to take place.  There was no financing contingency.

Based on that, I'd imagine that the seller might sue for specific performance.   As my professor in Business Law told me many years ago, "we can't make you buy the house, but we can make you wish you did!"

Jacqueline Carrington · Answer

I'd end my buyer contract with him based on falsified information provided during the course of the real estate transaction.