Need help possible funding scam!

[Chris Howell]

So I have been working with a private money lender on a deal and have exchanged well over 100 emails. But when it comes time to wire money he is now asking for more money.

More money than what was agreed on and signed on our contract.

He is claiming that the bank is requiring this fee for insurance on the wire transfer and can not complete the funding until I send more funds to him.

Is this normal? I have never heard of this and neither has my bank.

[Jeff S.]

I hope I’m misreading, @Chris Howell, but you don’t seem to want to take the advice given here.

These guys will drag you through as many emails, over as long a period of time as they can, to get you emotionally invested and to create urgency because you now probably need to close quickly. You presented a few interesting and predictable twists.

The 5% rate they normally offer is now recognized as too good to be true and many borrowers are wising up. The 10% this guy is offering is more credible.

Many also now understand that the Private Lender Insurance they ask you to pay for up-front doesn’t exist. Instead the new scam is to ask you to pay up front for some sort of wire transfer insurance. The doesn’t exist either but is crazy easy to confirm by just calling your scammer’s bank. It doesn’t appear he’s particularly slick. [While you have them on the phone, do some due-diligence 101. Ask the bank to check out the account he wants you to wire to indicating you suspect it could be a scam. Be clear you’re not asking for any information in that account. Unrelated to your post, but I’ve done this for several that were scammed by someone spoofing our company in my name, and the banks almost immediately recognized irregular activities and instantly froze the accounts.]

Let me also guess, the account he wants you to wire to is not his name or the name of his company. And, I bet it’s out of state. Do you wonder why? Wouldn’t a legitimate lender have bank account in his name or his entity in the state he does business, like blocks away from his office?

I can guarantee a few things:

• 1) If you wire the money, he will either ask for more or you will never hear from him again.
• 2) If you insist you will only wire to a neutral party such as title, escrow, or a closing attorney – whatever is customary in your area, and how all legitimate loans close – you will never hear from this individual again.
• 3) No matter what you do, you will never receive a dime from this scammer.

I know you have a lot of time invested here, Chris, and 100 emails, but you really have to get over it and be glad it didn’t cost you anything. I hope for your sake, you also don’t lose your deal.

Lending is a business best built on relationships. My usually advice is to attend some real estate clubs to find your lenders locally. Face-to-face. Since these are closed now, you might go on Meetup.com and call the local club owners. Ask them which lenders regularly attended their clubs and have the best reputation. Call these lenders with a list of informed questions. I promise, it will not take 100 emails.

Best of luck to you, Chris.