Cyber crime example of the importance of reconciling your trust accounts each month
This article appeared in the September 2013 issue of TitleNews. An escrow company holds real estate closing funds in trust in the same way a law firm in Ontario would.
Cyber Criminals Steal More Than $1.5 million from California Escrow Company.
California-based Efficient Services Escrow Group was shut down by the state after cyber criminals stole more than $1.5 million from the firm’s trust account and wired the money to China and Russia.
In a petition filed in Orange County Superior Court, the California Department of Corporations (DOC) said the thieves first wired $432,215 to an account in Moscow on Dec 17, 2012. Then, the criminals wired more than $1.1 million on Jan 24 and 30 to a trade company in China.
According to reports, Peter A. Davidson, the state-appointed conservator in the case, said funds were disbursed from more than 100 escrow accounts.
Efficient Services Escrow Group reported the theft Feb 22, two months after the first unauthorized transfer. According to the DOC, the escrow company failed to maintain its records in accordance with the law. The bank was able to recover the wire sent to Moscow, but not the funds wired to China.
Ontario lawyers will note that By-Law 9 of the Law Society of Upper Canada obliges them to do monthly reconciliations of their trust accounts, which would help avoid delays in noticing cyber thefts like the 2-month lag described above.