Real Estate Buyers Beware of Fraudulent Wire Transfer Instructions

Email Fraud and Real Estate Closings

Email fraud in Pennsylvania real estate transactions poses a cruel risk to innocent buyers. And email fraud connected to real estate closings is alarmingly on the rise. The FBI, national title companies and real estate advisers are warning buyers to confirm emailed wire transfer instructions with the settlement agent who is running their closing.

The Scam

The email scam is sophisticated, often successful and increasingly common.

It works like this. Hackers identify email accounts of real estate agents, brokers or other companies involved in real estate closings. Then they hack directly into the accounts and find emails relating to pending closings. Using the chain of emails already sent to a buyer by the realtor or other participants in the closing, the hackers are able to send a very convincing email to the buyer with false wire transfer instructions. The buyer readily accepts the instructions because he or she has already received emails from the apparent sender—  and the hacker’s email contains specific, correct information about the closing and about the property.

The fraudulent instructions direct the buyer to wire monies to an account controlled by the hacker. After the buyer wires the funds, the account is emptied instantly by the hacker.

Protect Yourself

How can a buyer protect against this fraud?

First, the buyer probably has previously received escrow instructions or other preliminary information that identifies the bank where funds will be deposited before closing. Buyers must review their paperwork before following emailed wire instructions. Often fraudulent wire transfers call for transfers to a bank some distance away from the town where the closing is scheduled.

Second, and far more importantly, buyers must speak directly to the settlement agent, by telephone or even in person, and review emailed wire instructions thoroughly before wiring funds. Given the existence of this hacking scheme, buyers simply cannot rely on emailed wire instructions.

Hacking is Common

Sony, Target and the United States Office of Personnel Management have been thoroughly hacked. It’s not wise to assume that the same can’t happen to real estate agents and title agents. Everyone involved in real estate closings must confirm wire transfer instructions by speaking with a responsible person involved in the closing to confirm the bank and account number in to which the funds should be wired.

Impacted? Act Quickly

And for those who are victimized by this scam, it is imperative immediately to cancel the wire transfer with the victim’s sending bank, in writing, with detail that the transfer was fraudulently induced. Equally quickly a scammed buyer must notify the receiving bank in writing that the transfer was fraudulently induced, and instruct the receiving bank to hold the funds pending further investigation. It may be impossible to reverse a fraudulent wire transfer, but a reversal can only occur if prompt written notice is given to both banks. Finally, prompt notice to the regional FBI Office can help stop the movement of funds.

 

Police Liability for High Speed Chases

Police Liability for High Speed Chases

Many Pennsylvania laws affect the power, responsibilities and liabilities of law enforcement authorities who engage in high speed chases. A recent Pennsylvania appeals case clarified one issue relating to high speed chases—the liability of a police office to a third party injured as a result of the chase. Sellers v. Township of Abington, 67 A.3d 863 (Pa. Cmmwlth. 2013).

In the case, police officers pursued a mildly speeding car in the early morning hours. The driver immediately “floored it,” because he was afraid he would be arrested for driving under the influence. The driver and his two passengers had engaged in a long evening of drinking, and the passengers had requested rides.

As the chase ensued, at speeds in excess of 100 mph, both passengers asked the driver to stop or slow down. After hitting a dip in the roadway, the fleeing car went airborne, crashed into trees and ejected one of the passengers. The ejected passenger died, and his heirs sued the policed department claiming that the decedent passenger was an “innocent bystander,” to the chase.

Pennsylvania law provides that law enforcers are liable for their negligence to innocent bystanders who are injured as a result of police vehicle pursuit. Sometimes high speed police chases are necessary, and not all high speed chases constitute negligence. In each case, the court or jury must consider all the facts, including the speed, the officer’s experience, the duration of the chase, the actual driving that took place and any other relevant factors.

In the case of the decedent passenger, the Pennsylvania appeals court decided that passengers who engage in extensive drinking with a driver and then voluntarily ride with the inebriated driver are not innocent bystanders. The court focused on the public’s interest in ensuring that the roads are safe from dangerous drivers. Noting that police officers have no certain way to know whether there are passengers in a fleeing car, or whether passengers are victims or are complicit with the driver’s misconduct, the court absolved police officers from a duty to ascertain the presence or status of passengers in vehicular chases. The court left for another day the liability of a police officer who pursues a car where he or she has reason to know that an innocent passenger is involuntarily at risk.

 

 

 

Ambulance Companies Can Compete

Ambulance Companies Can Compete

Pennsylvania law permits municipalities to chose a preferred ambulance company and to appropriate public funds for ambulance and emergency medical services. Emergency Care v. Millcreek Township, 68 A.3d 1 (Pa. Cmmwlth. 2013).

But when a Pennsylvania township effectively banned all competing ambulance companies from doing business in the township, it exceeded its powers under the law.

The township passed an ordinance designating the township’s ambulance service as the preferred provider. But the ordinance also directed all 911 calls to the township’s ambulance, required all emergency providers to redirect emergency calls to the 911 system and banned any other ambulance service from doing business or advertising in the township. An established commercial ambulance service with numerous subscribers and a 25 year history of doing business in the township sued and won.

The court held that municipalities may designate preferred emergency services providers and may devote public funds to such preferred providers. But the power to designate cannot be exercised so broadly as to “effectively exclude all other providers.” Finding that the township’s ordinance was an “attempt to isolate a revenue stream and eliminate competition,” the court struck the ordinance down as unconstitutional.

Gun Court Rules Illegal in Warrantless Search

Gun Court Rules Illegal in Warrantless Search

A Philadelphia man sentenced to probation in Philadelphia’s “Gun Court,” persuaded the Pennsylvania Supreme Court that the Gun Court rules were illegal.

Philadelphia’s Gun Court is not actually a court, instead it simply is a program designed to fast track trial and sentencing in gun possession crimes. The program was designed to decrease the number of illegal guns in active circulation, and to speed up supervision of possessors of illegal guns.

The man who challenged the program focused on the Gun Court rules of probation. Arrested for pointing a gun at an occupant of a car, the man was found guilty of possessing a hand gun without a license, and of possessing a hand gun with an altered serial number. Only twenty years old, the man already had an extensive criminal history. Largely because of that past criminal history, the judge sentenced the man to several years in jail, to be followed by a strict probation period of three years. Additionally, the judge ordered that the man’s probation officer could search his home at any time, for any reason, or for no reason at all, to find guns or contraband. The broad search power in the probation conditions was a routine provision used in Gun Court for probationers.

The man appealed, focusing on the probation provision that permitted a probation officer to search his home without warrant and without any particular reason or suspicion. Pennsylvania law regulating probation officers permits them to conduct warrantless searches of probationers’ homes and property if there is “reasonable suspicion” that the probationer has violated probation rules or possesses contraband or other illegal property. The Pennsylvania Supreme Court relied on the probation statute and decided that Gun Court judges may not expand the powers of probation officers by permitting “suspicionless, warrantless searches” of probationers’ homes and property.

Gun Court may continue to expedite and focus on gun crimes; but the firm measure of subjecting probationers to property searches without reasonable suspicion is no longer a weapon in the Gun Court’s arsenal.

No Unemployment Benefits After Religious Dispute

No Unemployment Benefits After Religious Dispute

A worker who refused to wear a name tag bearing a religious “mission statement,” lost the right to collect unemployment benefits after the court found that he quit his job and had no clear religious beliefs that were violated in the workplace. Mathis v. UCBR, 64 A.3d 293 (Pa. Cmmwlth. 2103).

The worker was employed for almost two years at a small heating and air conditioning company. The company’s owner included a spiritual mission statement in the employee handbook and on a name tag which all employees were required to wear. The name tag displayed the employee’s name, photo and company logo on the front; on the back, the name tag included a mission statement that stated that the company was not just a business, but was a ministry, and that the company was run in a way “most pleasing to the Lord.”

After working for the company for almost two years, the employee decided to cover the back of his name tag with duct tape, later explaining that he felt the company owner was ‘always pushing his religion.” When the owner noticed the duct tape, he told the employee to remove it or he would lose his job. The employee left the workplace and filed for unemployment.

In the subsequent litigation, the court focused on two issues. First, the court analyzed whether the employee was fired or quit. Because the employer created an option, conditioning the loss of the job on the employee’s removing the duct tape, the court found that the owner had not fired the employee. Instead, the court noted, the employer had given the employee a choice to keep his job by removing the duct tape. But because the employee then simply chose to leave the workplace, he was determined to have quit his job.

When work place disputes arise, an employee is not considered to have been fired if the employer has given the employee a choice. Statements from employers like “there is the door,” or “shape up or ship out,” are not considered firings. When employees are given an alternative to follow workplace rules or be fired, the courts focus closely on the employees’ response. Generally, an employer must clearly and unequivocally fire an employee for the termination to be considered a firing.

Next, the court focused on the religious issues. The court noted that while the employee claimed that his religious freedom and religious beliefs had been violated at work, the employee never identified his own religious beliefs and never explained just what he found offensive or burdensome in the name tag mission statement or in the workplace environment.

In defending his name tag mission statement, the business owner pointed out that the company employed workers of many faiths, and that while he advanced Christian beliefs, his Jewish employees and non-religious employees had no objections to the atmosphere at the workplace or to the content of the name tag statement.

Small businesses have broad leeway in introducing religious values in the workplace. While government agencies must respect constitutional principles of the separation of church and state, private employers may advance religious goals, provided they do so openly, without coercion and without discriminating against employees of different faiths.

Woman Lost Property at Tax Sale

Woman Lost Property at Tax Sale

Shortly after January 1, county delinquent tax collection authorities will start notifying some Pennsylvania property owners that they are delinquent in their payment of their real estate taxes. Eventually, that real estate will be sold at tax sale if the taxes remain unpaid. If you receive a delinquent tax notice in the upcoming months, don’t delay, resolve the payment promptly and make sure you have paid the taxes in full.

A Pennsylvania widow was shocked to learn that she lost her home at tax sale, and she was successful in her appeal to challenge the sale. The widow was not familiar with her real estate taxes because her husband had customarily taken care of the payments. When he died, she used the life insurance proceeds to pay off the home mortgage. But she failed to pay part of the delinquent taxes and then received a delinquent tax bill with penalties and interest. She promptly paid the delinquent tax bill of $897.19 in full. But because interest of $6.90 was accruing each month, and because another interest charge was imposed after she mailed her check, she was left with a balance due of $6.90. Several months later, the tax collection bureau billed her $28.25, a sum consisting of the interest balance of $6.90, plus postage and costs. The widow didn’t pay the $28.25.

The following year, the widow again paid her taxes late, and the total due, with penalties and interest was $3,990.03. The bill did not include the previous year’s balance of $28.25 and the tax collection bureau apparently did not send any further requests for the $28.25 from the previous year.

Because the $28.25 was over a year overdue, and because it caused the widow’s home to be on the delinquent tax list, her home went up for tax sale and was purchased by a bidder. When she discovered what had happened, she immediately requested a hearing to set aside the sale. The county court simply reviewed the record, found the sale legal and denied her any relief.

On appeal, the appellate court reversed the county court, finding that fundamental state and federal principles of constitutional law demand “the most rigorous due process standards” when government deprives an owner of property. The widow was entitled to a hearing, in which the collection bureau was responsible to prove that she had actual notice of the scheduled sale. The appeals court returned the case to the county for further hearing and proof.

Notices from tax collection authorities must be taken very seriously by property owners. In order to hold all property owners accountable to pay their real estate taxes, Pennsylvania law provides an orderly process for the forced sale of real estate burdened by delinquent taxes. Be sure your real estate taxes are current, and if they are not, pay careful attention to all notices regarding your delinquent taxes. If you have actual notice of a tax sale, even if you think the sale is a mistake, don’t ignore the notice. You could lose your property.

Cite

Battisti v. TCB of Beaver County, 76 A.3d 11 (Pa. Cmmwlth. 2013).

Changes to Pennsylvania Inheritance Tax Impact Family Businesses

Changes to Pennsylvania Inheritance Tax Impact Family Business

Very recent changes to Pennsylvania inheritance tax law make it more affordable for families to pass on interests in family businesses. See 72 P.S. §9111.

Businesses in existence for five years, with book value assets worth less than $5 million, and with fewer than 50 full-time employees can take advantage of the new law. All owners must be family members. Businesses with a principal purpose of managing investments or income producing assets are excluded from the protection of the new law.

Now when an owner dies, if he or she leaves an interest in a qualified business to a son or daughter, husband or wife, brother or sister or other limited lineal or ancestral relatives, the inherited interest is not subject to inheritance tax.

Before the Act was passed, when small business owners died, their heirs were subject to Pennsylvania inheritance taxes on the share of the business each inherited. Pennsylvania inheritance tax rate are based on the relationship of the beneficiary to the decedent. Spouses pay no inheritance tax, but parents, children and grandchildren pay 4.5%, siblings pay 12% and all other beneficiaries pay 15%. The law was passed to protect small business owners from the drain of cash or assets triggered by inheritance taxes on the share left by a deceased family member.

The relatives who inherit a share of the business must keep the business in family hands, continuing to maintain the business in the ownership of family members, for at least 7 years. They are required to report to the state every year confirming continued family ownership or they risk losing the exemption of the new law, and then must pay inheritance taxes.

 

Driver’s License Suspension for Failure to Pay Ticket

Driver’s License Suspension for Failure to Pay Ticket

A Pennsylvania man unexpectedly lost his driver’s license when he failed to respond promptly to a traffic ticket. Burgess v. PennDOT, 991 A.2d 1014 (Pa. Cmwlth. 2010).

The man’s problems started when he was cited for speeding and driving an unregistered car. The law enforcement agency didn’t arrest the man, but mailed him a citation after the incident. When he failed to respond to the citation, PennDOT sent the man a letter advising that he would lose his driver’s license in 20 days if he did not respond to the citation immediately. The man did not respond to the citation within the 20 days. Instead, two months after receiving the notice about losing his license, he pled guilty to the citation and paid the fine.

PennDOT then suspended his license for an additional 15 days, because he was convicted of a moving violation while his license was under suspension. The moving violation was the original speeding and driving an unregistered vehicle citation. His guilty plea amounted to a conviction.

The man appealed the additional 15 day suspension of his license, claiming that by pleading guilty to the citation for speeding and driving an unregistered vehicle he was effectively responding to the citation and his doing so should have ended the first suspension. He argued that PennDOT should not be permitted to treat his “conviction” as having occurred during a period of license suspension.

The man lost his appeal. License suspensions do not end in automatic restoration of drivers’ privileges. When Pennsylvania drivers lose their driving privileges due to traffic tickets, DUI charges, failure to pay past fines or for any other reason, they must complete a “restoration” process before their privileges are restored. Drivers who simply assume that they can drive legally at the end of their suspension period are mistaken. To start the restoration process, a driver can request a free restoration letter from PennDOT by calling (800) 932-4600. The letter is also available at no charge through an online request to PennDOT at www.dot.state.pa.us. Follow the menu on the first page headed “On-line Driver and Vehicle Services.” A restoration letter advises the suspended driver of everything he or she must do to become a legal driver again. Those conditions may include resolving previous open citations, paying fines and going through driver education and testing again.

Sleeping on the Job & Unemployment

Sleeping on the Job & Unemployment

An employee fired for sleeping on the job won her unemployment claim recently after convincing the court that she was not at fault for falling asleep at work.

The employee was a ‘money room technician,” whose duties involved counting money at a city parking garage. Working a shift that began in the late afternoon and ended at midnight, the employee spent a lot of time alone in a “counting room,” doing nothing. She requested additional work, so that she could avoid become drowsy and falling asleep but her supervisors did not give her tasks to fill her time. The employee suffered from diabetes and sleep apnea; she claimed that advised her supervisors that her sleep apnea sometimes caused her to fall asleep without realizing it. After hearing complaints from other employees that the employee was sleeping on the job, a supervisor found the employee asleep in the counting room and fired her.

In the unemployment compensation hearings, the supervisors denied that the employee had ever complained about medical conditions that could cause her to fall asleep. The hearing officer found that the employee was more credible. The employee testified that she repeatedly asked for more work so that she would not “konk out,” sitting alone in the counting room for lengthy periods. She also claimed that when asking for more work she was specific about her problems with sleep apnea.

The appellate court agreed with the hearing officer and found that the employee was not guilty of willful misconduct that could justify a denial of unemployment compensation. The court found that an employer seeking to avoid paying unemployment compensation must prove that the employee was aware of a work rule and violated it intentionally and deliberately. In the case of the sleeping employee, the court found that the city parking garage did not prove that the employee’s conduct was willful. In addition, the court found “physical illness can constitute good cause” for an employee’s failure to follow a workplace rule.

Employees with health problems cannot systematically violate work place rules and collect unemployment. But where an employee shows legitimate reasons that add up to “good cause,” the employee may be entitled to unemployment compensation after being fired for breaking work place rules.

 

Drug Treatment for Teens

Drug Treatment for Teens

Parents of drug dependent teens can have their children involuntarily committed to residential drug and alcohol treatment facilities. A little known and rarely used section of Pennsylvania’s Drug & Alcohol Abuse Control Act permits parents and legal guardians to petition the county court to determine whether a minor is in need of court ordered drug or alcohol treatment, either out-patient or in-patient. A minor is a person under 18 years of age.

If the parent or guardian’s petition identifies facts that show “good reason” for treatment, the court has the authority to take the minor into custody and to require an assessment by a psychiatrist, psychologist or certified addiction counselor. The minor is entitled to a lawyer, but is not entitled to have the lawyer present at the assessment. After the assessment, the minor is entitled to a hearing before a judge. If the judge finds “clear and convincing” evidence at the hearing that the minor is drug or alcohol dependent and in need of treatment, the judge can commit the minor to treatment for up to 45 days. At subsequent review hearings, the judge can continue to commit the minor to treatment for any number of successive periods up to 45 days each. At least every 45 days the minor is entitled to a review hearing before the judge.

Minors who are court ordered into in-patient rehabilitation are unlikely to stay in care unless they actually benefit from the treatment by actively engaging in the recovery program because most in-patient rehabilitation facilities discharge patients who refuse to cooperate with treatment. But skilled facilities are often able to help drug and alcohol dependent teens transform their behavior and commit to treatment. Parents and legal guardians sometimes can succeed in saving a young person’s life by seeking the court’s help in getting a minor into drug and alcohol treatment.

Cite

71 P.S. §1690.112a.

See also In Re F.C. III, 2 A.3d 1201 (PA 2010).