Fake Borrower Fraud

A key fraud vector to watch out for involves fake borrowers. This is a situation where the identity of the borrower is spoofed or impersonated in a loan transaction.

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In this example, a foreign national started profiling commercial property owners. In this case in southern California. Everything they were looking for was in the public record. They searched for properties that were unencumbered, without mortgages or liens.

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They created a fake profile that aligned to the attributes of the owners of the properties they profiled. This is how just technical these frauds can get. They created what federal law enforcement identified as high quality fake credentials. They then traveled into the U.S., impersonated the property owner, and initiated closing of a commercial refinance in excess of $2M. 

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The fake borrower first created a local account at a regional bank while they were in the country, matching the name of the property owner that that this person was defrauding. The funds moved from disbursement by the title company into an account that matched the name of the property owner. 

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With incredible sophistication and efficiency – they moved the funds into the local account and then offshore.The fake borrower then got back on a plane and out of the country within hours. 

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This example demonstrates how important it is to confirm the identity of parties in a transaction early on. This could have multiple parties involved from a legal perspective.