Property scam revealed: How Nigerian scammers sold a Perth house without the owners’ knowledge

It was marketed by LJ Hooker under the ironic headline “LOOKS CAN BE DECEIVING!!!”

And RP Data shows it sold within six days of its initial marketing in March at the lower end of its $410,000 to $440,000 price estimate.

But Perth police now suspect another Nigerian scam has taken place following the sale of a brick Ballajura house in the 6066 postcode 14 kilometres north of Perth.

The $410,000 property had been owned by absentee investors, who’d put it with the LJ Hooker leasing department’s rental pool in 2008 at $400 a week.

The snappily sold house (the marketing said “FIRST TO SEE WILL GRAB IT!”) – settled in April through LJ Hooker Settlements – was done so without the knowledge of the landlord owner, who has since complained to the fraud police. The unknowing buyer has also complained to police as being caught in the scam.

Absentee owners, especially investors with unencumbered titles, ought to be very vigilant given it’s the second time since June 2010 that such a scam has been successfully carried off.

“As far as we are concerned we have done nothing wrong,” the LJ Hooker agent told Property Observer.

The sale seemingly mimicked the 2010 case when another Perth property owner was overseas when his house was sold.

Police say early indications suggest there were a number of similarities to the fraudulent sale of Roger Mildenhall’s Karrinyup home last year.

Mildenhall lost his $485,000 home when it was sold by scammers in Nigeria.

He has yet to secure any compensation from the state titles register, Landgate. He was shocked when a neighbour informed him his house had been sold, only to then return to Perth and find his second property was also about to be sold.

Up to 400 WA property title transactions are being re-examined, with the incident bringing the real estate and conveyancing industries under increased scrutiny.

Consumer Protection Commissioner Anne Driscoll has warned there could be more cases that have not yet been detected and urged home owners living overseas to make contact with their real estate agents.

Police believe the estate agents acting for the unknowing owner and buyer of the house were conned by a Nigerian-based scam using fake identification despite heightened Landgate security processes implemented after the first fraudulent sale in September last year.

At the time, Detective Senior Sergeant Don Heise said the emails authorising the sale should have raised alarm bells.

“On most occasions the emails show poor English so that’s a very solid point that people should look out for when dealing with sales from overseas,” Heise says.

He says real estate agents also need to watch out for changes in personal details, especially the notification of a change of address, email address, home address or telephone number before the sale is registered.

Lands Minister Brendon Grylls has told State Parliament he is aware of the new case.

“Thousands and thousands of transactions take place on a weekly basis,” Grylls says.

“We’ve had one confirmed issue on this that has been thoroughly investigated and that investigation is ongoing.

“We now have another allegation at the moment, just an allegation.”

Both incidences appear to have begun with a Nigerian-based scammer contacting the property’s real estate agent and changing the owner’s contact details, possibly using fraudulent identification, before requesting a quick sale to fund a petro-chemical project.

The proceeds of both sales were apparently sent to Chinese bank accounts.

Driscoll says it is disappointing that the agents involved had been fooled by a set of similar circumstances within months of warnings being issued following the first case.

Opposition planning spokesman John Hyde hit out at the government who he said had failed to prevent these types of frauds from occurring.

“The government promised to fix the loopholes that allowed alleged false authorisation documents signed with a child-like signature and witnessed with a stamp purporting to be from the High Commissioner of Lagos Nigerian justice system, to secure a sale,” Hyde says.

“Yet it’s failed to fix all the loopholes that allow these scams to operate” Perth Now reported.

From July 1, 2011 responsibility for the regulation of the settlement industry was transferred from the Settlement Agents Supervisory Board to the Department of Commerce and the Commissioner for Consumer Protection.

Consumer Protection has advised agents to make further inquiries regarding identity and seek additional evidence whenever there has been a recent change in address or other contact details.

Signatures and initials checks ought to be undertaken if possible.

Agents have been advised to make further inquiries if the transaction originates from overseas especially from countries known for scams, such as Nigeria, or if there is a request for funds to be sent to a different bank account normally used by the client, or to offshore accounts including China.

It also suggests agents to make additional inquiries if the sale is urgent as a result of funds being required for investment in a business venture, or email addresses are generic such as Hotmail, Yahoo or Gmail.

“Ultimately, these steps are no guarantee against fraudulent conduct, but they will minimise the chances of these types of scams being successfully carried out,” Driscoll says.

“Agents and lenders are reminded they are obliged to provide their services to existing clients with due care and skill under the Australian Consumer Law, for which a range of remedies are available.

“The Real Estate and Business Agents’ Code of Conduct also makes disciplinary action available to agents who fail to provide services with due care and skill.”

Driscoll has been reported in the Nigerian press as saying there was no current finding the agents involved in this latest transaction had failed to act with due care and skill, but it serves as a timely reminder of agents’ obligations.

Consumer Protection, Landgate, REIWA and AIC will be working intensely and cooperatively to define additional practices in the industry that need to be put into action to minimise the likelihood of property fraud in the future.

“In the past we’ve seen scammers target people trying to sell cars or computer consoles online but now the problem’s hit the real estate market,” says WA Scamnet.

“A bogus buyer, who says they’re based overseas, approaches the seller claiming that they want to buy the house, unit or land being offered for sale.

“They may try to convince the seller they have paid a deposit, perhaps by using a stolen or fake credit card or by sending an email linking to a bogus PayPal transaction.

“The scammer could appear to ‘overpay’ the deposit and ask you to transfer back the overpaid amount.

“Only when the overpayment has been returned will the seller realise that the deposit transaction has been reversed because it was made with a stolen or fake credit card or never existed in the first place because the PayPal email was bogus.”

This article first appeared on Property Observer Australia’s top site for property investment news and advice