INTERVIEW ON THE PRICE OF BUSINESS SHOW, MEDIA PARTNER OF THIS SITE.

Recently Kevin Price, Host of the nationally syndicated Price of Business Show, interviewed Alexander Paykin.

The Alexander Paykin Commentaries

If you have bought or sold real estate in the last few years, you have probably received a stern email reminding you to verify wire instructions before sending money. You probably skimmed it. Here is why you should not.

The FBI’s annual Internet Crime Reports document hundreds of millions of dollars in real-estate fraud losses, and Business Email Compromise losses now exceed $2 billion per year. AI-enabled voice cloning, deepfake video calls and AI-written phishing have made these schemes far more effective. Voice cloning that used to require hours of audio now requires under a minute. A deepfake video call that used to require expensive software now runs on a consumer laptop.

On the Price of Business, attorney Alexander Paykin walked through the anatomy of a modern closing fraud. The attacker compromises an email account in the closing chain via phishing, monitors the email thread for weeks, and on closing day sends substitute wire instructions. If the buyer calls to verify, an AI-cloned voice answers and confirms. Funds wire to an offshore account within hours. Recovery rates are very low.

Who pays? Under Uniform Commercial Code Article 4A, the buyer almost always bears the loss unless the bank failed to follow commercially reasonable procedures. Insurance recovery is sporadic. The lawyer’s malpractice coverage applies only if breach of duty can be shown.

New York has structural protections that many other states lack. NY attorneys hold client funds in IOLA accounts under Rules of Professional Conduct 1.15 and Judiciary Law Section 497, with personal-liability exposure, mandatory professional-responsibility oversight and access to the Lawyers’ Fund for Client Protection. Holding closing funds in NY attorney escrow is one of the most powerful protections a high-net-worth buyer can have. By contrast, California has a strong escrow-licensing framework under the DFPI. Florida’s framework is weaker, and Florida ranks among the highest per-capita BEC loss rates. Texas relies on title-company escrow. Most states do not have the layered NY attorney-escrow protections.

Three rules for every six-figure-plus wire: verify wire instructions verbally using a phone number you obtained independently, never the number in the email; treat any urgency language as a red flag, not a reason to act; and for NY closings, consider holding funds in attorney escrow rather than wiring directly.

Alexander Paykin, Esq. is Managing Director of Paykin Law, a New York firm focused on commercial litigation, real estate litigation and complex transactions. Learn more at https://www.paykinlaw.net/attorneys/alexander-paykin-esq.

Document note: This post is for general informational purposes only and does not constitute legal advice.