YACHT SALES AND FRAUD: WHAT TO LOOK OUT FOR

PEGGY J. GARCIA

Cashier’s check scams

Usually non-resident purchasers Use cashier’s check, banker’s draft or business check to purchase

boat Amount of check is more than the purchase price Purchaser requests the overage be sent back to him, to his

international shipping agent, etc. High risk countries – Nigeria,

Russia, Israel,Ivory Coast,Australia

Wire transfer version of Cashier’s check scam

Purchaser asks for wire transfer instructionsInstead of sending wire transfer, sends someone to

deposit a forged or stolen checkBy the time the check bounces, the purchaser has

taken the boat

Disbursement of Funds to Fewer than all the parties

Boat titled by joint tenants (husband/wife or siblings)

Client requests that payment be made to only one name or to a representative

One family member may be taking the proceeds of the sale from the spouse / family member

Shareholder or owner of a corporation requests payment in his own name

You must check all the corporate docs to verify the shareholders, and even then, they can be forged

Information on Sunbiz.org (Florida) is not reliable for legal purposes, Delaware info. is not not even onlineCorporation may have a lien on its assets, including cash in the bank and accounts receivable, the shareholder may be evading a security lien

Shareholder could be avoiding responsibility to business partners

Limited Liability Companies – Members request payment to their individual names

Unless you review all the company’s legal documents, you cannot know whether you are paying all of the members of the company

Their percentage interests may have changedIf you pay the wrong persons, or in the wrong

percentages, you may be liable for the mistakeDocuments can be forged

Foreign companies without bank accounts

in the U.S.

Because it may be difficult for foreign companies to open a bank account in the U.S., foreign owners may ask that you disburse to a third party

The only safe way is to disburse funds directly to the titleholder’s name with a escrow account check or wire transfer to the titleholder’s account

What can you do to help the client in difficult cases?

The principal of the selling company can deliver written instructions for disbursement to a Florida attorney who represents the seller

Preferably, the attorney should be the registered agent of the company

Make sure you know the law firm you are working with, as disbursing to the law firm’s escrow account reduces but does not eliminate the broker’s liability

Disbursement – escrow account check or wire transfer?

To receive funds for closing, the wire transfer is saferTo distribute funds to seller (and brokers), an escrow account check is saferIf you wire funds, first contact the receiving bank to

verify that the name on the account of the beneficiary is the same name as the titleholder of the boat, check all the contact information of the seller with the beneficiary bank

When representing a purchaser

Keep the deposit in your escrow account until closingCheck the contact information (including email and

phone number) of the person claiming to be selling the boat, do they work with a reputable broker?

Obtain evidence of title and the HIN of the boat before releasing funds to a third party

See the boat! Be on the boat with your buyer at closing, and make sure that he takes possession

PEGGY J. GARCIApgarcia@robertallenlaw.com

www.robertallenlaw.com(305) 372-3300

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© 2012 ROBERT ALLEN LAW