YACHT SALES AND FRAUD: WHAT TO LOOK OUT FOR P EGGY J. G ARCIA

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 instructions  Instead of sending wire transfer, sends someone to deposit a forged or stolen check  By 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 online  Corporation 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 changed  If you pay the wrong persons, or in the wrong percentages, you may be liable for the mistake  Documents 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 safer  To distribute funds to seller (and brokers), an escrow account check is safer  If 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 closing  Check the contact information (including 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

P EGGY J. G ARCIA (305) THE SMALL PRINT: T HE STATEMENTS CONTAINED IN THIS PRESENTATION (1) DO NOT REPRESENT OUR OPINION OR RECOMMENDATION, (2) ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY, AND (3) ARE LIMITED AND DO NOT REPRESENT A COMPREHENSIVE OVERVIEW OF ALL LAWS THAT MAY APPLY TO YOUR SPECIFIC CIRCUMSTANCES. W E SUGGEST THAT YOU CONSULT YOUR ATTORNEY REGARDING YOUR PARTICULAR SITUATION. © 2012 R OBERT A LLEN L AW