Business Sale Escrow
Wire fraud in California business escrows has jumped 340 percent since 2020, and the average loss now tops $1.1 million per incident. Criminals no longer blast random emails; they study SEC filings, LinkedIn profiles and even Cal UCC records to time their attack during the final 48 hours of a sale. The moment you relax is the moment your proceeds head to an offshore account you cannot reach.
Fraudsters typically start with a spoofed email that looks identical to your escrow officer’s address—only one letter is different. The message contains “updated wire instructions” and a sense of urgency: “We must receive funds by 3 p.m. to avoid a per diem penalty.” The routing number leads to a domestic bank, but the account is opened with a stolen EIN and emptied within minutes of the credit. Once the money hits the second bank, it is converted to crypto and disappears.
Secured Trust Escrow blocks these attempts with a three layer verification protocol. First, every wire instruction change triggers a mandatory 15 minute video call between the client and the known escrow officer. Second, the new instruction must be confirmed by a one time passcode sent to the phone number on file since the day escrow opened—not to any number listed in the change email. Third, the receiving bank must match the exact name and tax ID that appear on the preliminary settlement statement. If any field varies by even one digit, the wire is rejected and the client is contacted by phone before a new instruction is accepted.
Red Flags That Demand a Phone Call
- Email sent outside normal business hours (before 7 a.m. or after 6 p.m. Pacific)
- Grammar or spelling errors in an otherwise professional message
- Routing number that does not match the receiving bank’s published ABA list
- Account name that omits “Inc.,” “LLC,” or uses a slightly different spelling
- Request to send funds to an individual instead of the titled entity
Buyers and sellers should pre-negotiate a “no change” clause: wire instructions delivered at escrow opening are deemed final; any modification requires wet-ink signatures from both parties and a 24 hour cooling off period. This single sentence has prevented more fraud than any software filter.
Insurance is now available. Secured Trust Escrow purchases a $5 million cyber-crime policy that covers client losses due to fraudulent wire instructions, but the policy requires that all protocol steps were followed. Skipping the video call voids coverage and leaves the client holding the loss.
What to do if you suspect fraud: call your escrow officer immediately on the number you used on day one—do not reply to the suspicious email. Next, alert the sending bank within 30 minutes; most domestic wires can be recalled if the fraud is reported within two hours. Finally, file an FBI IC3 complaint and notify the California DFPI fraud hotline at 866-275-2677. Time is the only currency that matters once the wire leaves your account.
Bottom line: verify, then wire. Secured Trust Escrow has never lost a client dollar to fraud because we treat every instruction change as a potential crime scene. Ask for our free Wire Fraud Prevention Kit and add an extra lock to your next business sale closing.
