Mortgage rip-off costs ASB $180,000

ASB Bank lost $180,000 in one of the country's single largest cases of mortgage fraud after a client tricked the bank with a forged passport and a false tax certificate and bank statements.

The Auckland District Law Society has warned its members to be vigilant against mortgage fraud and released details of the worst case of deception, in which a lawyer who has been practising for 35 years unwittingly helped a thief escape with the $180,000.

Don Thomas of West Auckland law firm Thomas & Co said yesterday that he was involved in the case in which the swindler sought finance on a West Auckland house owned by a person with the same name as her and where she claimed to live.

Mr Thomas said the woman had approached the ASB with false documents and got its agreement to provide a mortgage over the unencumbered property.

She then phoned Thomas & Co and instructed them to act for her, saying she wanted the money for renovations and a holiday but that she did not want her family to know.

She provided only a mobile phone number and an email address and said no mail should go to the house, Mr Thomas said.

Once ASB Bank deposited the $180,000 into Thomas & Co's account, she instructed that $90,000 go to an ASB account and the other $90,000 to a Kiwibank account.

All the money in the Kiwibank account was then transferred into another account in a foreign exchange bureau which then paid it out in cash in one lump sum, Mr Thomas said.

In one weekend, amounts of $5000 were methodically removed from the ASB account until nothing was left.

Alarmed executives at ASB contacted Mr Thomas on the Monday but when he tried to contact the woman, he got no reply from the mobile phone.

The ASB had discovered that the passport was forged, but its discovery came too late to recover the funds.

Law Society president Gary Gotlieb yesterday defended Mr Thomas and called for lawyers to be vigilant in checking clients' identities.

"Don's a very professional and good lawyer who just got suckered - it's just one of those things."

Mr Gotlieb said all practitioners should be suspicious when dealing with new clients.

Mr Thomas called for a new database to be established to help outwit the thieves who were using lawyers and real estate agents to steal from banks.

"The banks were taken in just as much as we were," Mr Thomas said.

He had contacted Internal Affairs about the false passport but was told it could provide no details about any individual passport.

An ASB Bank spokeswoman said yesterday that police were following leads but there was little hope of the $180,000 being recovered. The theft was the bank's largest loss in the spate of mortgage fraud which had become prevalent lately, she said.

"This woman had identity papers for Africa - a passport, Westpac credit card and bank accounts," the spokeswoman said. "But I don't think it's something we should be talking about a lot because we don't want to tell people how to do it."

The bank's investigations division had spotted one case of attempted mortgage fraud recently where a house was over-valued and more mortgage finance was being requested than the property was worth, she said.

Real Estate Institute compliance and operations manager Christine Le Cren warned about 16,000 member agents last month of mortgage scams and this year the Serious Fraud Office is taking 11 people to court in Auckland and Christchurch for alleged mortgage fraud.