This type of scheme has been around for a few years but has become more common in the past year or so, said O'Donnell. He said his firm learns of another property sale falling victim to scam artists in New York and New jersey about once a week.

Even a judge can fall victim to real estate wire fraud.

The New York Daily News reported that acting State Supreme Court Justice Lori Sattler was the victim of a $1 million fraud when she was selling her apartment and buying another.

The judge received an email from someone she thought was her lawyer, telling her to send money to an account. Following the instructions, Sattler sent $1,057,000 to that account, and the money was later transferred to a bank in China, the newspaper said.

Authorities are aware of the fraudsters who are targeting real estate transactions, and arrests are sometimes made.

In March, the U.S. Attorney's Office in New Jersey charged two California men with stealing $560,000 from a New Jersey resident who was using the money to buy a house. Eric Bullard and Anthony Hannah conspired to compromise the email account of a New Jersey law firm, which was not identified in court documents. The pair then allegedly emailed fraudulent wire transfer instructions to the victim, who was a firm client. After the victim complied, Bullard and Hannah transferred the funds to various other accounts, the U.S. attorney said. Bullard and Hannah are awaiting trial.

O'Donnell, when asked why a growing number of thieves are targeting real estate transactions, borrowed a line made famous by bank robber Willie Sutton: "That's where the money is."

Bethany Abele, a partner who also works on bank and title insurance at Riker Danzig, adds that "when you have a real estate transaction, a lot of times you have major funds transferring hands.  You've got prior mortgages that are being paid off. You've got loan proceeds being transferred. You've got large sums of money being transferred. And I think that's probably what they're looking for—they're thinking this is an easy way that I can sneak in there and I can grab that money."

Bethany Abele of Riker Danzig Scherer Hyland & Perretti. Courtesy photo

O'Donnell said lenders, lawyers and settlement agents are falling for these wire-fraud schemes by first not noticing the suspicious circumstances in the timing and form of the fraudulent payoff request and then not verifying the wire beneficiary's identity, wire instructions and other key details.

When funds from a real estate transaction are intercepted by scam artists, typically litigation results, said O'Donnell. "Who is left holding the bag depends on a number of circumstances. At the end of the day, the person usually left holding the bag is often going to be the settlement agent who didn't notice the [irregular] payoff statement and authorized it," he said.

While the authorities are aware of the uptick in wire fraud and working to find the responsible parties, most cases go unsolved, O'Donnell said. "It is so rampant that I don't think they have the ability to catch everyone. A lot of times the fraudsters are overseas," he said.

Sometimes funds lost to wire fraud can be recovered if the victim reports the crime promptly, O'Donnell said. "If you don't get it within the first couple of hours, it is very unlikely that you are going to recover a significant portion of the money. However, we have had instances where we recovered 50% of it because it was reported immediately to the authorities, reported immediately to the bank that wired the funds. The lending institutions are not bad at putting a freeze on it," he said.

Occasionally, the victims and responsible parties who learn of a major fraud do nothing, he said. "Sometimes people freeze and then don't know how to react," he said.

O'Donnell and Abele offered several suggestions for law firms seeking to avoid falling into the trap of wire fraud. They include reviewing information in the payoff demand, not just the wire information, to see if it makes sense; having a system to verify the payoff is going to the intended beneficiary, such as calling the beneficiary and confirming all information;  resisting pressure to close too quickly, thinking twice if an email seems off in some way, being suspicious of last-minute changes in closing directions, and being suspicious of any email that comes from a Gmail account.

Emails sent by fraudsters are often rife with spelling and grammatical errors and typos, Abele said. "That should be a red flag to the people involved in a payoff transaction. Another red flag is getting two sets of payoff instructions. That should make you say 'Why am I getting two sets of payoff instructions? One of the most important things is to call and check on that," she said.

"A lot of times you see a situation where someone says, 'I did call to verify. I called the number that was on the payoff instructions that I got.' By doing that, you're calling the fraudster. You need to call a known phone number that you have. If you're dealing with the seller's attorney, you have the seller's attorney's phone number," Abele said.

While vigilance is important in preventing wire fraud, O'Donnell said that some portion of the attorney population won't get that message.

"You have to be constantly diligent about wire fraud, and it's very tough to do that when you're running a residential real estate practice and you've got a thousand things going or you're a busy lawyer. Sometimes things just slip through the cracks and you make mistakes. It's almost like these fraudsters know we don't have to be successful in every case, we just have to get a couple and we've made a lot of money. Some very fine attorneys have been tricked by some of these fraudsters," O'Donnell said.

Louis Boltik, a lawyer in Hamilton who handles real estate closings, said he has not had any personal experience with hackers, but is aware of the problem. As a precaution, he never sends wiring instructions to a client by email, but only in an overnight mail package.

"I'm not surprised that it's been happening because it's been so busy in the past year," Boltik said. "I think attorneys that do this a lot are aware that this is a problem. Any time there is this much money moving around, there's always going to be the potential for fraud."

Jeffrey Apell, an attorney at Posternock Apell in Moorestown who handles residential real estate matters, said he is aware of the wire fraud problem in real estate transactions. It serves as a reminder of the need for law firms to be vigilant about making sure their firewall and information technology security precautions are up to date, Apell said.

Apell says title insurance companies are at a greater risk because they have largely taken over from lawyers the task of safeguarding large sums of money during real estate transactions, Apell said. But lawyers have a duty to warn their clients about the risks of wire fraud in real estate transactions, he said.

"It seems like there's always going to be hackers," Apell said. "If something looks amiss, make the phone call."