NEW YORK (NYT NEWS SERVICE).- When the $12,000 showed up in John Newman’s bank account from someone who had bought a pair of his drawings online, his first thought was relief.
But five days later, the money was gone.
The check was fraudulent. His bank reversed the payment. And now the New York artist was out both the cash and the drawings, which he had already shipped. Newman had been swindled by a fake check scam, in which fraudsters take advantage of the lag between when banks show funds are available in a seller’s account and when a check actually clears.
“I was furious,” said Newman, whose sculptures, drawings and prints are found in institutions like the Metropolitan Museum of Art, the Museum of Modern Art and the Tate Modern in London. “I realized I got screwed, and there was nothing I could do.”
Fake check scams have become more common in recent years and are responsible for some of the highest losses of any type of fraud, according to the Federal Trade Commission. People reported losing more than $28 million in more than 27,000 fake check scams in 2019, according to the organization’s fraud network.
“The fact that the funds are available does not mean that the check is good,” said Susan Grant, the director of consumer protection and privacy at the Consumer Federation of America, a nonprofit advocacy group.
A common tactic is for scammers is to buy an item online and “accidentally” send a check for a higher amount. They then ask the seller to refund the overage. At this point, the funds may have showed up in the seller’s account — that typically happens a day or two after the deposit is made. But it may take the bank a week or more to uncover a bogus check. When the check bounces, the bank may then reverse the deposit, leaving the seller on the hook.
Newman is known for his sculptural assemblages of disparate objects and materials, like bronze and tulle. The New York Times critic Roberta Smith wrote in a review of a 2003 gallery show that his “contorted, discontinuous forms have an outrageous, ebullient, disorienting energy, like art in drag.”
Newman said he was initially wary of completing such a high-dollar transaction online. This was the first time he had sold work through his website — he would previously have referred inquiries to his gallery, but he no longer has one, he said. But the buyer, who identified herself as “Tracy Pearl” in emails that Newman shared with The New York Times, seemed sincere. He quoted her a price — $7,500 for one drawing; $12,000 if she bought two. She’d take both, she wrote; her husband would send a check in the mail.
The check arrived, Newman deposited it at his bank, HSBC, and the funds showed up in his account. Still skeptical, he said he went to a branch on Second Avenue the next day to confirm the deposit before he shipped the drawings. “Is there any chance the funds could be taken away down the road?” he said he asked the teller. “No,” he said she told him several times. He shipped the drawings to Pearl, who gave an address in Houston, later that day (property records show that the address is the site of a three-story town house).
But then things took a turn. He received an email from Pearl saying that her husband had accidentally overpaid Newman, and made the check out for $14,000. She asked him to send her two $1,000 money orders to cover the overage. Newman was confused — the check was for $12,000, the amount they’d agreed on. “It shows you how stupid they are,” he said in an interview. “I’m a sweet guy, so if she would have sent $14,000, I probably would have sent $2,000 back.”
He responded that the amount was correct and that he had shipped the drawings. Then she started pleading with him: Her husband had just tested positive for the coronavirus, and she needed the money as soon as possible.
“I fear some foul play here,” he wrote back. “I am really uncomfortable with all of this. I am sorry to hear about your husband but … we had an arrangement. And I feel we should just keep to it.”
She sent him one final email in September — her husband was in quarantine; she needed the money. And Newman stopped responding.
About five days later, he said, he checked his bank account, and the $12,000 was gone. He said HSBC notified him that the check had been fraudulent and debited his account for the full amount.
He went to the branch to complain. But Newman said the manager told him there was nothing the bank could do. “Sorry, that’s just how it is,” he said the woman told him.
“The bank treated me like dirt,” he said. Though, he added, HSBC at least dropped the $10 processing fee it had charged him for the bounced check. (HSBC did not respond to a request for comment.)
He filed an intercept claim with the post office to try to stop the delivery, but the drawings had already arrived.
Newman said he had filed claims with the FBI for internet fraud, the District Attorney in Houston for theft, and the U.S. Postal Service for mail fraud. He has also retained a lawyer to try to help him recoup the $12,000 from HSBC.
Grant said that despite Newman’s attempt to verify the deposit, a teller cannot make the distinction between when a check shows it has cleared and when the funds have actually been withdrawn from the other bank. “The only way your bank knows that the check you deposited is bad is when it is notified by the supposed drawer of the check’s bank that it’s bad,” she said.
Newman hopes his story serves as a cautionary tale. “I doubt I’ll get the drawings back,” he said. “But I hope sharing my story prevents other artists from falling victim to this scam.”
© 2020 The New York Times Company
