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A “devastated” private school principal is accusing Westpac of negligence and considering legal action after he and his wife lost $323,000 in an elaborate scam.
Mark Geraets, 61, thought he was sending his retirement savings to an Australian account under his own name and says he discussed this during a phone call with Westpac staff.
But the account was under a different name and his money went to scammers. Geraets believes Westpac should have checked given the size of the transfer and feels the bank is liable for his loss.
“We would NEVER have transferred [the money] had we been aware of a different name on the account,” he told Westpac in a complaint this week.
Mark and Yvonne Geraets lost $323,000 in an investment scam after transferring their money via Westpac to an Australian account.
However, Westpac is defending its actions and refusing to reimburse the victims, saying Geraets “created and authorised” the transfer and the bank was following his instructions.
Westpac says there is no way to verify the name of an overseas account at another bank, “so we relied upon Mr Geraets’ information”.
“Our findings did not show any evidence to suggest that the bank’s security relating to your online banking has been breached,” an email from Westpac’s financial crime unit states.
Geraets, who has worked in education around the globe but is now retired, banks with Westpac Whakatāne but lives in Australia with his wife Yvonne.
In late February, he was contacted by a man posing as an HSBC investment adviser calling himself James Armstrong. Though the cold call raised suspicions, Geraets has an existing HSBC account, so the approach seemed plausible.
Disturbingly, the scammer had researched Geraets’ family and knew he had a retirement nest egg and was keen to invest.
Geraets was sent prospectus material and eventually convinced to invest in Victoria State Government bonds with the National Australia Bank (NAB).
Mark and Yvonne Geraets lost $323,000 in March this year in a sophisticated investment scam.
His own research confirmed the bonds were a real investment offering, and he found a LinkedIn profile for the man Armstrong was impersonating.
“This guy was so bloody good.
“He had a refined English accent and said he’d worked at HSBC in New South Wales.
“It all sounded very legitimate.
“He’d been on my Facebook. He knew about my grandson. He talked about his kids.
“He sparked up this incredible personal relationship with me. It was insane.”
Geraets was sent payment instructions for a NAB account which he understood was set up under his and his wife’s name, MH&YJ Geraets. He made the transfer online on March 8 from his NZ Westpac account.
Geraets received a call from Westpac the next day checking on the transfer’s legitimacy.
Westpac has denied liability for the victims' loss and refused to offer further compensation.
He and the bank staffer discussed the payment instructions and repeated the account name MH&YJ Geraets several times “so there was no confusion”, Geraets said.
Satisfied his money was going to the right account, he gave clearance for the transfer.
The scammers then tried for more money, saying as a “premier” customer he now qualified for higher interest rates.
This made Geraets suspicious so he called HSBC on March 18.
“They said, ‘Sorry mate, it looks like a scam’. I felt sick.”
Geraets immediately contacted Westpac and the police.
He was referred to Westpac’s fraud department who said they would investigate and call him back. But Geraets said he had to chase Westpac for updates about the investigation and attempts to recover his money.
In early April, a Westpac employee indicated “partial recovery” might be available. Desperate for updates after several more weeks passed, Gareats informed Westpac he was contacting the Banking Ombudsman and alerting the Herald.
“She rang me back after I told her about you and said, ‘we’ve recovered $123,000′, so of course I was over the moon.”
Geraets - who has banked with Westpac for 40 years - has now lodged a complaint about its actions and is also contacting the Banking Ombudsman.
While he accepts he was tricked by the criminals, he claims the scam was “permitted to proceed due to Westpac negligence and slow response”.
Given the amount involved and the prevalence of scams, he believes Westpac failed in its duty of care by not checking the name of the recipient account before processing the huge payment.
He said the fraud has had a devastating impact on him and his family. He wants Westpac to provide compensation and is consulting a lawyer.
In a statement, a Westpac spokesman said staff phoned Geraets before the payment was processed to query the transaction.
“Mr Geraets assured us he was paying an Australian account at NAB that was in his and his spouse’s name, and did not mention it was an investment.”
Westpac relied on Geraets’ information as it was not possible to check account names at overseas banks, and “didn’t suggest we had independently verified this”.
Even when a confirmation of payee system is implemented later this year, it won’t verify account names at overseas banks, the spokesman said.
Westpac rejected suggestions it acted slowly, saying it immediately sought recovery and successfully recovered some of the stolen funds.
Financial crime investigations were complex, involving police and banks across jurisdictions.
Westpac said it communicated frequently with Geraets and was now investigating his complaint and would also cooperate with police.
Auckland City CIB Detective Senior Sergeant Craig Bolton said because the fraud was committed offshore, NZ Police were unable to make an arrest and hold the offenders to account.
“As the victim resides in Australia and suffered the fraud there, there was nothing else police could do here, and the decision was made to file the case.”
Police encouraged the victim to work with his bank’s fraud team which was best placed to recover stolen funds.
Lane Nichols is a senior journalist and deputy head of news based in Auckland. Before joining the Herald in 2012, he spent a decade at Wellington’s Dominion Post and the Nelson Mail.
