Our private lending startup almost lost more than half a million dollars to fraud. Here’s what you can learn from our experience.
Ternus is a young private lending company that prides itself on operating differently. We’re investor-focused, values-driven, and transparent. But in March, we came terrifyingly close to losing $645,000 in a sophisticated wire fraud scheme. What followed our discovery was an all-hands-on-deck response that tested our systems, our culture, and our core values.
Thankfully, we caught the fraud in time—but just barely. We are sharing our story not to sensationalize, but to spotlight how fraud really happens and how others in the private lending industry can protect themselves.
The Setup
The fraud began weeks earlier with a seemingly ordinary transaction that ultimately fell through. In hindsight, that initial interaction was a reconnaissance mission; it was our first glimpse of a fraudster preparing to launch a sophisticated social engineering scheme.
Our transactional funding product, a short-term bridge loan facilitating A-to-B-to-C property deals, was at the center of the fraud. This product allows the buyer to close on a property and resell the same property in a separate deal for a profit—either on the same day or within a few days. As the lender, we wire funds to the title company and get our money back within 24 to 48 hours. That short timeline turned out to be a blessing.
When the first deal did not close, a title company representative circled back to one of our processors, suggesting they had another borrower in the same market seeking a similar type of deal. We were thrilled to get the referral, and the borrower completed all the necessary documentation. Since we’d “worked” with this title company before, everything seemed to check out.
But this was all part of their plan.
The title company appeared to be a local branch of a well-known, national company; the required documentation all came in quickly; and the email communication was all very typical, even including the name of the actual branch manager on emails (using a slight variation to the email address). But subtle inconsistencies—like a domain name ending in .org instead of .com—started to stand out. Grammatical mistakes in emails raised flags. The phone number appeared to be associated with a burner phone. The emails seemed to be written from a common template. And when our wired funds didn’t come back on schedule, our internal alarms went off.
Our Response
On the Friday morning we were expecting our funds to be returned, a simple check-in about the wire repayment triggered a cascade of action. Our head of closing reviewed the transaction chain with our chief operating officer, and suddenly everything clicked: This wasn’t a delay. It was a setup.
Within the hour, we had escalated the issue to our bank, initiated a wire recall, locked down our bank accounts, activated our IT team, and started tracing every digital breadcrumb. At the same time, the operations team informed our CEO and the leadership team. We didn’t waste time with blame or cover-ups. Our team operated according to the values we’ve ingrained from day one—speed, transparency, accountability, respect, and service. Our trust in each other allowed us to act quickly and decisively, without fear of finger-pointing.
Because we acted within the allowable window for wire reversals, the bank flagged the transaction, coordinated with the receiving bank, and successfully returned our funds.
The Aftermath
The emotional rollercoaster of nearly losing $645,000 was real. For a startup company, that kind of loss could have been devastating, perhaps even existential. Over that weekend, some employees worried the company might not survive. But by Monday morning, we were able to call an all-staff meeting, put the rumors to rest, and share that we had recovered the money.
But we also knew we couldn’t just celebrate and move on. We took immediate steps to investigate. Everyone involved was interviewed. We combed through access logs and asked our third-party verification provider for a full breakdown of where their validation process failed. We even collected IP addresses and other digital identifiers from the communications trail, and our general counsel sent a detailed fraud report to the FBI and local law enforcement.
This wasn’t an opportunistic scam; it was a carefully staged, multilayered deception, likely part of a sophisticated fraud network. Our hope is that the data we provided will be added to a database of fraudulent activity that, over time, may help authorities identify patterns and catch the perpetrators.
Hardening Our Defenses
Although we are proud of how our team responded, we also had to admit that our systems had vulnerabilities. The experience revealed gaps we didn’t know existed. Although we had controls in place, we learned that even strong systems can be sidestepped by smart, persistent bad actors.
So, we took action. First, we eliminated any reliance on email-only communication for onboarding new borrowers. Now, every borrower must be contacted by phone through our official company line, and those conversations are recorded and documented. This shift ensures auditability. Importantly, it also creates a layer of human interaction that can help detect suspicious behavior or inconsistencies that might not show up on paper.
We also implemented a policy of independently verifying all title company contact information. Rather than calling the number listed in the email or wiring instructions, our staff now cross-checks phone numbers and email domains independently.
Another major change was adopting more advanced identity verification tools. We have partnered with services like LexisNexis to help confirm identities at the application stage, enabling us to flag suspicious applicants before they get too far into the pipeline. We also now use identity verification technology that allows real-time photo and ID comparisons to confirm applicants are who they say they are.
Beyond implementing technological solutions, we have doubled down on training, especially around social
Engineering and phishing red flags. We now hold regular fraud-awareness sessions and update our internal red-flag checklists based on the latest tactics scammers use. And our team is encouraged to take a moment to slow down, especially on high-dollar deals. Rushing, we’ve learned, is the enemy of good judgment. Even subtle anomalies, like odd punctuation or mismatched contact domains, are considered reasons to pause.
Lessons for Private Lenders
Our experience underscored the uncomfortable truth that private lending is fertile ground for fraud. The combination of fast-moving transactions, online interactions, and limited regulation makes us a prime target.
Although we had transaction-level insurance coverage to protect us from wire fraud through a third-party provider, we discovered the limitations of relying on a safety net. Even if they had paid out, it would have taken months—months that would have crippled our liquidity. Worse, it gave us a false sense of security that nearly cost us everything.
Today’s fraud isn’t amateur hour. It’s calculated and often rehearsed against your own systems. Scammers are learning your workflow and your patterns. They probe, they test, and then they strike.
The core takeaway is vigilance. Don’t rely on “green checkmarks” from third-party tools. Read the reports. Scrutinize the source. If a title company has a name that matches a national brand, dig deeper. If a borrower sounds just a little too polished or too desperate, pay attention.
And perhaps most important, don’t let empathy cloud your judgment. Borrowers often tell urgent, compelling stories. They push timelines, insist on speed, and may even try to guilt lenders into shortcuts. Some of those stories will be real. But you must treat every transaction as if it could be a setup. Because sometimes it is.
That doesn’t mean abandoning relationship-building, but it does mean establishing guardrails that apply to every borrower, every title company, and every funding request.
Our Close Call Is Your Early Warning
We were fortunate. Our people responded quickly. Our systems gave us just enough information to piece things together. And our bank acted in time.
But our real advantage came from our culture. The values we instilled from the beginning—speed, transparency, accountability, respect, and service—aren’t just words painted on the wall.
We practice them. When something felt wrong, no one waited. No one tried to fix it quietly or protect their own reputation. Instead, they sounded the alarm, collaborated across departments, and did what needed to be done. Everyone made their best effort to stop the damage.
If this happened to us despite our use of sophisticated third-party tools, experienced staff, and internal protocols, it can happen to anyone. Fraudsters are getting smarter. They adapt. They evolve. So must we. Let our close call be your early warning.
Fraud prevention isn’t a one-time checklist. It’s a living, breathing exercise that needs to be reviewed and reinforced constantly. As Sergeant Phil Esterhous from “Hill Street Blues” used to say, “Let’s be careful out there!”
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