Real Looking Scams Require Lawyers to Be Warier Than Ever

The following article appeared in the new Fall 2011 issue of LAWPRO Magazine.

Don’t be a dupe: That’s the advice from those who were fooled.

In the months of July and August alone, hundreds of lawyers (from across Canada, the U.S., and even elsewhere in the world) have provided LAWPRO with emails seeking to retain them on bad cheque frauds. The most common scenarios are loan or debt collections and spousal support payments. (If you get obviously fraudulent emails, please forward them to fraudinfo@lawpro.ca) Dozens of Ontario lawyers have called looking for help in determining whether a matter they were handling was a legitimate one. In many cases we have recognized the name of the fraudster, the scenario and/or the text of the email. And where we don’t recognize the fraud, the members of the LAWPRO fraud team can use the collective experience of having seen many frauds to determine if a matter may be fraudulent. On a few occasions, we have seen matters that were highly suspicious, but still may have been legitimate retainers.

Clearly Ontario lawyers are more aware that they are the targets of fraud, and they are becoming more adept at recognizing frauds. That is good. But we see some complacency, too. We frequently hear comments such as“l would never be fooled,” or “How would anyone fall for one of these frauds?”

But some are falling for these frauds, acting through at least the initial stages of collecting information, sending a demand letter and communicating with the debtor – who just happens to call up wanting to pay immediately after getting the demand letter. And there are some lawyers who go all the way and are successfully duped into disbursing funds from their trust accounts. This happens more often at solo and small firms, but the biggest firms are not immune either.

One lawyer said to us: “I was suspicious at the start, but the client called several times, provided me with an Ontario driver’s license as ID and a bunch of documentation. He led me along and I got fooled. I feel stupid that I fell for it.”

Some of those who were duped were saved when the teller or the bank detected that the cheque was counterfeit. But don’t rely exclusively on the banks to protect you: They get fooled too. These counterfeits are really good. They will be in colour, on decent paper, and have holographs and watermarks.

In one recent case, a lawyer faxed to the bank a copy of a cheque drawn on the account of a major Canadian retailer. The bank replied that the signatures on the cheque matched what was on file and that the cheque looked good. The lawyer was told “out of an over abundance of caution you may want to contact the company to verify that the cheque is good.” The lawyer did so and it was confirmed that the cheque was bad. The fraud was one we had reported on the AvoidAClaim blog (avoidaclaim.com).

Frauds getting ever better

The fraudsters are changing it up to make fraudulent matters appear more legitimate.

We are seeing more phone calls or personalized emails as the initial contact (not generic BCC blasts to many people). We are also seeing new fake client names more frequently. In the sidebar to the right we list the new and most common names we’ve seen at LAWPRO in the last two months. But just because a name does not appear on this list does not mean you can stop worrying. New names are being used by fraudsters daily.

While in the past the fraudsters would sign retainer agreements and promise retainer cheques, they are now providing actual retainer cheques (which are fake of course),typically on a U.S. account. Banks will accept these for deposit, but will put a hold on them. Of course, a payment on the debt collection matter magically shows up from the debtor a day or two later, before the bogus retainer cheque bounces.

What to do if you are suspicious

If you have even the slightest suspicion that the matter you are handling isn’t legitimate, ask questions and dig deeper, especially if the facts don’t add up or are inconsistent. Click on the confirmed frauds button at the AvoidAClaim.com blog to see a full listing of confirmed frauds. (avoidaclaim.com/?pageid=1479). Search the client’s name on Google. Cross-check names, addresses and phone numbers.

If you still aren’t sure, Ontario lawyers should call LAWPRO for some direction. We will walk you through the common fraud scenarios we are seeing and help you spot red flags that may indicate you are being duped. This will help you ask appropriate questions of your client to determine if the matter is legitimate or not. If the matter you are acting on turns out to be a fraud and there is a potential fraud if possible, and minimize potential claims costs. If you have been successfully duped, please immediately notify LAWPRO as there maybe a claim against you.

For more immediate updates on fraud and claims prevention, subscribe to the email or RSS feed updates from LAWPRO’s AvoidAClaim blog.

Fraud Fact Sheet

More fraud prevention information and resources are available on the practicePRO Fraud page (www.practicepro.ca/fraud),including the Fraud Fact Sheet, a handy reference for lawyers and law firm staff that describes the common frauds and the red flags that can help identify them.

Ultimately, if you are not completely sure a matter is legitimate, terminate the retainer. Don’t be sucked in by your emotions or a strong desire to help. Don’t let the lure of a generous fee cause you to ignore your concerns as to the legitimacy of a matter. If t looks too easy or sounds too good to be true, it probably is.

Comments

  1. Victoria Lehman

    Hi Dan! Recently received an actual telephone call, likely from a potential “fraudster”, calling herself “****” [note: name removed], saying that she was calling from Los Angeles, was three hours behind, etc. etc., wanted to talk about a matter dealing with “trusts”, and was looking for legal assistance. She gave me an L.A. phone number “626-xxx-xxxx” BUT when I checked my Voicemail as to date, time and phone number, the number she had actually called from was LOCAL “204-yyy-yyyy”.

    This seems to be a bit more sophisticated version of the email trust-money scams, where here, they have someone actually make personal voice contact, and then “pass off” to someone in another jurisdiction, where the scam action is really generated and centered. And since she had a rather heavy Asian accent, what would I know from thereafter, speaking to another woman with a heavy Asian accent at the number in LA to which I would be directed?!

    There may be a real concerted effort here to scam our accounts.

  2. I received an email from a Japanese company requesting services in relation to the negotiation of a merger. The correspondence was not well written, but the company appears to be a legitimate company and all of the contact information appears to be correct. After verifying this through third party resources, I gave them a retainer agreement, which is not effective unless I accept and sign it. This they signed and shot back like a bullet at 4:00 a.m. Japan time. Well, that made me immediately more suspicious. The signature on the retainer agreement they sent back is clearly not the person I had put down as the signatory – the person listed as President on their records. They followed this with a letter of intent purporting to be between them and a local company. I told them I would like to contact that company to get a list of officers and directors to ensure no conflict, but they were very concerned that I not contact this other company until their attorney contacts me first. The signatures on the letter of intent are funky – that’s the best way I can describe them – and the letter of intent, instead of listing a purchase price for the company, says they are going to pay a huge debt through my trust account. Yikes! Why would the seller be the one with the payment obligation here anyway? And, I’m aware of the debt collection scams. At this point, I have sent back an email indicating that I am not willing to allow such an amount to be passed through the trust account and that we will not accept a check in excess of the agreed retainer. Further, I reminded them that the retainer agreement is not effective until I accept it and until the check for the retainer (in the agreed amount) has fully cleared the bank. But, where do I go from here? What do I do with the check if it does show up? Since the company is a legitimate company, it seems very strange to me. I’m not sure whether I should contact the company directly to find out if this person really does work for them or this is a real deal. Since they are ostensibly my client, I can’t see a reason why I could not do this.

  3. Thanks Dan. I just wanted to post a follow up that I did receive a check from these guys purporting to be from the Japanese company, but claiming to be mailed from the target company via a Canadian address. The check appeard to be a draft check drawn on a bank in Ontario. I had my banker look into it. They were able to determine that it had a false routing number and was therefore a counterfeit check. They indicated that had I tried to deposit it, the check would have floated around for quite some time before getting returned as a bad check.