[This is the text of a LAWPRO Alert sent to real estate lawyers in Ontario June 13, 2012.]
Do any of these names ring a bell: Kin Hang Cheung, Haru Hayate or Hideki Kazuhiro?
OR – is someone from overseas asking you to act on a real estate matter? Is a real estate agent you know sending you new business from an offshore client?
Be wary: Real estate lawyers like you (as well as real estate agents) are being targeted all over the continent by a new fraud scam.
To date we’ve heard from lawyers in Toronto (purchase of a Niagara property), Ottawa, London, Barrie, Orillia, Port Hope and Trenton who have been contacted by Cheung. The Law Society of British Columbia sent a warning to B.C. lawyers about three real estate frauds attempted by this same individual. You can see a copy of this warning on the Law Society of BC website.
Red flags to watch for:
- client is overseas, has worked with a real estate agent in your area to complete an Agreement of Purchase of Sale;
- real estate agent (often known to lawyer) refers deal to lawyer, sometimes with copies of client ID and bank statements. See this AvoidAClaim blog post for copies of various documents used on this fraud;
- payments to be made, at least in one case, through the client’s stockbroker or other third party;
- cheque for $300,000 plus arrives shortly after lawyer receives the documents from the real estate agent, cheques allegedly sent on client’s instructions;
- cheques are drawn on bank accounts of third party business entities with no apparent connection to transaction (LAWPRO has seen cheques from many entities often using the names of actual local businesses including Moloney Electric Inc., Reach Technologies Inc., and SMS Rents Division of SMS Construction and Mining Systems);
- cheque is for much more than required for deposit, and is to be deposited into the lawyer’s trust account;
- fraudster – who apparently has signed Agreement of Purchase and Sale that is subject to inspection clause or that has another avenue to back out of the deal – asks for his deposit back, presumably by electronic transfer, less a very generous amount for lawyer’s fees and disbursements;
- if the lawyer wires funds from his or her pooled trust account, the lawyer’s account will be short and perhaps overdrawn.
Canada Day is coming: Be on guard!
All lawyers are being targeted with bad cheque frauds: We’re getting reports of frauds that appear to be personal or business collection matters, spousal support collections, business loans and IP licence disputes.
The common names we are seeing include (click on these names to be taken to the AvoidAClaim blog for more details on these frauds) Nick Ualtar , Elena Kinoshita, and Tom Prodromou. We expect to see higher than usual fraud activity as we head into the Canada Day holiday weekend.
Don’t let your guard down & be caught short
Some lawyers are being fooled by these increasingly sophisticated frauds – which often result in significant shortfalls in their trust accounts.
Forward any of the emails and supporting documents that you have received to firstname.lastname@example.org.
If you are an Ontario lawyer and you suspect you are acting on a matter that might be a fraud, call LAWPRO at 1-800-410-1013 (416-598-5899). We will talk 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 claim, we will work with you to prevent the fraud and minimize potential claims costs. If you have been successfully duped, please immediately notify LAWPRO as there may be a claim against you.
For more information
Fraud Fact Sheet: More fraud prevention information and resources are available on the practicePRO Fraud page, 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.