[This is the text (updated for SLAW) of a Fraud Alert that LAWPRO sent to Ontario Lawyers December 15, 2011.]
LAWPRO continues to see high numbers of bad cheque frauds targeting lawyers across Canada and the U.S., as well as several other countries around the world. On a monthly basis, 250-300 lawyers advise us that have been targeted by bad cheque frauds. We are seeing the same types of scams over and over again, and on a weekly basis we are seeing two or three new fraudster client names. And these frauds are becoming more sophisticated. Very experienced lawyers have been successfully duped. One of the most convincing frauds we have seen, an IP licence dispute scam involving a client named Dan Nagasakii from CCP Group International, has been reported to us several times over the last few weeks.
Be extra vigilant as we approach the Christmas and New Years holidays! From past experience, we know that fraudsters are more active just before long weekends and holidays.
Bad cheque frauds continue to be the most common type of attempted fraud we are seeing. These otherwise legitimate-looking legal matters create circumstances to dupe a lawyer into quickly disbursing funds on a bad cheque or bank draft that was deposited into a trust account. The fraudster gets real money and the lawyer is left with a trust account shortfall. Common scenarios include the payment of spousal support arrears, business debt collections, and personal injury settlements. The amounts involved on these frauds are typically around $250,000, but can range much lower or higher than this figure.
This AvoidAClaim blog post lists the common red flags of an email fraud scam.
To help lawyers identify fraudulent matters, LAWPRO is posting information on individual confirmed frauds on the AvoidAClaim.com blog. Click the Confirmed Frauds button to see a full list of the names of confirmed fraudsters. For each confirmed fraud there are individual postings that allow you to see the actual back and forth communications between lawyers and fraudsters. You’ll also find images of the fake supporting documentation the fraudsters are supplying, including identification, bad cheques and bank drafts.
You can help us help other lawyers avoid being duped by forwarding copies of the emails and supporting documents that you receive on any fraud attempt to firstname.lastname@example.org.
Keep your guard up
Some of the fraud attempts are very obvious: Poor spelling, bad grammar and/or completely untenable fact circumstances (e.g., multi-million dollar lottery wins or inheritances) should sound alarm bells.
However, some frauds are extremely sophisticated and look like completely legitimate legal matters. Both new and very experienced lawyers have been temporarily fooled into working through file opening and initial stages of the matter before they recognized or determined they were the target of a fraud. Unfortunately, some lawyers are being duped by these frauds and they are finding themselves dealing with significant trust account shortfalls. Don’t be complacent and don’t think you wouldn’t be fooled by one of these frauds. The fraudsters go to great lengths to create scenarios that otherwise appear to be legitimate legal matters. Recently we have seen several matters that originated with phone calls, direct and personalized emails or through firm website intake forms. The fraudsters are prepared to engage in extensive and ongoing communications over weeks and even months, usually by email, but also by phone, and on occasion, even in person. Here is an example of communications that went back and forth over several weeks. They will provide information, names and addresses that are tied to your local area.
How to handle a real or suspected fraud
If you have been targeted by any of these frauds, please forward any of the emails and supporting documents that you have received to email@example.com.
If you suspect you are acting on a matter that might be a fraud and you are an Ontario lawyer, 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.
If you suspect you are acting on a matter that might be a fraud and you are not an Ontario lawyer, call your insurer, Law Society for direction on how to handle the matter.
For more immediate updates on fraud and claims prevention, subscribe to the email or RSS feed updates from LAWPRO’s AvoidAClaim blog.
Fraud Fact SheetMore 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.