Fraud Alerts
NOTE: If you wish to report a fraud, please use our Reporting Fraud service.
January 26, 2012
Fraud Alert: Potential Fraud Email Solicitations Circulating
In the first half of January 2012, the Law Society of Alberta has been notified by Alberta lawyers of several different potential fraud email scams circulating among firms.
One purportedly comes from a Kiyoshi Yukoi or Nan Zhang with NPI Lease Company. The email solicitation is:
- A request of services regarding a breach of lease of equipment that purportedly was incurred by an overseas company involving a Canadian customer. The email notes that NPI “secured the equipment required by them and leased it to them for an agreed period of time, but they have since fallen short of the executed agreement put in place.”
In another situation, a lawyer noted that:
- “our firm received an email from a potential client approximately one month ago requesting assistance to enforce a family law agreement she had reached with her ex-husband. The client advised that the agreement was made in Saskatchewan with Sask. lawyers, but that the husband had moved to Alberta so, she need Alberta counsel to contact the husband. We requested several items and we received a Sask.driver's license and a copy of the agreement. Before reviewing the documents, we received a payment (CIBC cheque) in the sum of $140,000.00 from the husband for the money he owed. (The cheque was deposited by our firm but has not cleared and I suspect it will not). When I attempted to contact the Sask. lawyers who drafted the Agreement it became evident that the "lawyers" were not lawyers. I then googled the lawyers' names and it became evident that the same scam had been attempted in Saskatchewan and Ontario.”
Another lawyer reported to the Law Society that he had:
- “been contacted by a Mr. Dan Nagasaki, the alleged CEO of CCP Group International of Japan, regarding an intellectual property matter. We did not perform any work for Mr. Nagasaki, as the matter was regarding an alleged contract with an Ontario based company. We have since discovered that this particular individual is part of an email scam as reported on www.lawtimesnews.com.”
Know the Law Society’s client identification and verification rules.
October 19, 2011
Counterfeit Trust Cheques
It has been brought to the Law Society of Alberta’s attention that counterfeit cheques have been negotiated through lawyers’ trust accounts. In this instance, the bank alerted an Alberta law firm about this matter. Upon contacting the law firm, the bank has frozen the firm’s account effective immediately, and will open a new account. The police have been contacted.
One of the key ways to safeguard against fraud is to closely monitor your trust account(s). This can be achieved by reviewing your trust bank account online on a daily basis. Often staff will view the account on-line to ensure certain deposits have been received. By extending this view to have the staff scan the trust bank account for transactions to determine if there are out of sequence cheques, unusual names or payees, you may catch fraudulent transactions. Alternatively you may wish to have a staff member review the trust account on-line on a daily basis for unusual items.
Also these types of fraudulent transactions will be caught once the month end trust reconciliations are completed. The monthly trust reconciliations are one of the key control components of any law firm. The objective of the reconciliation is to ensure trust assets, which is the amount held in the trust bank accounts equal trust liabilities, which is the total amount owing to all of the clients of the law firm. The trust liabilities are the sum of the all of the individual client trust ledger cards.
Trust assets must equal trust liabilities and if they don’t, you must find out why and take immediate correction action. If the trust assets are less than trust liabilities the law firm must issue a cheque from the law firm general bank account to correct the shortfall. Once that is done, the law firm can further investigate the reason for the shortage, such as counterfeit cheque, bank error, client overpayment, etc.
Many firms reconcile their trust bank account using an online statement on the first day of the following month to detect any problems, bank errors, etc. Once the actual statements and cheque images arrive they would be compared to the online version to ensure that they are the same.
October 14, 2011
New Business Loan Scam Circulating
In this type of scam, a lawyer is contacted to help an overseas lender collect on a business debt from a purported borrower in the lawyer’s jurisdiction. The fraudster will provide documentation about the loan. A retainer agreement will be signed, but the fraudster will delay in paying the retainer fee. Instead, the lawyer will be asked to deduct any fees from the debt payment.
When the lawyer has sent a demand letter (or sometimes, before any letter has been sent) a cheque will arrive. The lawyer will be asked to deposit the cheque in the trust account and wire the balance (after fees are deducted) to an overseas account. Of course, the cheque is fraudulent and the lawyer will be left with a shortfall in the trust account.
The current fraud circulating originates from a person calling himself William Brock. He contacted an Alberta law firm recently seeking assistance to collect on a promissory note. The debtor is an Alberta corporation. The law firm advised him of its policy with respect to opening new files. He emailed the firm requesting a retainer agreement and attached his promissory note. A google search by the firm turned up the exact same documents, except for the debtor name, on a blog maintained by LawPro/practicePro in Ontario. The same scam had been attempted in that province.
The Alberta law firm advised him that they were unable to act for him.
July 19, 2011
Be Vigilant and Aware of Potential Fraud Scams
Lawyers are encouraged to be vigilant and aware of fraud scams which continue to target the legal profession. These are some of the fraud scams which have been brought to the Law Society's attention recently:
A Collection Request on an Unpaid Receivable
An Alberta lawyer received a call on May 31, 2011 from an individual purporting to be from Newton, Mass., seeking a collection of $320,000 on an unpaid receivable.
He provided an email, physical address and a contact number. In checking the details, the lawyer found the company appeared to be a legitimate one with an office in Lethbridge, Alberta. The postal code was correct. The lawyer checked the physical address through Google Earth and did not locate any buildings. When the caller provided the phone number, 613-224-612, the lawyer advised him it did not have the correct number of digits. The caller then added an 8 to the end.
The lawyer advised the Law Society that he did not intend to have any further contact with this individual unless otherwise instructed.
Fraud Attempt on a Trust Account
The Law Society was notified of an attempt to defraud a Fort Saskatchewan law firm's trust account in the amount of $1,985.45 via a trust cheque dated May 27, 2011.
The bank recognized the fraud immediately and no loss was incurred. The law firm was advised and the usual protocol was followed.
One of the ways lawyers can protect themselves is by closely monitoring the monthly trust reconciliation of their trust accounts.
Identification Information Sought in “Nigerian Letter”
An Alberta lawyer advised the Law Society that he, his wife and a client received similar letters over a six month period seeking proof of identity.
The letter to the Alberta lawyer was sent from an individual purporting to be a personal attorney to a client (who had a similar last name as the Alberta lawyer). He indicated that his client, along with his family, lost their lives in the Madrid train bombing and that he is seeking information to repatriate the money and property left behind. The deceased client is purported to have an account valued at “about USD$88.8 million dollars” and the bank “has issued me a notice to provide the next of kin or have the account confiscated within the next ten official working days”.
The letter writer states he has been unsuccessful in locating the relatives “for over 8 years now” and wishes to present the Alberta lawyer as the next of kin since he has the same last name as the deceased client. The Alberta lawyer was requested to send legal documents verifying his identity. No money was requested.
Strange Real Estate Transaction Raises Red Flags
An Alberta lawyer was recently retained to act for a buyer and seller in a residential real estate transaction, a cash deal with a purchase price of $412,500.00, and in the ensuing process, several red flags were raised.
The seller had contacted the lawyer prior to signing any deal to ask about a kind of reverse tenancy-at-will type of agreement because the buyer was apparently in a panic to get possession. When the lawyer was notified it was a cash deal, the realtor was advised the transaction could be closed quickly, if that was the case, and the buyer could have possession in a hurry.
The realtor then drew up the offer with a quick closing date. The offer was written up in a strange way as the deposit was the full purchase price and it was supposed to come to the lawyer’s office instead of the realtor’s trust account. The realtor had difficulty obtaining ID from the buyer, though she finally did get a birth certificate from him to copy. He could not and would not produce any photo ID.
When the lawyer drew up the purchase documents, the appointment was rescheduled three times as the buyer would cancel at the last minute. His excuses for cancelling varied from family emergencies to being unable to get off work. The buyer claimed that he is in the military and could not tell the government he needed time off to attend the appointment.
The lawyer informed the buyer that the deadlines were tight for the real estate transaction to go through, and that everyone must take office time to attend appointments on occasion to see their doctor, dentist, lawyer, etc. He was advised the appointment was rescheduled three times and the deal was to close the following day.
At that point, the buyer told the lawyer he would courier a bank draft to her that afternoon to get the deal closed. By this time there were enough flags raised. The lawyer was not prepared to use any monies received in trust from him without having another lawyer as agent to confirm his identification or being able to confirm it herself. He was told this. Since then, the lawyer, realtor and seller have not heard from him.
May 17, 2011
Fake Law Firm Website Used in Real Estate Scam
The Law Society of Alberta has been advised of a sophisticated version of a real estate scam which has been circulating for some time.
Good follow-up and adherence to the Know Your Client identification and verification rules will uncover this fraud.
In this version, fraudsters create a fake website of a business or law firm which is identical to that of the real firm. Recently, a Calgary firm received an email from a UK lawyer referral service inquiring on behalf of a London architectural firm. The email, purporting to be from a "principal" of the firm, requested the Calgary firm to collect an unpaid amount on a house design.
In a phone call to the "principal," a number of red flags were raised:
- He answered the main telephone number with "hello" only.
- He did not ask about rates but only wanted to know if the job could be done.
- He agreed to a retainer being wired, and agreed to appear before a solicitor in London at his expense to verify his identity.
- On checking on the Calgary real estate address, the Calgary lawyer was suspicious of the deal to spend $112,000 on architectural fees on a newer house of $415,000.
- On checking the internet, the Calgary lawyer discovered two identical websites with different addresses. The only difference in the websites themselves was the contact information.
- During the conflict search, the Calgary lawyer was contacted by several other lawyers who had done conflict searches as well.
The apparently legitimate website is obviously intended to create a sense of confidence that the intended transaction is legitimate. The contact number appeared to be a London cell phone, but could be located anywhere in the world.
June 15, 2010
Fraud Alert – Keep Your Guard Up
The Law Society of Alberta continues to receive calls and emails from lawyers who find themselves the targets of attempted frauds.
The following are highlights from the spring issue of LAWPRO magazine which uncovers sophisticated cheque scams targeting lawyers. Red flags of fraud are identified, information is provided on how fraudsters have changed their tactics, and steps are outlined to enable lawyers to avoid being duped.
Read more ...
November 27, 2009
Fraud Alerts: Beware of Scams Circulating
Lawyers are urged to be aware of three types of scams. These include:
- Fraudsters using counterfeit bank drafts. This is a counterfeit bank draft fraud scheme that targets real estate lawyers on mortgage deals. Furthermore, the new scenario may include the supposed fraudster using the identity of a major national financial institution as the actual lender in the transaction.
- Access being sought to a lawyer's trust account. In this type of fraud, the red flags are: the client is usually located offshore, and written correspondence appears to be written unprofessionally. It is "not common" for a legitimate company to randomly choose a law firm from internet services and follow up with a letter offer to retain.
- Cash purchases being made for local real estate transactions. Usually in this type of fraud, a red flag would be that cheques are not certified and are electronically signed by the purported current officer of the organization. The quality of the cheque paper raises suspicion.
Fraud is a real and growing problem for all lawyers, law firms and their staff. Know your client. Many of these schemes would be discovered through compliance with client identification and verification rules implemented by the Law Society of Alberta.
June 18, 2009
Fraudsters using counterfeit bank drafts, identification of major banks on mortgage deals
Real estate lawyers are warned to be on the lookout for a new fraud scheme targeting them. For the first time LAWPRO is seeing a counterfeit bank draft fraud scheme that targets real estate lawyers on mortgage deals. Furthermore, the new scenario may include the supposed fraudster using the identity of a major national financial institution as the actual lender in the transaction. 
Read the LAWPRO E-Alert.
May 26, 2009
The following are two reports of fraudulent activity which the Law Society received for Alberta practitioners.
Access Sought to Lawyer’s Trust Account
A law firm in Cold Lake received an unsolicited letter of request from what appears to be a legitimate company in China to gain access to a lawyer's trust account. The red flags raised in this situation included:
- Client located offshore
- Letter appears to be not written professionally
- It is "not common" for a legitimate company to randomly choose a law firm from internet services and follow up with a letter offer to retain
The letter was forwarded to the Law Society of Alberta which has verified that it is an attempted fraud by unscrupulous individual(s) using the legitimate company as a front.
Cash Purchase Made for Local Real Estate
The Law Society of Alberta was contacted about an attempted cash purchase of real estate in Medicine Hat.
An Alberta practitioner was contacted by a local realtor with a client in Sudan (purchaser) who expressed interest in purchasing real estate in that community. A cheque was received by the practitioner in the amount of $220,000 US and was drawn on the account of an Alberta company. Key red flags in this case included:
- Cheque was not certified and was electronically signed by the purported current officer of the organization.
- The quality of the cheque paper raised suspicion.
In performing due diligence, the practitioner contacted the Alberta company who advised that the cheque was fraudulent.