USA: Scammers step up efforts against law firms

Discussion in 'North American scam news' started by Miyuki, Dec 13, 2008.

  1. Miyuki

    Miyuki Administratrix Staff Member

    From a couple of our members.

    The Facts
    Nigerian scammers operating out of Canada and the U.K. have stepped up their efforts against U.S. and Canadian law firms in what is called the “Collection” scam. The suspects have access to mass produced counterfeit negotiable instruments, mostly in the form of certified or corporate checks, and havesuccessfully defrauded a number of lawyers in both the U.S and Canada.

    On or about August 4, 2008, a suspect using the aliases Jack William and Kennb Osas purchased mailing lists of North American law firms from an online marketing company.

    On or about October 21, 2008, the same group purchased an internet domain of kyleenterprisehk.net and email services from Rosepark Telecom, an internet service provider favored by fraud artists.

    Other known aliases of suspects and companies involved in the fraud are Deborah Morrison, Philip Franklin, Bernard Morin, Beverley Haycock, Karen Walters-Chang, Beverley Schwartz of Korpan Tractor, Genentech, Devlan Construction, Edward Jones Securities, Mystik Toyz, Bajer Design & Marketing, Inc., Phillips Toy Mart, Belmont Toys, Toys 4 Fun, Kidcore Toys, Train Central, Masterpieces Puzzles, Mega Marbles, Another World Enterprises, Save A Buck Enterprises, Domtar International, Tonichi Kenki Co. Ltd, Sumitoks Japan Co. Ltd, Toyoka Global Investment.

    The Scenario
    The target firms will be, or have already been, contacted by an individual claiming that their company wishes to engage the firm for collection efforts and/or the purchase of property by an offshore client. A person from the law firm will then contact the person supposedly owing the debt (an accomplice) at which time they will agree to pay the full amount, or an amount over what was "due." These checks will be sent via UPS, FedEx, Canada Post and in some cases, U.S. mail.

    The instrument will arrive and, to the naked eye, appear to be legitimate. In some cases even examination by the bank fails to detect the counterfeit. These checks are stolen from real companies and altered so that only the name of the payee is changed. It is not until the check returns to the legitimate company and an audit is performed that the counterfeit is detected. At this time the law firm is held accountable for the lost (stolen) funds.

    False Due Diligence
    Some firms have already made the mistake of believing that simply depositing the check and waiting for the bank to approve payment is sufficient due diligence. There is also a false belief that a faxed copy of a drivers license and or passport is legitimate identification. The only true identification is a “face to face” with the person you are doing business with—even then they may produce false identification.

    These counterfeits are created with the names, routing and account numbers of legitimate companies. The normal processing for any check is for the instrument to be sent to the paying bank. The paying bank will often only check to see if the funds are available and that the account that the check is drawn against is in good standing. In these cases, it may be months before the scam is discovered and even then only by the real company itself during account reconciliation.

    Some banks have improperly verified checks by faxing inquiries to lines set up by the scammers themselves.

    Correct Due Diligence
    The check is ALWAYS the weak point of the fraud and there is only ONE way to verify the legitimacy of the check and the transaction.

    The company that supposedly drafted the check should be contacted directly. Any phone number printed on the check should first be verified. If one is not present on the check, either do an online search or use directory assistance to locate the company’s real phone number. Ask to speak directly with the Accounts Payable department to verify the validity of the check and transaction.

    If you have been a victim of this type of scam, or are in the process of completing a transaction, contact your local police department and advise them of the situation.
     
  2. Miyuki

    Miyuki Administratrix Staff Member

    State bar of Wisconsin:

    Email scam targeting lawyers in bogus collection case

    April 1, 2009 -- An email scam targeting attorneys has been reported by a Wisconsin lawyer.

    Thomas Kubasta of Kubasta, Rathjen, Rickford & Lorenson, LLP in Wautoma received on Jan. 26 an email purportedly from “Martin J. Arbus,†a New Jersey lawyer. In the email, “Arbus†explains that he represents a Chinese company trying to collect $558,205 owed in the state of the email recipient. “Arbus†says that he is only licensed in New Jersey and so he seeks local counsel.

    Kubasta said that the named Chinese company and “Martin J. Arbus†actually exist and the email appeared to be a legitimate solicitation.

    After agreeing to participate in the debt collection, Kubasta said that he received an email on Jan. 29 purportedly from the Chinese company “client.†In that email, the “client†discloses the name of the alleged debtor so that Kubasta can run a conflict check before entering into a retainer agreement. The “client†predicts that once the alleged debtor is told local counsel has agreed to assist, the alleged debtor will likely pay up “to avoid legal action and litigation.â€

    Kubasta said his next contact was in the form of a cashier’s check received by his office around March 10. The check – supposedly for the amount owed by the debtor – was a fake. The hope of the fraudsters was that Kubasta would deposit the check and then disburse funds from a client account to “Arbus†before realizing the check was worthless.

    Fortunately, Kubasta did not play along.

    Internet research turned up a Jan. 21 article on Law.com reporting this to be an international scam targeting attorneys. Lawyers in Texas, Oklahoma, Illinois, New Jersey, New York, Pennsylvania, California, and the Virgin Islands have received the email, according to the article.

    The Law.com article stated that the real Martin Arbus is a municipal attorney in New Jersey. “The fake emails seem to have been sent to lawyers who do mediation work, and at least one person who contacted Arbus was a nonlawyer mediator,†the Law.com article said.

    “Arbus handles alternative dispute resolution, as do both New Jersey lawyers who called him after receiving the fake emails,†the article continued. “That leads Arbus to believe the names might have been obtained from a roster of mediators.â€

    Keith Sellen of the Office of Lawyer Regulation advises any lawyer who receives this type of email to exercise caution and only disburse funds from an account after the check is actually honored.

    “Anytime a person wants their money really quickly, it’s time for a lawyer to reflect and do some due diligence,†Sellen said.

    Lawyers in receipt of such an email should also contact appropriate law enforcement, he added. The Trade and Consumer Protection division of the Department of Agriculture receives complaints of internet fraud at 1-800-422-7128 or (608) 224-4953.

    Related story: Sophisticated scams target attorneys

    By Alex De Grand, Legal Writer, State Bar of Wisconsin

    http://www.wisbar.org/AM/Template.c...nsideTrack/contentDisplay.cfm&ContentID=79575


    Northern Mississippi Commentator

    Lawyer collection internet scam

    Lawyers all over the country are being targeted by a collection-case scam. The Mississippi Bar has just sent out a warning:

    An internet scam targeting attorneys in states around Mississippi and across the country is prompting warnings from bar associations and federal authorities. Please exercise extra diligence when presented with circumstances similar to those noted below.

    The scam works like this: a law firm receives a referral from someone posing as an out-of-state attorney to enforce a simple contract dispute or collect a debt from a local corporation owed to a foreign company. The firm, believing it is exercising due diligence, confirms that the prospective client is a real company, then enters into a fee agreement. It sends a demand letter, and later receives a cashier’s check made payable to the law firm. The client is pleased and directs the law firm to wire the money, after deducting its fees and costs. The law firm deposits the money in its client trust account, waits for the check to clear the local bank, and wires the money to the client. Things fall apart when the bank on which the check is drawn notifies everyone that the check is a counterfeit fraud – by which time it is too late to stop the wire transfer, and the law firm’s client trust account is now out the proceeds, which the firm has to replace. The scam works because the law firm erroneously believes that the check is good when it clears the law firm’s bank. That is not the case. The first clearance is only provisional. The bank on which the check is drawn has additional time under the law to verify the check.

    An article on the Wisconsin Bar site from April has more. As far back as January, Law.Com reported that lawyers in Texas, Oklahoma, Illinois, New Jersey, New York, Pennsylvania, California, and the Virgin Islands have received the email. The email identifies a real lawyer in New Jersey and a real Chinese Company that is legitimate (and is a client of the New Jersey lawyer!). The reply email address for the New Jersey lawyer is fake.

    June 12, 2009, 1:32 pm |
    Tags: internet scam, Missisippi bar | Category: Law, Mississippi Legal | 9 comments

    http://nmisscommentor.com/2009/06/12/lawyer-collection-internet-scam/
     
  3. Gentle Giant

    Gentle Giant Giant Admin for a Day Staff Member

    http://www.abajournal.com/weekly/ar...geting_lawyers_are_increasingly_sophisticated


    Law Practice Management
    Bad-Check Schemes Targeting Lawyers Are ‘Increasingly Sophisticated’

    Posted Feb 25, 2010 10:29 AM CST
    By Molly McDonough



    Bad-check schemes specifically targeting law firms are becoming more and more sophisticated, prompting calls for vigilance and caution in the bar.

    Lately, family law firms appear to be the targets of scams which purport to involve the collection of outstanding spousal support and other divorce matters. Earlier this week, the FBI in Hawaii warned that two of six family law firms targeted in a cashier's check scheme were swindled out of more than $500,000.

    Toronto's Dan Pinnington wrote on the law blog Slaw that he gets two to three calls and e-mails a day from lawyers who have been targeted to act on matters that are clearly frauds.

    Pinnington says family law practitioners aren't the only ones who need to be on guard. "We continue to see attempted frauds involving debt collections, and we also continue to see real estate frauds as well (more ID theft now, as flip frauds are harder in a slower market when property values are not rising)," writes Pinnington, who is director of practicePRO at the Lawyers' Professional Indemnity Company.

    Among the frauds Pinnington has seen in Ontario: three instances where fraudsters have forged checks written on law firm trust accounts. The presumption is that fraudsters believe the forged law firm checks will undergo less scrutiny than any other forged check. Fraudsters are lowering the amounts in spousal collection schemes to make them look more reasonable. Lawyers are also being approached by fraudsters who purport to come from trusted referral sources.

    Pinnington offers several tips for lawyers to avoid being duped, including:

    • Be familiar with common types of bad checks and frauds targeting lawyers; and educate staff to be on the lookout too.

    • Be sure to properly identify and verify client information.

    • Never be in a rush to disperse funds from a trust account, especially if the client is pushing.
     
  4. Miyuki

    Miyuki Administratrix Staff Member

    http://www.ic3.gov/media/2012/120312.aspx

    Intelligence Note
    Prepared by the Internet Crime Complaint Center (IC3)
    March 12, 2012
    U.S. Law Firms Continue to be the Target of a Counterfeit Check Scheme

    The IC3 continues to receive reports of counterfeit check schemes targeting U.S. law firms. The scammers contact lawyers via e-mail, claiming to be overseas and requesting legal representation in collecting a debt from third parties located in the U.S. The law firms receive a retainer agreement and a check payable to the law firm. The firm is instructed to deposit the check, take out retainer fees, and wire the remaining funds to banks in China, Korea, Ireland, or Canada. After the funds are wired overseas, the checks are determined to be counterfeit.

    In a slight variation of the scheme's execution, the victim law firm receives an e-mail from what appears to be an attorney located in another state requesting assistance for a client. The client needs aid in collecting a debt from a company located in the victim law firm's state. In some cases, the name of the referring attorney and the debtor company used in the e-mail were verified as legitimate entities and were being used as part of the scheme. The law firm receives a signed retainer agreement and a check made payable to the law firm from the alleged debtor. The client instructs the law firm to deposit the check and to wire the funds, minus all fees, to an overseas bank account. The law firm discovers after the funds are wired the check is counterfeit.

    Law firms should use caution when engaging in transactions with parties who are handling their business solely via e-mail, particularly those parties claiming to reside overseas. Attorneys who agree to represent a client in circumstances similar to those described above should consider incorporating a provision into their retainer agreement that allows the attorney to hold funds received from a debtor for a sufficient period of time to verify the validity of the check.

    If you have been a victim of an internet scam or have received an e-mail that you believe was an attempted scam, please file a complaint at www.IC3.gov.
     

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