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.