This is the text of an email alert LAWPRO sent June 29, 2011, warning lawyers of recent fraud activity and to be extra vigilant for fraud as the Canada Day long weekend approaches.
Fraudsters are busier than ever and they have lawyers in their crosshairs: At LAWPRO we’re getting many calls and emails daily from lawyers targeted by fraudsters attempting bad cheque or real estate matter frauds. Don’t let your guard down.
Be extra vigilant as we approach the Canada Day weekend! From experience we know that fraudsters are more active just before long weekends and holidays.
Read this Alert for more information on the types of frauds LAWPRO is seeing, the red flags of fraud, and what to do if you suspect you’re being targeted or have been duped.
Bad cheque frauds
This is the most common attempted fraud we are seeing. At their simplest, these bad cheque frauds all work the same way. The fraudsters retain a lawyer to act on an otherwise legitimate-looking legal matter. That matter creates circumstances to dupe the 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.
LAWPRO most commonly sees bad cheque frauds on the following types of legal matters (in all these cases the person making the payment is the fraudster or someone that is in cahoots with the fraudster):
- A payment from an ex-spouse on a spousal support collection, often further to the terms of a collaborative family law agreement (currently the most common);
- A payment from the debtor on a business debt collection (currently the second most common);
- A settlement on a work-related personal injury claim;
- A loan advance from a sham lender on a business loan or inventory purchase loan; and
- A bad cheque given by the purchaser as a deposit on a real estate deal that ends up being aborted, triggering a request to pay the deposit back to the purchaser or a third party.
Real estate matter frauds
Although not as frequent as a few years ago, real estate frauds may be making a comeback: LAWPRO has seen two attempted real estate frauds in the last week. Both appear to be scams that were intended to grab mortgage proceeds from an unsuspecting lawyer acting for a purchaser. In one case the lawyer acting for the vendor was someone impersonating another Ontario lawyer. In the other case, the purported lawyer was not a member of the Law Society. One way to avoid being duped if you don’t know the lawyer acting on the other side of a real estate matter is to crosscheck the lawyer’s name, address and phone number information in the documents given to you with the information that appears in the Law Society’s member database.
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 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. Don’t be complacent. The fraudsters go to great lengths to create scenarios that otherwise appear to be legitimate legal matters. They 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. Unfortunately some lawyers are being duped by these frauds.
Red flags of a fraud scam
For a listing of the common red flags that indicate a matter is a fraud scam see this AvoidAClaim blog post.
practicePRO’s AvoidAClaim blog: Posts on the AvoidACLaim.com blog have details on the different types of frauds and examples of real 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, and fabricated collaborative family law agreements and divorce decrees. A list of confirmed frauds and the names the fraudsters are using> is available as well.
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.
FAQs on LAWPRO enhanced fraud coverage
On LAWPRO’s website you’ll find answers to common questions about the enhanced protection provided lawyers regarding counterfeit certified cheques and bank drafts.
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 firstname.lastname@example.org.
If 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. Instructions on how to report a claim are here.