Business loan collection fraud by John F. Chao of Chao Equipment & Trading Company Ltd
Date First Reported: October 2011
Primary Name Associated: John Chao
Description of Potential Fraud:
[Updated December 2012]
Over the last three months dozens lawyers in Canada and the U.S. have received emails from the purported John Chao looking to retain them with regards to a breach of a business loan agreement. In the two weeks before Christmas we have seen a burst of activity for this fraud (mostly in Texas but also in Ontario and California). This is similar to other frauds of this kind we have seen. For a full description of how this fraud works and to see other names attached to it, see our Confirmed Fraud page that deals with business load frauds.
Here is the email. Interestingly, on this example the return email address contains the name Hoshiko, a name we’ve seen on a collaborative family law fraud.
From: [email protected]
Sent: Thursday, October 06, 2011 5:34 PM
Subject: GREETINGS COUNSEL
I need your legal assistance. I provided a friend of mine Mr Philip Anderson a business loan in the amount of $350,000. He needed this loan to complete an ongoing project he was handling in 2009. Mr Anderson is well based in your city and the loan was for 12 months and interest rate of 7.85%. The capital and interest were supposed to be paid on April 15th, 2011 but Mr Anderson has only paid $50,000.
Please let me know if this falls within the scope of your practice so that I can provide you with the loan documents and any further information you need to know.
A lawyer who responded received this reply:
Thank you for your response to my mail dated 19. October, 2011,Sorry I had been out of my station,which result to the long delay in responding back to your email reply as at when due. Never too late for now I suppose, here are more information’s regarding this matter. Below is the information of the borrower. And I know there is a lawyer client retainer’s charge that may be payment in the process of the exercise pending on your conditions.
BORROWER NAME: Philip Anderson
ADDRESS: 1820 Lone Oak Rd Houston, TX 77093
Email: [email protected]
The Borrower is someone I have known for over 9 years and we have done business in the past without any issues. He is into HEAVY DUTY EQUIPMENT RENTALS AND SALES. why I deal on GENERAL EQUIPMENT RENTALS AND SALES here in Asia.Like I stated in my previous email, Phillip owes me $350,000. And he has only paid me back $50,000 and left with a balance o $300,000 us dollars still outstanding till this day. I am in constant contact with him and even though he has promised to pay the balance, I think the threat or possibility of litigation would serve as a catalyst to make him pay sooner rather than later. Find attached
a PDF version of the Loan agreement Promissory note, demand letter and receipt.
I expect this to be a non-litigation collection from the borrower but I am prepared to litigate this matter if he is not ready to pay the balance owed on the loan agreement. Note that this loan is not in
dispute. The present economic down turn has been cited as the reason for delayed payment, He has continually requested for more time, we strongly believe that the introduction of legal pressure may initiate immediate payment from him Send me the engagement letter so that we can proceed with this issue with him. I want to also let you know that as an owner of a business, this loan that I gave to Philip (Who I know very well) has caused considerable strain on my operation capital.
Note that this loan is not in dispute. I am open to either an hourly or contingency fee basis. Please advice which works better for you.
CHAO EQUIPMENT & TRADING CO.LTD
Minamiku, Tuji, Japan
Here is some of the documentation received:
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 protected]
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.
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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.