"AvoidAClaim" Blog

Our primary goal when we started posting bad cheque fraud warnings was the protection of LAWPRO-insured lawyers, most of whom reside in Ontario. An unexpected result has been the huge response from lawyers outside Ontario.

Of the nearly 2,300 emails we’ve received from targeted lawyers since January 2011, almost half have come from outside Ontario. We have had reports of fraud attempts from every province and territory in Canada and almost every U.S. state. In addition, we have had reports from more than twenty countries, including: Mexico, Argentina, the UK, Germany, Turkey and Australia. We keep track of the location of people that contact us, and have used that information to create this map showing the locations of lawyers targeted by these frauds:

The map makes very clear just how widespread these fraud attempts are. Organized crime groups are behind many of these frauds.

These are simple bad-cheque scams packaged in a legitimate looking legal matter that is a set-up to have you deposit a fake cheque into your trust account. After making the deposit, you are instructed to wire money to the fraudster client. The fraudster gets real money and you are left with a shortfall in your trust account. Read this earlier AvoidAClaim blog post for more information on how these frauds work.

The legal matters you are retained on will look legitimate and will involve people that appear to be in your jurisdiction (these people will be in cahoots with the fraudster client). The most common matter types used in these frauds include debt or spousal support collections, business or inventory purchase loans, and IP licensing disputes. The fraudster will give legitimate looking ID and other relevant supporting documents. You will then receive a fake cheque that will look real as it has been printed on real cheque stock. This page has numerous examples of fake documents and cheques that lawyers have sent to us.

Canadian lawyers will get cheques or cashiers cheques from U.S financial institutions. U.S. lawyers will get cheques or cashiers cheques from Canadian financial institutions. This makes it difficult for the validity of the cheque to be checked when it is deposited.

Sometimes lawyers in multiple places are are simultaneously targeted with the same frauds using the same names. We have also seen different regions being hit by the same scams at different times, sometimes months apart. However, thanks to internet, a lawyer targeted in California can search by the fraudster client name and discover that the matter is a fraud.

More 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.

So keep the emails coming. While we know of lawyers being successfully duped by these scams, we’ve also found that making information available to lawyers around the world has been an effective weapon for helping many lawyers avoid being duped. If you have been targeted by one of these frauds, please forward any of the emails and supporting documents that you have received to fraudinfo@lawpro.ca.

If you are a LAWPRO insured and 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.

Two real estate agents in the U.S. tell us they’ve been contacted by the purported Ellis Wayne with regards to what looks like a real estate bad cheque scam. For details of how this scam works and other names attached to it see our Confirmed Fraud page.

Here is the email along with a fake proof of funds:

From: Ellis Larry
Subject: Re: 143 Sun Chase Court — Aerial Views
To:
Date: Saturday, March 24, 2012, 3:10 PM

Regards
Mr.Ellis L .Wayne

How to handle a real or suspected fraud (more…)

A lawyer in the Northwest Territories and two in the US have received emails from the purported Gavin Pykerman with regards to a commercial debt litigation scam. This is similar to other commercial debt collection scams we have seen that use a real company, and even real employee names pulled from the company website, but with fake contact information.

The full list of names attached to this type of fraud can be found on our Confirmed Fraud page. For more details of how the fraud works see our Fraud Fact Sheet.

—–Original Message—–
From: Gavin Pykerman [mailto:gavin@yahoo.com]
Sent: Tuesday, March 13, 2012 5:04 AM
Subject: Lawsuit

I need a commercial litigation lawyer to handle a collection matter, I will also need a referral if this is not your line of practice. Thank you as I look forward to your response soonest

Sincerely,
Gavin Pykerman.

The lawyer replied and got this response:

Thanks for your reply. I am Gavin Pykerman, soliciting your representation on behalf of Claremore Mechanical Services Ltd. We got your contact from the lawyer referral service and as such we need your counsel in litigation to collect a debt owed in the amount of $700.000.00USD by a delinquent seller in your region. Kindly let me know the best time to reach you. We prefer to established Our presence in your state via a legal representative, Thereby forcing the seller to comply with payment request as effort made for refund has proven to be abortive.

I look forward to your prompt response and your retainer agreement. Thank you

How to handle a real or suspected fraud (more…)

All too frequently LAWPRO sees instances where lawyers have shared their Teraview PSPs with staff members. The following post provides guidance on the safe and ethical use of PSPs. The content comes from the Law Society’s Electronic Registration Q&As.

What is a Personal Security Package?

Each person in a law firm using electronic registration (“the user”) is required to obtain a Personal Security Package (PSP) from Teranet. The PSP consists of a personalized, specially encrypted floppy diskette and a unique pass phrase created by the user. The PSP is a security feature built into the electronic registration system. To access electronic registration the user must use both the diskette and the pass phrase.

What responsibilities do I have regarding the use of PSPs in my firm?

The integrity and security of the electronic registration system is achieved by Teranet establishing and maintaining an audit trail of all transactions and of the parties who performed them.

Since the knowledge of and control over members of law firms rest with law firms, lawyers must be vigilant to ensure that appropriate safeguards are implemented in relation to PSPs issued to individuals in their firms.

When a lawyer has a personalized specially encrypted diskette to access the system for the electronic registration of title documents (“electronic registration”), the lawyer must not permit others, including a non-lawyer employee, to use the lawyer’s diskette, and must not disclose his or her personalized electronic registration pass phrase to others.

When a non-lawyer employed by a lawyer has a personalized specially encrypted diskette to access the system for the electronic registration of title documents, the lawyer must ensure that the non-lawyer does not permit others to use the diskette, and does not disclose his or her personalized electronic registration pass phrase to others.

Practice Guideline 1: Maintaining Integrity of Access and Accounts and Subrules 5.01 (7) and (8) of the Rules of Professional Conduct

What can I do to safeguard my PSP?

A lawyer must:

• not share his or her PSP with anyone,
• guard access to his or her PSP,
• obtain a separate PSP for each person in the firm who needs access to electronic registration.

Practice Guideline 1 – Maintaining Integrity of Access and Accounts

What can I do to safeguard the use of PSPs in my law firm?

• emphasize to all users in the firm, the need to maintain the confidentiality of pass phrases and the need to safeguard encrypted diskettes,
• take appropriate steps to discourage and prevent the sharing of pass phrases,
• establish guidelines for formulating pass phrases to take full advantage of the security afforded by the system,
• take appropriate steps to destroy, disable and/or replace pass phrases and diskettes when confidentiality is breached,
• establish appropriate monitoring procedures to safeguard against unauthorized access to the electronic registration system under the firm’s account,
• record and reconcile any and all charges incurred with Teranet because this may disclose unauthorized access to the account,
• implement procedures to notify Teranet of changes in the firm which affect who the authorized users are under the firm’s account, and
• obtain the return of all copies of an authorized user’s encrypted diskette when the user leaves the firm and notify Teranet immediately of the termination of the user’s access.

Practice Guideline 1 – Maintaining Integrity of Access and Accounts

A dozen Ontario lawyers have notified us that they have been contacted by the purported Vanessa Adone with regards to a collaborative family law agreement dispute. This is a fraud we have seen before under several other names and similar scenarios. For details on how this fraud works and a full list of names attached to it see our Confirmed Fraud page.

Here is the initial email:

From: vanessa adone abele
Date: Thu, Mar 22, 2012 at 6:10 AM
Subject: lawyer needed
To:

Thank you
VanessaAdone.VanessaAdone100@gmail.co

One lawyer received the following fake ID, and the fraudsters went as far as to sign and fax back his retainer agreement (though no retainer payment as actually sent).

How to handle a real or suspected fraud (more…)

A lawyer in Ontario and one in New York have reported to us that they’ve been contacted by the purported David Honghui of China Resources Machinery with regards to retaining their services to collect on a breach of a license agreement. It is nearly identical to scams under the names David Yamaguchi and Dan Nagasakii.

This is another bad cheque fraud in which the ‘customer’ accused of breaching the lease agreement will no doubt also quickly send a (counterfeit) cheque for damages to the lawyers office, and the lawyer will be asked to wire the funds (minus fees and costs) to an offshore account. See our Fraud Fact Sheet for more information on how these scams work and how to spot them.

Here is an example of the initial contact email:

From: davidhonghui@chmisghk.com [mailto:davidhonghui@chmisghk.com]
Sent: March-03-12 4:16 PM
To: lawyer name
Subject: IP Rights Violation

David Honghui
President/Owner
China Resources Machinery Company Ltd
26 Harbour Road
Wanchai Hong Kong

How to handle a real or suspected fraud (more…)

The following is a sidebar to the article ‘Here Today, Gone Tomorrow: Insurance Implications of Lawyer Transfers and Practice Structures’, which appeared in the January 2012 edition of LAWPRO Magazine.

Not all insurance policies work the same way. One factor that differs is how a policy that is renewed annually “matches” claims to policy years.

A policy that matches claims to the policy in force when the facts giving rise to the claim occurred is sometimes called an “occurrence” based policy.

LAWPRO’s standard policy, by contrast, is a “claims-made- and-reported” policy.

A claims-made-and-reported policy provides coverage under the present policy for claims that arise out of past and present services. With this type of policy, two developments together trigger coverage:

1. a claim is made against an insured; AND
2. the insured reports the matter to the insurer (LAWPRO) as a claim.

The focus is on when the claim is made and reported, not the year in which services are provided and the alleged error or omission is said to have occurred. If a claim is made against an insured this year for services provided in 2008, the policy that responds is this year’s policy. If the insured had similar coverage in 2008 as he or she has in 2012, it may not make much difference from a coverage perspective.

However, it is possible to have quite different coverage in different years:

• The insured may have retired since 2008 and now have only basic run-off insurance that provides coverage of $250,000 per claim and in the aggregate;
• The insured may have been practising real estate law in 2008, and would have had specialized coverage under the Real Estate Practice Coverage Option at the time, but discontinued the practice of real estate between 2008 and 2012;
• The insured may have been practising in a firm in 2008 and have had the benefit of innocent party coverage and excess insurance coverage, but is now a sole practitioner without either (or vice versa – the insured may have moved from sole practice in 2008 to a firm in 2012); or
• There may be general changes to the policy provisions, terms and conditions, and the scope of coverage expanded or reduced between the time the services were provided and the time a claim is made and received.

Clearly, changes in coverage between the year in which the error was made (and when factors leading to the possible liability of other parties are relevant) and the year in which the claim is made and reported can have significant coverage implications. The LAWPRO policy is available at www.lawpro.ca/standardpolicies.

An Ontario lawyer has notified us that they’ve received two emails from the purported Toru Hashimoto looking to retain them with regards to a collection matter. The introductory email would seem to be a setup for a scam similar to other debt collection frauds 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 initial email:

From: Tushar Meher
To: uhhelpdeskservice@mailnj.custhelp.com,
Date: 17/03/2012 11:38 AM
Subject: I urgently have a collection matter for you

———————————–
M-TECH Innovations Ltd, Pune, India

How to handle a real or suspected fraud (more…)

Four Ontario lawyers have notified us that they have been contacted by the purported Rebecca Schneider with regards to a collaborative family law agreement dispute. This is a fraud we have seen before under several other names and similar scenarios. For details on how this fraud works and a full list of names attached to it see our Confirmed Fraud page.

This is the same name (with different email address) that we’ve also seen recently attached to a business loan fraud.

Here is the initial email:

From: Rebecca Schneider [mailto:schneiderlrebecca@gmail.com]
Sent: Monday, March 19, 2012 03:34 AM
Subject: Re: Legal Representation.

Rebecca Schneider.

How to handle a real or suspected fraud (more…)

The following appeared in a March 2012 Law Society of Upper Canada e-Bulletin and also appears in the Q&As on the Law Society’s website.

Remote Access to Your Teraview Account

I practice real estate. I have a transaction closing at the end of the week, but I am scheduled to be out of the office on that day. Although I have signed the documents for completeness, I am concerned that changes might be made to the documents on the closing date requiring me to re-sign them. I am told that there are programs available that would allow me to log into my office computer from a remote location and access my Teraview account. To access Teraview, I would simply call my office assistant and have him turn on my office computer and insert my key into my office computer’s USB port. From the remote location, I would then type in my pass phrase and review, sign and submit the electronic documents for registration.

Can I access my Teraview account in this way and still comply with my obligations under Rule 5.01(3) of the Rules of Professional Conduct which prohibits lawyers from sharing their PSPs (diskette/key and pass phrase used to access e-reg™)?

Yes, provided that you do not disclose your e-reg™ personalized pass phrase to your office assistant or to anyone else, and provided that once you have accessed Teraview using your personalized e-reg™ pass phrase and key, you do not delegate to your office assistant or to anyone else the responsibility of working on, signing and/or submitting the documents for electronic registration using your key.

Rule 5.01(3) prohibits lawyers who have diskettes or keys used to access the e-reg™ system from permitting others to use the diskette or key and from disclosing his or her personalized e-reg™ pass phrase to others. The mere fact that you permit your office assistant to insert your diskette/key into your office computer would not in and of itself result in a breach of Rule 5.01(3).

Jeffrey Schwartz, in an article entitled “Up, Up & Away (and still able to close)” published in The Abstract Page, Real Property Section of the Ontario Bar Association in December 2011, discusses some of the benefits for sole practitioners of having remote access to their Teraview account.

See these Law Society resources for more information:

• Electronic Registration of Title Documents
• Real Estate Practice Resources