We have received several recent calls from lawyers with respect to equipment purchase and debt collection frauds. These frauds are not new, and in fact we have been warning lawyers about them for over ten years. However, they may may be new to newer lawyers.

In these types of fraud scams, a lawyer is contacted to help what is often an overseas business collect on a commercial debt from a purported borrower in the lawyer’s jurisdiction, or facilitate the purchase of a large piece of commercial equipment (often a dredger). The fraudster will provide documentation about the loan, sale of equipment, or whatever else is involved in the debt or transaction. A retainer agreement may be signed, but the fraudster will delay in paying the retainer fee. Instead, the lawyer will be asked to deduct any fees from the debt payment.

The lawyer will be asked to deposit the cheque from the debt collection sale or in the trust account and wire the balance (after fees are deducted) to an overseas account. Of course, the cheque is fraudulent and the lawyer will be left with a shortfall in the trust account.

Lawyers should be on alert for these types of frauds. Lawyers and firms should engage in full client ID and verification before sending any money out of trust. Any cheque funds received should be held until your bank confirms they are “good” by contacting the other bank, and having the bank confirm, in writing, that it is safe to withdraw from the deposit. Lawyers and law firm staff should be on guard against the red flags of bad cheque fraud schemes by reviewing our Cybercrime and Bad Cheque fraud fact sheet.

When in doubt, reach out to practicePRO at [email protected] before sending any monies out of your accounts.

Categories: Fraud Prevention