Schemes and scams to watch for
Counterfeit trust cheques
Several British Columbia law firms have recently been the targets of a counterfeit trust cheque scam. Since November 1, there have been four attempts of uttering counterfeit trust cheques at banks in Vancouver, Kamloops and Nelson. The amounts on the counterfeit cheques ranged from between $10,000 and $250,000.
In one of these instances, the counterfeiters somehow learned the account number and branch location of the law firm's bank where trust accounts were maintained. They then produced a counterfeit cheque drawn on the law firm trust account and attempted to utter the forgery.
The counterfeit did not resemble the law firm's trust cheques and appeared to have been created on a computer. There was no attempt by the counterfeiters to match signatory signatures. When the cheque was presented for payment, the bank withheld payment and contacted the law firm to confirm that the trust cheque was legitimate. The law firm alerted the bank that the cheque was a forgery, which took prudent action to prevent loss.
If your law firm is the target of a counterfeit attack, please report the incident to the Law Society. Work closely with your bank representative to assist in stopping payment on forgeries and to protect the integrity of your trust accounts. If the original forged document is returned to you, preserve it for use in a police investigation. If the bank retains the original, ask for a copy of the counterfeit. The partners of the law firm should report the incident to the police jurisdiction where the forgery was uttered if client confidentiality is not an issue.
The law firm should consider closing the targeted trust account and opening a new account.
For further information or to report an incident, please contact Jerome Malysh, CGA, Senior Auditor, Department of Audit & Investigations, Law Society of British Columbia by telephone at (604) 669-2533 (toll-free within B.C. at 1-800-903-5300) or by fax (604) 605-5399. [Note: As of March, 2001, Mr. Malysh is no longer with the Law Society, but queries should continue to be directed to the Audit & Investigation Department.]
Nigerian banking schemes
For the past 10 years, Nigerian money schemes have targetted businesses, including law firms, in B.C., and according to information from the RCMP and the Better Business Bureau, these schemes are widespread in North America.
Typically, a law firm receives an unsolicited letter or fax from Nigeria, addressed either to the firm or to a client (such as a company for which the law firm is the registered and records office). The Nigerian letters propose to remit huge sums of money directly to the firm's bank account and, in return for use of the account, offer the firm 30% of the remittance. The authors purport to be associated with the Nigerian government, a government agency or a bank, and they set out various stories as to why the funds are being transferred out of Nigeria, including scenarios in which the funds were improperly obtained.
Lawyers have been asked to participate in these transfers by providing signed blank letterhead, signed blank invoices, bank account information and addresses.
On their face, many schemes propose money-laundering, but most are scams designed to entice people into seemingly lucrative transactions, followed by a demand for money. While lawyers are unlikely to be drawn into any of these scams, there are some sophisticated versions, and all members of a firm should be sure to steer clear.