Potential fraudulent investment scheme operating in BC
August 1, 2012
The Law Society has learned of a potentially fraudulent enterprise operating in BC. Lawyers may be targeted and asked to certify documents, receive funds into trust, or both.
The first phase involves "historical bonds." A lawyer may be asked to certify the existence of the "bonds," as well as prepare agreements relating to their sale. A second phase involves investor funds purportedly kept on deposit at a bank and leveraged to buy securities. In 2008, the BC Securities Commission found a scheme, in which investors were told that their investments would remain on deposit at a bank and within their control and not at risk, to be a Ponzi scheme.
Perpetrators of fraudulent schemes may try to use a lawyer — and that lawyer's trust account — to add credibility to a fraudulent enterprise. Protect yourself. Before you agree to act on any matter, ask the questions necessary to ensure that you understand the transaction, its legitimacy and the reason for each step you are asked to take. And remember that Chapter 4, Rule 6 of the Professional Conduct Handbook states that a lawyer must not engage in any activity the lawyer knows or ought to know assists in or encourages any dishonesty, crime or fraud.
For more information on fraudulent schemes, including the "red flags" of fraud and questions to ask, read Watching out for questionable schemes and scams, Scamsters target lawyers, and the further material under fraudulent investment schemes.
Bad cheque scamsters particularly active before long weekends
Lawyers are encouraged to be vigilant and know that scamsters sometimes target law firms just before a long weekend when firms may be short-staffed and people may be in a rush.
This notice is intended to alert lawyers to common elements of scams and fraudulent schemes in which they may be targeted to lend assistance. If you are approached in relation to any questionable scheme, contact Practice Advisor Barbara Buchanan (firstname.lastname@example.org or 604.697.5816).