Fraud Alert: January 22, 2008

Fraud alert - counterfeit certified cheques

January 22, 2008

The Law Society has become aware of a new series of frauds involving counterfeit certified cheques. The scheme has arisen in Ontario, but has not yet surfaced in BC.

Who is at risk? To date, the lawyers in Ontario who have been targeted have been sole practitioners and lawyers in small firms. These new scams involve commercial loan transactions such as small business equipment or inventory purchases. The lawyer is retained to act for both the lender and borrower to obtain appropriate security for the loan.

The deals look legitimate, and typically the client is in a hurry and is new to the firm. Typically the lawyer receives and deposits the certified cheque that funds the transaction. He or she then draws certified cheques as the borrower has directed. Several days later the lawyer is advised that the certified cheque from the lender is bogus and there is a shortfall in his trust account.

How do you protect yourself? If you are dealing with clients you do not know well, in order to protect yourself and your trust account, contact your bank and ask them to contact the bank issuing the certified cheque to verify the authenticity of the certified cheque, and to confirm that the funds have been cleared. If you draw from your trust account without the certified cheque being verified or cleared, your firm may be exposed to loss.

If you suspect you have encountered this fraud, contact Dave Bilinsky, Practice Management Advisor, at 604-605-5331 or, or Barbara Buchanan, Practice Advisor, Conduct and Ethics, at 604-697-5816 or