January 8, 2020
ALIAlert : Foreign Bad Cheque Scams Ring in the New Year
The Alberta Lawyers Indemnity Association (ALIA) is warning Alberta lawyers to be wary of recent bad cheque scams, including a fake real estate purchase that has targeted at least two Alberta firms.

The real estate scam involves a Russian buyer who wants to purchase property in Alberta. An Alberta firm reported that the Russian buyer, who says he is living in Japan but is an offshore engineer and must communicate by email only, sent the firm a fake cheque as a deposit for the property. After some time passed, the buyer stated he needed to pull out of the deal (due to inability to obtain a visa) and requested the law firm to return his funds. However, the cheque had been determined to be fake.

The purported buyer also provided copies of a passport page and driver’s license to another Alberta firm he attempted to retain to purchase property.

In another scam, it appears a fraudster masquerading as a foreign oil company attempted to retain an Alberta firm to help the company sell drilling equipment located in the United States to an Alberta buyer. As the lawyer attempted to verify the identity of the new client, a fraudulent cheque was delivered to their office from the purported buyer (another fraudster). The transaction was then determined to be false.

Like all bad cheque scams, these matters present themselves as legal matters requiring the assistance of a lawyer. The goal of this kind of scam is to deceive lawyers into wiring funds from their trust accounts to their new client (the individual perpetrating the scam) after depositing the fake cheque received as purchase funds. Later, the bank informs the law firm that the cheque is bad and retrieves the amount paid out, and the firm is left owing the money missing from their trust account.
Red Flags 
Here are some red flags of a bad cheque scam:
  • In scams where the lawyer is retained to enforce a debt, the debtor pays without any difficulty, despite the client stating a lawyer is needed to help push for payment. 
  • The client says they prefer email communication due to time zone differences.
  • The client is in a rush and pressures you to complete the transaction quickly. 
  • The client is willing to pay higher-than-usual fees on a contingent basis from the (bogus) funds you are to receive.
  • The client instructs you to quickly wire the funds to an offshore bank account based on changed or urgent circumstances.
  • The client tries to avoid standard identity verification procedures or funds are received very quickly prior to the matter being opened.
Actions to be Taken 
If you or your law firm receives any request to handle a legal matter from a client who is from out of the country, consider the possibility that a fraudster is at work. To protect yourself: 
  • Follow these Client Identification and Verification Rules before taking on anyone as client.
  • Hold the funds until your bank confirms the funds are properly deposited into your trust account by contacting the bank that issued the cheque. Have your bank confirm, in writing, that it is safe to withdraw funds from the deposit. However, even this may not be completely risk-free, as banks often reserve the ability to subsequently remove funds from your account.
  • We also recommend that your firm establish protocols for transferring trust funds and adhere to them. 
  • If you receive a communication that appears suspicious, please send an email containing details of the message to ALIAlert and, if possible, provide the potential fraudster’s contact information. 
ALIA remains grateful to Alberta lawyers and firms for their continued reports of potentially fraudulent activities.
ALIA does not provide legal advice. ALIAdvisory notices, ALIAlerts and the content on ALIA’s website, notices, blogs, correspondence and any other communications is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. This information is not a replacement for specific legal advice and does not create a solicitor-client relationship.

ALIA may provide links to third-party websites. Links are provided for convenience only; ALIA does not vet or endorse the information contained in linked websites or guarantee its accuracy, timeliness or fitness for a particular purpose.

If you believe that you have been targeted by potentially fraudulent activity, please contact ALIAlert .