Fraud Alert: May 2, 2011

May 2, 2011

Editor's note: This fraud alert includes names used by fraudsters in BC. Real people with the same names may be the victims of a fraudster or of coincidence, but are not suspected of wrongdoing.

Wagner Elliot LLP is not a real law firm, but in yet another twist on the bad cheque scam, a sophisticated fraudulent website (www.wagnerelliot.com) is used to fool you into believing that it is. The scamsters hope to trick you into paying out on a phony trust cheque, certified cheque or bank draft.

Although Wagner Elliott LLP is used as the bogus site in this scam, the details -- including the fake law firm used -- may vary. Here's generally how the scam works:

• You are contacted by a new client who claims to live in another country (e.g. Japan) and wants you to act on a conveyance.
• The client has used a BC realtor to make an offer to purchase with subjects on a residential property in BC.
• The realtor sends you the signed contract of purchase and sale.
• The client tells you that they will have their Wagner Elliot LLP lawyer, based in Toronto, send you the funds.
• You receive a well made but phony instrument for deposit into your trust account.
• Soon after you deposit the funds into trust, the client contacts you to say that they aren't removing the subjects and to please return the funds.
• If you write a trust cheque before learning that the instrument was bad, you've been scammed.

This isn't the first phony law firm that we've seen in attempts to scam lawyers and it won't be the last. Here are some steps that you can take to help protect yourself:

• If you are contacted by a new client who tells you that Wagner Elliot LLP will send you funds on their behalf, assume it's likely a scam. Appreciate that while the initial contact in any scam is often by email, it sometimes occurs by telephone or in person.
• Scamsters may use other phony law firm websites or develop new ones. Make sure that a firm and the lawyer sending you funds are real by checking with independent sources such as the law society in the lawyer's jurisdiction, and then comparing the information provided to see if it matches with that provided by the firm.
• Use the Internet and other resources to cross-check names, addresses and telephone numbers to see if they correspond. For example, you can use reverse directories to see if the number provided to you corresponds to the name and address and to find out if the number is a cell phone or land line. Some information is free and more detailed information can be obtained for a very small fee.
• Abide by the client identification and verification rules (Rules 3-91 to 3-102). For a "financial transaction" (as defined), a lawyer must take reasonable steps to verify the client's identity in person (no matter where the client claims to live). It's not sufficient for the client to send you a fax or email scan of what the client claims is their passport, driver's license, Nexus card or other identification. See the Client Identification and Verification Procedure Checklist precedents for how to verify identity using a guarantor (client in Canada) or an agent (client outside Canada).
• We have a number of long weekends coming up and also summer holidays. Fraudsters like to prey on law firms when they think they may be short-staffed or rushed for time and not as careful. Be extra vigilant at these times.

Scams, including bad cheque scams, are ubiquitous. Make sure that you and your staff are familiar with the common scams that target lawyers. For more tips and information, read the materials in Fraud Alerts on the Law Society website.

If you suspect that a new client may be a scamster and you would like confidential ethical advice, you are welcome to contact Barbara Buchanan, Practice Advisor, at bbuchanan@lsbc.org or 604.697.5816 or any member of the Practice Advice Department.