practicePRO - practice aids: Fraud

Download a LAWPRO presentation on what frauds look like and how to avoid them. You can download and listen to the MP3 (audio) file and the program PowerPoint presentation.

Business Loan Fraud

In the first scenario, a new client introduced to you by a broker or a former client, is in the process of setting up a business and is borrowing money to buy inventory or materials. The loan documentation looks legitimate and the deal is processed. A certified cheque is deposited in the lawyer’s trust account. The lawyer draws a certified cheque on his/her trust account as directed. Several days after that cheque is cashed, the lawyer is advised that the deposit cheque is counterfeit and there is a shortfall in the trust account. Using this type of scheme, fraudsters successfully duped 10 lawyers over the 2007/2008 Christmas and New Year holiday time. They struck again just before the 2008 May long weekend and four more claims were reported and four more lawyers were left with shortfalls in their trust accounts. In May of 2009 LAWPRO alerted lawyers to yet another well organized scam that targeted at least twenty Ontario lawyers (Click here to read the e-bulletin).

The lesson? Be extra vigilant during periods of time when there are banking holidays. When banks are closed for a day and offices are short staffed, the fraudsters have a bit more time to complete their plans. For the full story behind this fraud see the article below.

Debt Collection Fraud

This type of fraud targets litigators. A new client will contact you seeking representation on a debt collection matter. As payment you will be promised a larger than usual portion of the recovered proceeds. All the documentation will look legitimate, and it will include copies of invoices, demand letters, etc. Phone calls to the creditor will be answered and messages returned. It will be the easiest debt collection you ever do. After just a single call or letter a certified cheque will be delivered to your firm. The cheque will look authentic and have all the normal security features. You will be asked to send the funds, minus legal fees, to an offshore account. And a few days after that you will get a call from your bank advising you that the cheque was counterfeit and that there is a shortfall in your account.

Employee Fraud

While value, title and identity fraud are now commonplace in commercial and real estate transactions, and lawyers tend to be much more alive to these issues when meeting with new clients, they may not appreciate that long-term employees are also responsible for millions of dollars of losses each year. The following article gives you some warning signs of a dishonest employee, recommends some internal controls you can implement and tells you how to screen prospective employees.
• Fraud on the inside: What to do when partners, associates or staff commit fraud (LAWPRO Magazine Winter 2008/2009)

• Fraud: The threat from within; plus Screening new staff during the hiring process (LAWPRO Magazine Summer 2008)

Real Estate Fraud

Fraud, forgery and identity theft

Fraud: How to avoid becoming its next victim

The facts on overdraft protection by Kathleen Waters (LAWPRO Magazine December 2009)

E&O Insurance: counterfeit cheque protection; real estate surcharge increases to $65 (LAWPRO Magazine December 2009)

Fraud: claims put pressure on premiums (LAWPRO Magazine July 2009)

Anatomy of a fraud alert (LAWPRO Magazine July 2009)

Fraud on the inside by David Debenham (LAWPRO Magazine Winter 2008/2009)

Fraud alert: LAWPRO Magazine Summer 2008 (all fraud articles)

Fraud: A growing problem affecting all lawyers; plus Not all claims are covered (LAWPRO Magazine Summer 2008)
An update on new fraud claims reported to LAWPRO, tips on how to avoid being victimized, and a review of coverage for fraud under the LAWPRO policy

Fraud: The threat from within; plus Screening new staff during the hiring process (LAWPRO Magazine Summer 2008)
Tips on internal controls to help avoid fraud by long-service employees, and information on how to screen prospective employees.

Show me the money: Funds handling and the benefits of wire transfers (LAWPRO Magazine Summer 2008)
Counterfeit cheque fraud has left lawyers wondering about funds handling options; three experts provide their advice.

Casebook: Powers of attorney and solicitors' liability (LAWPRO Magazine Summer 2008)
A review of case law involving powers of attorney.

Two new frauds: 'the suspect purchaser' and 'the fictitious divorcee' (LAWPRO Magazine Winter 2008)

Real estate fraud legislation (LAWPRO Magazine Summer 2007)

Dangerous liaisons by Caron Wishart and Debra Rolph (LAWPRO Magazine Summer 2007)

Fraud: The problem that won't go away by Caron Wishart (LAWPRO Magazine Winter 2007)

Guarding against real estate fraud by Jerry Udell, Eli Udell and Catarina Galati (LAWPRO Magazine Winter 2007)

Communication issues underlie spike in real estate claims by Caron Wishart (LAWPRO Magazine Summer 2006)

Fraud-proof your practice by Lisa Weinstein (LAWPRO Magazine Winter 2006)

Coverage for Commercial Properties (LAWPRO Magazine September 2005)

OwnerEXPRESS for current homeowners (LAWPRO Magazine September 2005)

Managing the security and privacy of electronic data in a law office booklet (2005)

Employee departure checklist by Dan Pinnington (2005)