A holiday tradition the pandemic won’t stop this year: frauds targeting lawyers

The pandemic means we won’t be able to fill our December holidays with the familial gatherings and other joyful celebrations to which we are accustomed. But even though many holiday activities and events are cancelled, there is one annual tradition that likely won’t be taking a break this season: frauds targeting lawyers.

At LAWPRO, we often see an increase in fraud attempts just before and during holiday periods. Criminals take advantage of the season’s end-of-year financial deadlines and the fact that key staff members will be distracted or on vacation. The criminals try to trick firms into redirecting trust funds to the wrong account or act as an unsuspecting dupe in a money laundering transaction. This year, the communication and coordination difficulties that come from lawyers and staff working from home may make firms even more susceptible to these frauds.

Thankfully, LAWPRO is here to assist Ontario lawyers. Throughout the pandemic, LAWPRO counsel has been available to provide advice and assistance for lawyers dealing with potential frauds. Our avoidaclaim.com blog provides regular updates on the types of fraud we’re seeing, and advice on how to avoid being targeted and duped.

Here are four recent examples we’ve seen:

1) The Nicolas Buckley – The Crypto COVID update

We recently saw a new twist on a familiar equipment purchase fraud. This time, the potential fraudster claimed to be seeking assistance in executing a cryptocurrency transaction. The alleged fraudster said they were from another jurisdiction, but unable to travel due to COVID-19. They contacted an Ontario lawyer and requested, essentially, escrow services, saying that a draft agreement was already in place.

Luckily, the lawyer in question had read about the previous “Nicolas Buckley” scenario on the avoidaclaim.com blog, and recognized the red flags. The lawyer contacted LAWPRO to discuss the situation, and LAWPRO’s assistance helped the lawyer avoid a potential claim.

2) The Classic Timeshare Fraud

Another Ontario lawyer was recently retained to work on the sale of a timeshare with a foreign bank and a broker. This particular sale involved a request to send money directly to a broker who purported to have a purchaser lined up.

As a matter of due diligence, the lawyer reached out to LAWPRO to inquire whether the bank in question had been associated with fraud. LAWPRO advised the lawyer that the alleged transaction carried many of the indicia of fraud seen in similar timeshare sale scams.

Taking LAWPRO’s advice, the lawyer offered to pay sale proceeds to a separate attorney, rather than the broker directly. Unsurprisingly, the lawyer received no response and never heard from the potential fraudsters again.

3) The Worrisome Bank Draft

Earlier in the year, an Ontario lawyer contacted LAWPRO, concerned that their client had deposited a bank draft directly into the lawyer’s trust account, even though the client had been instructed to wire the funds. The lawyer was aware that fraudsters will target lawyers with bad cheques, having them deposited in a lawyer’s trust account and then requesting reimbursement before the funds had a chance to clear or the cheque rejected. This can leave the lawyer overdrawn and facing a potential malpractice claim.

LAWPRO advised the lawyer to refrain from transferring the funds until the bank could confirm in writing that the funds had cleared. After which, the transaction could close in the normal course

4) The Non-Existent Client

Another lawyer was contacted by a client after the client received an offer to purchase a piece of property at a large premium. The buyer claimed to be associated with a foreign company, and evidence existed online to confirm someone with the name provided by the purported buyer did, in fact, work at the stated company.

The client was still suspicious due to the overpayment and requested a large deposit as proof of good faith. The supposed buyer immediately agreed and sent a bank draft for approximately half the amount requested, drawn from a Canadian bank, and saying the balance would be provided later. The client contacted the bank, who confirmed they had no record of the draft.

The client’s lawyer reached out to LAWPRO to confirm whether the circumstances suggested fraud, and whether additional steps should be taken. LAWPRO confirmed that it was not uncommon for fraudsters to steal the identity of bona fide individuals in carrying out their fraud attempts. The lawyer was advised not to act on the matter and not deposit the bank draft.

Providing peace of mind

While some fraud attempts appear obvious on the surface, many are much more insidious. Lawyers can take proactive steps to protect themselves by reading the AvoidAClaim blog, which provides regular updates on fraud schemes seen in Ontario, as well as helpful advice for avoiding fraudsters. Lawyers can also subscribe to our fraud warnings, which notify lawyers of specific names and modus operandi associated with fraud that they may see in their practice.

If you suspect you may be targeted by a fraudster, or you are simply surprised by an unorthodox request from your client, give LAWPRO a call. We have several staff who take these fraud “hot calls” and use their experience to provide helpful, practical advice that will help lawyers determine whether the matter is legitimate or a fraud. In either case, you will have peace of mind, and you may avoid a claim.