♬ Everything is not what it seems
When you can get what you want by the simplest of means
Be careful not to mess with the balance of things
Because everything is not what it seems…♬
Lyrics and music by: John R. Adair, Ryan David Elder, Bradley Jay Hamilton, Stephen R. Hampton, recorded by: Selena Gomez.
CBC News on May 4, 2010 in an on-line article entitled: “Bank of Montreal alleges huge mortgage fraud” reported on a potential $30 million mortage/real estate fraud in Alberta.
The article is disturbing, as the size of the fraud and the number of people involved is not small: there are apparently 14 inter-connected groups involved:
Toronto forensic accountant Al Rosen said he has never seen anything like it.
“This is massive in the sense that it is so broad and so deep,” Rosen said Tuesday. “This is [allegedly] a huge fraud. I can’t think of any situation that has so many people involved and over a period of time like this one.”
The people involved ranged from ‘straw buyers’ who fronted the purchase of the properties for inflated prices based on fake, inflated wage and net income documents, to lawyers, to bank employees and ‘masterminds’.
(more…)
♫ The time is right to do it now
The greatest rock’n’roll swindle
The time is right to do it now…♫
Music and Lyrics by Steve Jones, paul Cook, Julien Temple, recorded by the Sex Pistols.
The ABA Journal reported on Feb. 22, 2010 that an email scam was targeted at 6 law firms in Honolulu and two of them fell for the scam, losing a total of $500,000.00.
In this case the clients, who only contacted the firm via electronic communications, “overpaid” the retainer by way of a cashier’s cheque. When informed about the ‘overpayment’, the clients requested a wire-transfer refund.
By the time the law firm realized the cashier’s cheque was counterfeit, the wire transfers were long gone…
The ABA Journal states:
“Law firms and other professional service providers are cautioned to be on high alert when dealing with clients who come forth via the Internet,” the FBI warns. Also, when dealing with wire transfers, firms should be sure the initial payment has fully cleared before issuing refunds.
Law firms should be instituting policies regarding ‘know your client’ as well as policies regarding ensuring that funds deposited to their trust accounts have fully cleared before forwarding these funds along. The swindlers are counting on the fact that there are lawyers out there who have not yet taken steps to follow these precautions; in which case the swindlers are saying….the time is right to do it now…
♫ Well, who are you?
Who are you? Who, who, who, who?
I really wanna know…♫
Music and Lyrics by Pete Townshend, recorded by The Who.
A new service has sprung up. It is entitled “Career Excuse.com” Its purpose is to allow you to create false career references for your resume. They state:
Lets say you are applying for a Retail position and have a 3 year gap in your resume you want to fill. CareerExcuse.com has a retail company already established with a 800 number, a real address, a real website, and a real contact person.
Not only do they allow you to ‘fill’ that 3 year gap, they can act as new former job references, complete with: ‘company name, address, “800” number, company website/Email address , contact name, contact phone number, contact email address’.
You can create your own virtual company answered by a live receptionist, or direct any inquiries into voice mail limbo.
What if someone should happen to call the listed job reference?
When we receive a call inquiring about your references, they will be directed to our human resources dept. where they are instructed to fax, or e-mail, a Authorized Release Form and their Employment Verification Form to a contact person that we provided to you as your new job reference.
It seems their creativity knows no bottom:
Bankrupt companies make a great previous employer
We have created a management company with dozens of bankrupt companies that are ready to provide any inquirer your desired reference information.
Advising on ethics is just another part of their services:
Is misinformation on a resume illegal?
No, Since a resume is not a legal document, it is not illegal to misrepresent on a resume.
Course if the employer should happen to find out about this, ah, deception:
Can I get caught and fired?
We can’t guarantee that you wont and not liable if you do. If you get the job in the first place..we did our part. It’s up to you to act responsible after you get the job
After you get the job?
It would seem that an employer must do their own due diligence by checking #800’s and email addresses against valid sources to ensure that they are receiving valid reference checks.
It does seem that they are careful about privacy:
What about my privacy?
For your protection we do not collect or share any personal information about you, such as your name, mailing address or credit card number. All of your financial transactions are conducted through Paypal, our secure payment processor.
When it comes to hiring people these days, it seems that one needs to carefully ask: “Who are You…who who????” because we would like to know…
Hat tip to Pete Roberts for passing this site along!
♫ Go on take the money and run
Go on take the money and run..♫
Lyrics and music by: Steve Miller, recorded by the Steve Miller Band.
A lawyer in BC has reported that the fraudsters have a new tactic in their attempts against lawyers and their trust accounts.
Past fraud attempts have aimed at trying to have a lawyer immediately forward funds to a client resulting from a ‘collection’ against a debtor that is paid by a forged certified financial instrument that is deposited into the lawyer’s trust account. Now the fraudsters have changed tactics.
Rather than try to convince the lawyer that he or she has just collected a large debt and he or she should send over large amounts of money forthwith, the fraudsters are now simply forging cheques that appear to be trust cheques drawn on the lawyer’s trust account. This way they bypass the lawyer and their firm controls entirely.
This is a straight cheque forgery. In one case that I am aware, a bank cashed one of these forged cheques, only to reverse the withdrawal shortly afterwards and restore the funds back into the lawyer’s trust account.
This behooves lawyers to go online and check their trust account activity on a daily basis…just to ensure that someone hasn’t taken the money and run….
♫ Everyone of them knew that as time went by
They’d get a little bit older and a litter slower but
It’s all the same thing, in this case manufactured by someone who’s always
Umpteen your father’s giving it diddly-i-dee
District was leaving, intended to pay for
Number 9, number 9
Who’s to know?
Who was to know?…♫
Lyrics and music by Lennon & McCartney, recorded by The Beatles.
A bookkeeper of a San Francisco Medical Malpractice and Personal Injury firm Bostwick, Peterson & Mitchell was sentenced just before Christmas to 10 years in State Prison for stealing $9 million US from the firm since 2005 reported Legal Pad in a post on Jan. 6, 2010.
He will go to prison for 10 years; his thefts took place over about 9 years. He stole $9 million; he was ordered to pay $8.7 million in restitution.
Legal Pad stated:
‘While it’s mostly “water under the bridge,” said partner James Bostwick, it does offer some relief. “It took way too long, but of course it’s good to see him transferred from county jail to state prison.”
Bostwick said the firm uncovered Thomas’ transgressions in 2005, when he started acting suspiciously during an audit of the firm’s finances. “He caused a lot of harm along the way,” Bostwick said. “He was a person we trusted for 10 years.” ‘
Such stories make a rather convincing case for good law firm audits on law firm’s trust and general accounts. After all, in every year its all the same thing – a trusted person at the center – who’s to know without an audit?
♫ Tell me, who can you trust or not
The ones that be trying’ to get what you got
Just listen to these words whatever you do…♫
Words and Lyrics by Keri Lewis, recorded by Mint Condition.
This is a fraud alert from LawPro in Ontario on new fraud attempts on lawyers and law firms:
LAWPRO E-Alert: Fraudsters using counterfeit bank drafts, ID of major banks on mortgage deals
Ontario real estate lawyers are warned to be on the lookout for a new fraud scheme targeting them. For the first time LAWPRO is seeing a counterfeit bank draft fraud scheme that targets real estate lawyers on mortgage deals. Furthermore, the new scenario may include the supposed fraudster using the identity of a major national financial institution as the actual lender in the transaction.
This new type of fraud works as follows: A new and previously unknown client or lender contact allegedly from a major bank will ask you to act on mortgage matter. The source of the referral will be unknown to you (i.e. a person you don’t know or recognize). Shortly thereafter, you will receive mortgage instructions, and a legitimate looking bank draft drawn on a major bank. Loan amounts to date range from $640,000 to $685,000. Client will be in a rush to complete the deal.
Please be wary if you are handling a matter that appears the same or is similar to the one described above. We encourage lawyers and their staff to be extra careful when handling mortgage deals. Remember that these are very sophisticated frauds. The letters and other documents provided by the client and bank drafts received from the lender will look legitimate – but turn out to be counterfeit.
Watch for the red flags on this type of fraud:
> Client and/or lender contact are new to your firm
> Source of referral is unknown or not recognized
> Very large mortgage be placed on mortgage free property
> Client is in a rush to complete the deal.
It appears that the people behind this fraud have stolen the identity of the property owner, and that the property owner is unaware that this has happened. Use the title search, telephone book, Internet and other sources to cross-check client and bank names, addresses, phone numbers and other information in the documentation provided to you.
Protect yourself when dealing with the bank. Don’t rely on oral confirmation from your bank at time of deposit that the bank draft is good. Don’t disburse funds immediately – even if your client is pushing! Wait until the second bank-to-bank verification before issuing funds from your trust account. For branches in major centres this often will take one or two banking days, and for branches in more remote locales as long a 8-10 calendar days. See the Show Me the Money article for more information on funds transfers (Summer 2008 LAWPRO Magazine at
http://www.practicepro.ca/
Please call LAWPRO if you are an Ontario lawyer at 1-800-410-1013 (416-598-5899) if you suspect you have completed or are acting on a matter that, based on this information, causes you concern. If you have or come into the possession of a fraudulent cheque or bank draft, please carefully place it in an envelope so that an attempt to recover fingerprints from it can be made.
Please read LAWPRO’s new Fraud Fact Sheet at http://www.practicepro.ca/
Hopefully by passing this information along we can stop those who are trying to get what you got and leave your trust account in mint condition.
♫ It’s a heartache
Nothing but a heartache
Hits you when it’s too late
Hits you when you’re down…♫
Words and Music by Ronnie Scott and Steve Wolfe, recorded by Bonnie Tyler.
I received an email newsletter from PCTools today (the developer of the Spyware Doctor anti-virus suite) that chilled my heart. For the record, I have no relationship with PCTools other than being a satisfied customer.
They relayed the story of John who, on Valentine’s Day, clicked on an e-card link. This Valentine’s Day link caused his computer to shut down, but not before it infected his computer, stole his credit card and banking information and mailed itself to his contacts in his address book.
As a result he had to cancel his credit cards, close his bank accounts and inform his contacts that he had been infected and telling them not to open the dangerous email.
PCTools gives a list of how to stay safe this Valentines’ Day:
- Be wary of any e-mail received from an unknown sender and do not click on any links provided. Run up-to-date anti-virus and anti-spyware software with behavioural protection – such as Spyware Doctor with AntiVirus.
- Ensure your software is up-to-date and run Smart Updates regularly.
- Keep the programs running in the background at all times.
- Use common sense.
Even if you run a Mac, if you are running Windows inside VMWare, Parallels, Crossover or other Windows emulator, you could be susceptible. After all, no one wants a heartache at Valentine’s Day.
♬ Trust me
Try rolling with the flow
Trust me
I’ve been there don’t you know
I’m giving you a chance, so take it
I got all you want, you’ll make it..♬
Music by Elton John, Lyrics by Tim Rice, recorded by Elton John.
The biggest law firm in the Philippines has been defrauded of P50 Million (approx $1,265,000.oo CDN), according to Purple S. Romero, abs-cbnNEWS.com.
“The law firm was reportedly promised five percent of its client’s $50 million-claim. However, in order to get their cut, the firm was first asked to advance P50 million.”
The firm checked the client’s bank account prior to advancing the funds, but the funds ‘disappeared into thin air’ once the advance was made.
Sycip Salazar Hernandez Gatmaitan appears to have fallen victim to a classic ‘advance fee’ fraud.
It is truly unfortunate that ‘confidence men’ are able to take advantage of the lure of p100 million (approx $2.6 million CDN) in fees – showing yet again, that if the chance appears to be too good, it probably is…and a firm should not take it.
♫ Hey honey-you’ve got lots of cash
Bring us round a bottle
And we’ll have some laughs
Gin’s what I’m drinking
I was raised on robbery…♫
Written and performed by Joni Mitchell.
The ABA Journal website per Martha Neil reported on Dec. 11, 2008 that New York City attorney Marc Dreier has allegedly stolen $380 million dollars from hedge funds and investors (it looks like the amount in question keeps going up…).
In an earlier article this week, (How Marc Dreier Allegedly Sold Worthless Forged Paper) Martha Neil stated:
“Federal prosecutors and securities regulators contend that Dreier has stolen $113 million since October by falsely claiming that a real estate developer—apparently former client Solow Realty, in at least one attempted transaction, according to the New York Times—wanted to sell debt at a deep discount. Then he allegedly closed the fraudulent deals by charming his way into the offices and conference rooms of unwitting accounting, pension fund and real estate offices linked to the transactions by faked documents, recounts the newspaper’s DealBook blog.”
There is a Canadian connection to this story:
“People familiar with the matter say Mr. Dreier attempted to secure money from Fortress, a New York asset-management firm, by impersonating an Ontario Teachers’ Pension Plan attorney. When Fortress wanted to meet with Ontario Teachers’ representatives in person, Mr. Dreier flew to Canada, the people say, and posed as an in-house counsel for Ontario Teachers’ in a meeting with a Fortress executive.”
Of course there is the usual hallmark of a fraud: he is reported to have had ‘a lavish lifestyle’ and spent substantial sums as well on his New York City-based firm’s Park Avenue headquarters.
Now compare and contrast this to the sub-prime mortgage crises. Wikipedia states:
“The New York State Comptroller’s Office has said that in 2006, Wall Street executives took home bonuses totaling $23.9 billion. “Wall Street traders were thinking of the bonus at the end of the year, not the long-term health of their firm. The whole system—from mortgage brokers to Wall Street risk managers—seemed tilted toward taking short-term risks while ignoring long-term obligations. The most damning evidence is that most of the people at the top of the banks didn’t really understand how those [investments] worked.”[38]
In both the sub-prime crises and in the Dreier case, innocent people ended up losing money on worthless paper. Could it be that the major distinction is that certain people at the banks didn’t understand – or care – how their investments worked (willful blindness?) but Mr. Dreier did (intention?)
Mr. Dreier has been charged with wire and security fraud and is facing civil litigation suits.
One could speculate that perhaps Joni Mitchell’s lyrics were taken a little too much to heart?
♫ Can I Trust You? Show me your honesty
Tell me you promise me the truth… ♫
Words and Music by: Rebecca St. James and Shaun Shankel
An Alberta law firm has been defrauded of more than $1.4 million dollars over a 3.5 year period by a former legal assistant of the firm, according to The Edmonton Journal (March 19, 2008). The legal assistant (a 36 year old mother of three) plead guilty to seven counts of fraud and one of forgery and was sentenced to 3.5 years in jail for her actions, according to The Calgary Herald (Sep. 10, 2008). The firm was left with little chance of recovering over $800,000 once the dust cleared (The Calgary Sun Aug. 23, 2008).
In an agreed statement of facts, the legal assistant (I won’t name her here – I think her family has been through enough) stated:
- She forged lawyer’s signatures on trust cheques
- She created false cheques
- She create false cheque requisitions
- She concealed her efforts by altering trust requisitions to transfer more funds than requested from private trust accounts to Bennett Jones’ pooled trust accounts, then writing cheques from the pooled account for her own benefit
- She paid off credit card debts, paid The Receiver General of Canada, Canadian Tire and others
- She removed the fraudulent cheuqes from the bank statements when they arrived and altered the statements to cover her tracks
- She doctored letters requesting the transfer of funds from a private trust account in Los Angeles to the firm’s pooled trust accounts in Calgary
A pre-sentence report by a forensic psychologist stated that she stole the money initially ‘because she could’ and that it ‘gave her a rush’.
OK..so what lessons are there in this case for partners, lawyers, administrators and accounting departments?
For one, being a large and trusted firm does not exempt you from the possibility of internal embezzlement. Bennett Jones is a large and trusted firm in every definition of the word.
Two, all trust accounts need to be under the full control of the accounting department. Reading between the lines, the legal assistant had access to both the bank statements and the cheques for a separate or private trust account that was the responsibility of a lawyer of Bennett Jones but was not under the full control of their accounting department. The best practice separation of duties and roles was, for some reason, not followed in this case. The safeguards that should be built into every accounting department were somehow bypassed.
Three, you can’t trust everyone, all of the time. There is a small minority of people who will succumb to temptation if the systems allow them to do so.
While Bennett Jones suffered a monetary loss, no doubt the damage to their reputation was worth far more…however, they chose to come forward and deal with the situation rather than dealing with it privately. To their credit, they chose to show everyone their honesty and told the truth, even in the face of full public scrutiny.