Toronto lawyer Gene Colman, who has handled divorce and child-custody cases for 30 years, was immediately intrigued by the e-mail he received out of the blue.
"My name is Liana Chengjie and I am a [sic]contacting your firm in regards to a divorce settlement with my ex husband (Paul Chengjie) who resides in your jurisdiction," read the e-mail, sent to Mr. Colman's website (complexfamilylaw.com) last fall.
The woman explained that she was "on assignment in Hong Kong" but was trying to get her ex-spouse to live up to the terms of an out-of-court settlement under which he owed her more than $400,000.
"I thought, 'this is an interesting case,'" Mr. Colman recalled. "I like interesting cases."
But the message, as he soon learned when his requests for copies of government-issued identification and a phone conversation were ignored, was a fake - part of a wave of increasingly sophisticated "bad cheque" fraud attempts aimed at lawyers across Canada and the United States.
There was no mention of a Nigerian prince, and relatively few of the grammatical errors that usually set off spam alarm bells. Instead, this breed of scam has targeted Canadian lawyers in recent months and has managed to fool at least a few, legal industry officials say. Lawyers in Texas and Hawaii, among other places, have also been swindled. And the price of gullibility can be high: tens, or even hundreds, of thousands of dollars.
It works like this: A woman, writing from overseas, asks for help collecting spousal support from an ex-husband in amounts ranging from $300,000 to $900,000. In some cases, follow-up e-mails include a convincing (but fake) out-of-court agreement, colour scans of counterfeit passports or U.S. drivers' licences, addresses and Social Security numbers.
For the lawyer, the assignment proves surprisingly easy. After dashing off a routine letter demanding that the deadbeat ex pay up, the former spouse does so, with no fuss. But the cheque he encloses with his apologetic letter is a sophisticated fake.
The lawyer thendeposits the bad cheque in his or her trust account. Pressured by the client, the lawyer agrees to wire the money to her, having agreed to take a cut for the retainer. A few days later, when the fraudulent cheque doesn't clear, the lawyer ends up on the hook for the total. By this time, the client, along with the money, has vanished.
Mr. Colman said red flags were raised when the documents he asked for were not forthcoming and it was difficult to arrange a conversation with his client. He Googled the names of the lawyers at the bottom of the bogus divorce agreement sent to him: One didn't come up and the other wasn't a family lawyer. When he phoned his client's number in Hong Kong, he left a message with the man who answered.
"There was that pregnant pause … probably because they've got more than one fraud going," Mr. Colman said.
At first, the scam seems real because the amounts of money do not immediately jump out as unrealistic, he explained. "It's not out of range for any sort of agreement between people who have some assets. … If they want to give you 10 per cent of $100-million, you know it's a fraud. Especially if they're from Nigeria."
John Allen, auditor of the Law Society of Saskatchewan, has been warning his province's lawyers about similar frauds since 2008, and says the latest wave is using higher-quality forged cheques. (He sent an e-mail message in May alerting lawyers to another e-mail scam, in which the client claims to be helping earthquake victims in Asia.)
In 2008, Mr. Allen worked with Regina police as they set up a sting operation at a law office that had been targeted. Instead of a lawyer, a police officer corresponded with the fraudster in an attempt to track him or her down. That attempt failed. But the investigation continued, and last summer the RCMP arrested two people in Montreal in connection with 80 bad-cheque frauds that had netted $600,000 and targeted lawyers in Quebec and Saskatchewan, as well as other victims in Canada and the United States.
Dan Pinnington of the Lawyers' Professional Indemnity Co. (LawPro), which insures Ontario lawyers for malpractice, said these kinds of scams have targeted about 60 lawyers in the province in recent months, and about 25 in the last few weeks. At least one Ontario lawyer was tricked, he said, and lost money.
Lawyers have long been fraud targets. But common real-estate scams, such as fake mortgages or "flip frauds," seem to have subsided as the real-estate market cooled, Mr. Pinnington said, only to be replaced by bad-cheque schemes.
LawPro recently added overdraft insurance coverage, which allows Ontario lawyers losses from this type of fraud. But lawyers are eligible only if they waited eight days for a cheque to clear before advancing funds or received written assurances from a bank that a cheque was genuine.
Mr. Pinnington said the recent alerts he has sent out should have lawyers on their guard. But he warns that the fraudsters are constantly improving. Some are contacting lawyers by phone to make the scam more convincing. They use voice over Internet protocol (VoIP) to make the calls over the Internet and cloak their real location. In one similar scam two years ago, a fraudster even showed up at targeted law offices in person.
"The old, traditional, what we sometimes call Nigerian frauds, those are deadly obvious to just about everybody," Mr. Pinnington said. "But these newer ones … [have]reasonably decent grammar and English and a believable background. They've evolved."
The first pitch
Here is an edited version of an e-mail sent to lawyers in Saskatchewan in May. It was posted in a fraud alert on the Law Society of Saskatchewan's website:
My name is Karen L. Clark. I am contacting your firm in regards to a divorce settlement with my ex husband (David Baker) who resides in your jurisdiction.
I am currently on a charitable assignment with my church in Asia. We had an out of court agreement for him to pay $378,450.00 plus legal fees. He has only paid me $44,000 ever since this agreement was reached. I am hereby seeking your firm to represent me in collecting the balance from him. He has agreed already to pay me the balance but it is my belief that a Law firm like yours is needed to help me collect payment from my ex-husband or litigate this matter if he fails to pay as promised.
Karen L. Clark."