Guest contributor Christopher C. Carr , Esq., MBA describes a debt collection scheme that nearly took him in and what attorneys can learn from his experience.
A single fraudulent transaction can easily wipe out the entire bank account of a small firm and expose the firm and members of the firm to lawsuits in the matter of just a few days. A few years back I was taken in by a fraud scheme, and suffered what was luckily a much smaller loss, so when another scam came in through my email a year ago, I knew how read the signs.
In this most recent case, I would have been defrauded to the tune of $180,000 by a collection scheme that came in through my email. A supposed British subject hired me to collect $600,000 owed her under a very real looking promissory note from her ex-husband, a West Chester, Pennsylvania resident. I even got her to sign a fee agreement. The background of their relationship and source of the debt is beyond the scope of this article; suffice it to say that their ruse was very detailed and convincing.
These two had a relationship alright, but it wasn’t the one they told me about.
When I contacted him by email threatening suit, the correspondent in the fraud (the supposed ex) hemmed and hawed a bit (to make it look realistic) but ultimately agreed to pay a large installment on the debt. A Fed Ex pack duly arrived a few days later containing a check written on a Nova Scotia bank. I called the bank and verified that he was a customer of the bank but they would not tell me his balance for reasons of privacy. I then deposited the check in my bank and watched my “available balance” soar. The fee letter required me to remit the proceeds less my fee by wire to an account in the UK. Had I done so, I and my bank would have been left holding the bag for hundreds of thousands. So I waited. I ultimately got a notice from my bank that the check had been dishonored upon presentation to the Nova Scotia bank, which took about 10 days from the time of my deposit.
The couple perpetrating the international fraud obviously counted on this “float” period where I had funds in my account that did not really exist. Clearly their check was written on a foreign bank to try and extend this time as long as possible.
I contacted the local police who took a police report but nothing ever came of it. Although I didn’t suffer any loss in this instance, there would have been little or no insurance coverage for such a loss, had it occurred.
The only traceable elements of this scam typically are:
- The account (and routing information) into which the proceeds are to be paid
- The IP address of the defrauder (where the computer or other device is located in the world). It cannot be cloaked and can be checked using a free service available via the internet.
This information can be of use in detecting fraudulent activity as to avoid detection and apprehension these people will rarely be where they say they are. This should be a dead giveaway.
My advice is to fellow attorneys is to stay on alert when it comes to transferring large sums of money. Never take anything for granted, and you won’t get taken to the cleaners.
About the Author
Christopher C. Carr , Esq., MBA (Finance) is a suburban Philadelphia, Pennsylvania solo consumer bankruptcy attorney. He has been in practice for over 25 years in Real Estate & Mortgage Modifications; Debtor & Foreclosure Defense; Small Business, including Business Divorces; Elder Law; Technology, including Computer Law & E-Commerce & Entertainment Law. His background also includes significant experience as a financial planning analyst with a Fortune 100 Company.
Mr. Carr blogs regularly on debt and bankruptcy topics at http://christophercarrlaw.