LawPRO says bad cheque scams are on the rise

A commercial debt litigation scam originating from an alleged Malaysian company has targeted several Ontario lawyers this month, PracticePRO warns.

The alleged company, Yuraki Yamanaka of Chan Industries Pte Ltd., is said to have sent e-mails to lawyers asking whether or not they are in a conflict that will prevent them from representing the company’s alleged client, Renesas Electronics Corp., against “an entity” that Yamanaka claims is in the lawyer’s jurisdiction.

According to PracticePRO’s warning, the e-mails end by asking the lawyer to respond and say “we are ready to pass your retainer fee immediately.”

When lawyers replied, they got an e-mail back detailing more information about Yamanaka’s alleged case involving unpaid machinery equipment. Yamanaka also asks the lawyers to send a retainer agreement, PracticePRO warns.

Dan Pinnington, vice president of claims prevention and stakeholder relations at LawPRO, says the scam is one of many bad cheque scams that have targeted lawyers over the last several years.

“The main type of scam we’ve been seeing lately are bad cheque scams. These are scams that otherwise present themselves as legitimate legal matters, but ultimately turn out to be a scam. For example, bad debt collections fall under that category,” says Pinnington. “I think we’ve been seeing more of them compared to what we used to see in the past.”

In the last year and a half, Pinnington says LawPRO has uncovered more than 3,000 bad cheque scams nationally and abroad.
“Those are just the tip of the iceberg,” says Pinnington. “We are also getting reports that more of them are surfacing in other provinces and territories too.”

In August, PracticePRO issued alerts on at least five similar scams. Each appear to follow the same pattern of e-mailing lawyers, asking for their help in a legal matter, and inquiring if there are any conflicts.
Pinnington says the spike may be due to the increasing accessibility of technology and lawyers being able to access large amounts of money.
“It may be facilitated in part by technology,” says Pinnington. “We are used to dealing with people from all parts of the world now, even when we’ve never met them in person. Some of the scams are also clearly part of organized crime and lawyers are likely being targeted because they hold large amounts of money in trust and are able to access that money fairly easily.”

Pinnington says there are several red flags lawyers should look out for to avoid the scams.
“Be aware of matters that look too easy, messages that are inconsistent, and anyone that is willing to pay higher than normal fees,” says Pinnington.
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