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Criminal

Harnett warns of scam targeting lawyers

Toronto criminal lawyer Aaron Harnett is warning about an international scam that targets Ontario lawyers. WATCH VIDEO

He says it typically begins when a lawyer receives an email from someone who claims to be from a large company seeking to retain counsel to recover a debt by sending out a demand letter. The fraudster then entices the lawyer by inviting a large fee for services, or a percentage of the recovered fees.

“The lawyer is given what purports to be an assortment of documents evidencing the debt, such as Agreements of Purchase and Sale or contracts of various kinds. They may look quite authentic. The duped lawyer will then send out a demand letter to the “debtor," he tells AdvocateDaily.com. "Soon after, the debtor gets into contact with the lawyer and sends a cheque, or multiple cheques to cover the amount."

What happens after that is the lawyer deposits the cheque and if he or she doesn't leave enough time for it to be fully investigated as legitimate and clear the account, which can take as long as 10 business days, the lawyer is in "trouble," says Harnett.

"The lawyer gets into difficulty after he or she sends out a wire transfer to the fraudster/client – less the lawyer's commission of course," he says. "The lawyer is out the money when, a few days later, the bank contacts the lawyer because the cheque was NSF or fraudulent in some way. The lawyer is then left holding the bag for what he or she sent out to the fraudster/client.

"Furthermore, professional liability insurers are generally not reimbursing lawyers for their disbursement of the funds.”

Harnett, who has played along with the fraudsters in hopes of being able to assist investigators in identifying them, says the cheques appear to be legitimate.

"Some of them are working worldwide out of Toronto," he says. "The cheques appear to be drawn on a real bank on a real bank account. The paper looks like a real cheque and it's embossed on both sides."

Harnett says there have been a number of Toronto-area lawyers who have found themselves in "serious financial difficulty" after they got caught up in the scam.

Recently, Harnett acted as counsel for a European lawyer who was in the process of being defrauded and lost about 10,000 Euro in fees and penalties as a result of the fraud.

Harnett says some hallmarks for lawyers to watch for in these types of frauds include: they are being offered ridiculously high commissions, attempts to reach people directly are unsuccessful and generally debtors don't hand over large amounts of money simply because they've received a letter threatening legal action.

"It just doesn't make sense," he says.

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