By Bill E. Branscum
I investigate financial crimes, schemes to defraud, tax schemes, offshore asset management "strategies," money laundering, etc., domestically and internationally.
Lately, I am seeing a particularly insidious fraud scheme here locally that I believe the community should be aware of.
This particular scheme to defraud is a variation of the common "Advanced Fee Scheme" but, in these cases, the fraudster supplies the advance fee funding to his victim in the form of a fraudulent check.
Most recently, the scheme has been refined and revised to target attorneys and doctors, but the original version was specifically designed to appeal to single mothers and others who dream of an opportunity to make a living from home.
In this scheme, attorneys are retained to collect judgments, either on an hourly or contingent fee basis. They are provided with the relevant documentation, typically a copy of a foreign judgment. In response to their efforts on their client's behalf, they receive a settlement check, often from an insurance company. These checks are generally facially legitimate; they will clear the bank and be credited to their IOLTA (Interest on Lawyers' Trust Account).
The credited funds, less fees and expenses, are dutifully and timely conveyed to the client, usually by Western Union or wire transfer.
Like attorneys, doctors are easily identified by fraudsters and their financial institutions presume them to be honest and credible. They generally receive written notification that they have won a foreign lottery, or some such thing, accompanied by a "good faith" partial payment on their winnings.
The doctor is instructed to tender payment for taxes due in order to receive the balance, but everything seems legitimate because the partial payment is more than enough to cover the taxes–usually more than double the amount due. The check they received is often certified, and drafted on a well-known domestic bank, like Bank of America or Wells Fargo, but I have seen checks drawn on well-known insurance companies as well. These checks can be expected to clear without issue. Banks have no reason to question checks written to doctors, especially from legitimate insurance carriers.
Once cleared, the doctor conveys the taxes due as instructed, generally by Western Union, and waits in vain for a balance that will never come.
Opportunities to "Make Money From Home" are, and have long been, touted on web sites frequented by single parents, and via spam emails to various target rich distribution lists. Those who respond are told that a foreign business entity needs domestic assistance in collecting funds of one kind or another, but no "collections"-related work is required. The victim is simply expected to accept checks, deposit them and forward the funds less their generous commission to the promoter, usually via Western Union. They are told that they are not responsible for any incoming funds until the deposits have cleared their bank, so there appears to be no risk.
These schemes are lethal in their effectiveness because it usually takes several months for a forged check to be identified as such. I have seen cases where the victim was first notified that their check was a forgery almost a year after the check cleared their bank.
With respect to single parents, the tragedy is compounded by the fact that, unlike doctors and lawyers who are presumed by law enforcement authorities to be credible, these victims often first learn that they have been defrauded when they are arrested. Further, unlike doctors and lawyers who deposited a single check, investigation by law enforcement authorities reveals that all their deposits are forgeries, and the credited funds were immediately withdrawn in cash. These victims face criminal charges that they lack the wherewithal to defend, and liability for funds that they have no means to repay.
Be aware that, even as you read this, some clever scoundrel is developing a new twist on the scheme. For example, I had a case where the victim did not deposit a check–they were told to expect an incoming wire transfer, the only truly safe way to receive funds. Their account was credited almost immediately as expected, and it was only after the fraud unfolded that they discovered that the fraudster who promised them a wire transfer, had actually sent a forged check to their bank via FedEx, along with a deposit slip created from the wire transfer information that they had provided.