August 2, 2023

Scammer defrauds Alberta law firm of $190K while posing as petroleum CEO from Denmark

Multiple lawyers have reported similar frauds backed by elaborate fake documentation

A Calgary-based law firm recently lost approximately $190,000 in a sophisticated bad cheque scam centred around a fake client from Denmark.

Alberta Lawyers Indemnity Association has received multiple reports of firms being contacted by a man claiming to be the Denmark-based CEO for a company called Thorne & Coleridge Petroleum. This potential client, calling himself “Jens Nielsen,” explains he is seeking representation to recover a large debt from a friend who lives in Alberta.

The man then provides extensive documentation to back up his story – sometimes including records of correspondence between him and the defendant, photos of a Danish passport or driver's license, a link to his company website, and a copy of a loan agreement for more than $320,000 USD.

In the recently reported incident, the law firm was able to connect with the alleged debtor, who seemed apologetic and eager to settle the debt without litigation. The lawyers soon received a cheque for part of the amount owed, about $195,000 CAD. This cheque was later revealed to be fraudulent after the law firm had paid the client from their trust account.

Scam breakdown

The fraudster:

The law firm is contacted by a man calling himself "Jens Nielsen" who claims to be a petroleum CEO from Denmark.

The angle:

Nielsen is seeking legal representation to reclaim a debt from a friend who resides in Alberta. He has a loan agreement for approximately $320,000 USD, though this amount may vary.

The target:

The fraudster wants the lawyer to send him money from the law firm’s trust account before it's discovered the cheque is counterfeit.

Confirm the cheque with your bank

While a standard waiting period after depositing a cheque is a good start, it may not be sufficient to prevent this sort of fraud. Scammers are hoping you are too busy to take an active approach to confirming the funds.

To protect yourself from these scams, law firms can establish protocol to obtain confirmation from the bank that the incoming funds have cleared prior to issuing a cheque from a trust account. Do not send any payments until the cheque has been fully cleared and you have verified with your bank that the funds are legitimate.

Red flags

This scam included a sophisticated level of documentation designed to back up the imposter's story. Many of these elements looked convincing in passing, but the law firm noticed some flaws upon further investigation.

Cheque typo – The cheque was missing security features and misspelled the word “suite” as “Uite”.

Suspicious cheque source – The cheque appeared to be from Solium Capital, which a web search revealed to be a subscription software company. This company does not appear to be involved with the scam.

Fake ID – The Danish driver’s license provided was very convincing, but it was missing a signature.

Slick website lacks substance – At first glance, the client’s business website https://thornecoleridge.com seems relatively normal. After further scrutiny, the contact links do not work, it is unclear what the company actually does, and Google Maps displays the address as an empty field.

Phone off the hook – The residential phone number provided by the client leads to a busy signal.

Extra scrutiny can help avoid losses to scams

Many of the bad cheque scams reported to ALIA involve a cold call or random email from a client who is allegedly located in another country. The success of these scams often relies on lawyers being too busy to slow down and notice some details don't add up.

Another Calgary-based law firm handled a similar client situation last month. In this instance, a cheque from the debtor arrived at the firm before the lawyers had taken any action. A savvy associate recognized this as a red flag and reported it to a superior.

This sparked further investigation into the client's documentation, revealing more holes in his story. This firm did not deposit the fraudulent cheque. Instead, they reached out to the alleged issuer of the cheque and confirmed it was counterfeit.

An explanation of typical bad cheque scams, including red flags and actions that can help firms protect themselves, can be found on ALIA's website. ALIA remains grateful to Alberta lawyers and firms for their continued reports of potentially fraudulent activities.