It is well known that Nigerian scam artists have built a lucrative cottage industry using Internet ploys to raid the bank accounts of gullible Americans.
Foreign solicitations replete with hilarious misspellings and grandiose offers of easy money have become a clichéd staple of e-mail junk files.
But now, a recent case from central Pennsylvania reveals an entirely new level of sophistication by these criminals. Their target this time: law firm trust accounts.
The scam involves hiring a lawyer to help recover funds owed by a North America-based company from a real estate transaction, a divorce settlement, or a lawsuit claim.
The fraud begins with an e-mail letter from a prospective client who claims to be overseas and in need of legal help to collect the debt.
To disguise the Nigerian origin of the scam, the group used Asian client names and bank accounts in Singapore, South Korea, Japan, and China.
The lawyer is offered a generous fee for his or her efforts in recovering the owed funds.
What the lawyer will not know is that he/she is now in the center of an intricate web set up to mimic all the steps of a genuine debt collection process.
Within days of the lawyer’s involvement, a check for the owed amount is sent to the lawyer. The “client” has asked that the lawyer deposit the proceeds into the law firm’s trust account and then – after subtracting the generous fee – wire the remaining funds to the client’s foreign bank account in Asia.
Here’s where the fraud gets interesting. A careful or suspicious lawyer might want to verify the authenticity of a check that has just been deposited into his firm’s trust account.
In anticipation of that suspicion, the Nigerian scammers hired a forgery specialist to create a perfect copy of a real company check including a company phone number and the name of a representative of the company.
When the cautious lawyer calls the contact number on the check, the individual on the other end of the line identifies herself as an employee of the company and vouches for the veracity of the check. In reality, she is part of the scam.
Satisfied, the lawyer then gives his bank instructions to wire the client’s “recovered” funds to the client’s foreign bank account.
The fraud is now complete. Another member of the criminal group immediately withdraws the funds from the foreign bank account.
In one fraud depicted in federal court documents, the scammers asked a lawyer in Carlisle, Pa., for help recovering about $300,000. They promised the lawyer $50,000 for his help. The scammers ultimately got away with $244,278 in funds that were wired to an account in South Korea, according to federal documents.
It took four days for the US bank to realize the original check was fraudulent, and little additional time to discover that there is no possibility of recovering the wired funds from the overseas account. Gone too was the lawyer’s generous fee since it was the proceeds of a forged check.
It sounds so simple, so what lawyer worth his or her salt would be taken in by such a scam?
According to federal court documents, one group of Nigerian scammers raked in $29 million through 70 different law firm trust accounts in the US and Canada over a two-year period. Another estimate places the losses from the same group at $70 million.
There is also some good news. Three hundred other law firms detected the scam before the funds were wired overseas, thus preventing more than $100 million in losses, according to federal documents.
Last week, one of the alleged leaders of the Nigerian group, Emmanuel Ekhator, was sentenced to more than eight years in prison after pleading guilty for his role in the scam. He was also ordered to pay more than $11 million in restitution.
Several other members of the group are in custody and are awaiting extradition to the US. In all, federal investigators estimate the group may have included as many as 40 individuals.
As part of his guilty plea, Mr. Ekhator agreed to cooperate in the ongoing investigation.
At the time of his guilty plea in January, Ekhator wrote a two-page letter to the judge, seeking mercy and apologizing for his actions.
“I am very sorry and remorseful with respect of my involvement in this crime and I have no excuses whatsoever for my deeds,” he wrote.
Then, he sought to minimize his role in the conspiracy, claiming he was only a middleman who was promised a 10 percent fee and paid less than $200,000.
By the time of his sentencing last week, both Ekhator and his lawyer acknowledged that he played a leadership role and that he was responsible for losses estimated at between $7 million and $20 million.
The international investigation is being carried out by a task force including investigators with the US Postal Inspection Service, the Federal Bureau of Investigation, the US Secret Service, Toronto Police Services, the Royal Canadian Mounted Police, and the Nigerian Economic and Financial Crimes Commission.