Scammers dupe at least one local law firm

| 05/05/2011

(CNS):Not usually the most likely targets for internet fraudsters, police have revealed that scammers have already conned one local law firm and are targeting others in the Cayman Islands in an attempt to obtain hundreds of thousands of dollars illegally. Detective Chief Inspector Claudia Brady is warning people, and in particular those in involved in the law profession, to be on the lookout for suspicious communication from people posing as overseas clients. “So far one law firm has fallen victim to the scam,” she said. “But we are aware that other firms are being targeted. That’s why people need to be extra vigilant.”

The financial cop explained that the fraudsters pose as potential overseas clients seeking the services of the Cayman based legal firms. “They say that they want the law firm to act on their behalf to collect a debt from someone living on island,” Brady revealed. “A short time after the law firm accepts the work the ‘debtor’ pays up – sending the law firm a high value US dollar check. It’s at that point the ‘client’ asks for the money to be transferred to their overseas account. When the ‘debtor’s’ check reaches the clearing bank it is found to be fraudulent and the law firm is hundreds of thousands of dollars out of pocket.”

Anyone who believes that they have been contacted by these scammers, or who has fallen victim to this crime, should contact the Financial Crime Unit on 9498797.

 

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Category: Crime

Comments (20)

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  1. Lambert Locke says:

    The comment about terrorist funding by Just Commentin’ is very important.  We are one wire transfer to help a terrorist attack on the US from losing our most important industry forever.  It is in the public interest that we are informed which law firm was involved and whether they have complied with requisite money laundering requirements when they took on this "client".  If they did not they should the subject of criminal investigations. 

    As regulation and KYC becomes more burdensome the very small local firms are likely to struggle to provide the compliance function needed to carry on international business in the modern environment.  If I were I betting man, I would wager that the firm involved will be on of these very small outfits.  I doubt the larger firms would ever have gone close to opening up a file for this "client".

    • Dennie Warren Jr. says:

      I figured that someone would make the argument you did here.  I believe that to be fair to the small firms who are diligent, the offending firm should be named.  Oh, I'm sorry, law is not about fairness, but about winning at all cost!

  2. Anonymous says:

    Well, lawyers in the Cayman Islands were so used to be inundated with business and clients that they could chose and pick what to take on! Now that there is not much business going around and they have gotten attached to their thick pay checks those lawyers and law firms are falling over each other desperate to take on business and get ahead and in the process are throwing all caution to the wind.

    Serves them damn right! Live and learn.

  3. Just Commentin' says:

    The law firm must have some morons workin’ for ’em. But these are not the only potential morons in this story.

    Moreover, (and this is a point worth further investigation by the press) I would opine that there is more to this than meets the eye.

    Let us suppose the cheque were genuine and could clear the bank. A drug dealer or terrorist could easily launder “dirty money” and come in under the radar with such a transaction. The Al-Qaeda “client” wanting the funds collected needs a dupe to launder dirty money coming from the “debtor”. A law firm would be a perfect “laundromat”. The lawyers collect the dirty funds without due diligence on their source. The attorneys cut a wire transfer to their (actual terrorist) “client”. Presto! The outgoing funds are “clean” as they came from the law firm’s account.

    If the law firm in question had conducted proper due diligence on the parties to this mess, I fail to see how they possibly could have been duped. It would seem that the law firm did not conduct any meaningful due diligence on this transaction. (Could they also, therefore, have run afoul of the law?)

    Will the broad legal ramifications of the matter be brushed it under the rug? The world is now watching. If this gets by without serious official attention it will show the world how flawed our financial laws and legal system really are.

    One of the requirements of the local anti money-laundering regualtions is that the source of funds be well-verified. In other words the person from whom the debt was collected should have been subject to due diligence scrutiny. So should have the recipient of the funds been scrutinised with diligence. Does this law firm not have a Compliance Officer? They should. If so, at least one head should roll.

    The last straw may be the most telling: It could very well be that law firms (and collection agencies) dealing with collecting or receiving funds from one party on behalf of a client and acting as intermediary in returning the funds to the client – as in this transaction – may be exempt from the Cayman Islands law’s definition of conducting “relevant financial business”. Therefore, law firms fit through a loophole from the lion’s share of the law if they are not conducting business covered under the law!! It would seem that unless a law firm is operating under the Companies Management Law, or the Mutual Funds Law, or the Securities Investment Business Law, the due diligence requirements may not apply. It could be that such entities can launder money well under the radar of the law. In which case the Cayman Islands Government are silly-billies for not including law firms acting in any capacity as fiduciary intermediaries in the definition of “Financial Service Providers” conducting “relevant financial business”. Collection agencies should also be covered but apparently (and I stand to be corrected) they are not. (It would be interesting to know how many millions of dollars may have already been laundered by attorneys acting as financial intermediaries under just such a scheme?)

    It is interesting to note that I can find no record that any Cayman Islands attorneys have been convicted of money laundering in the Cayman Islands. (I absolutely fail to believe that any industry involving lots and lots of money (especially lawyers as greedy as many of them are) can be that clean!) We have focused on banks and financial institutions and left the legal profession free from scrutiny as long as they do not conduct “relevant financial business” under the law. Then we left a damn big loophole in the law. Damn well amazing!

    Hey, Guys! This just in: The International Bar Association’s Anti-Money Laundering Legislation Implementation Working Group and the Professional Ethics Committee will hold a free intensive workshop targeted the legal profession and bar associations on Tuesday May 24 2011 in Warsaw, Poland. It would seem that most of the people involved in this drama need to attend – especially local attorneys and certainly our legal department – as the goal of the workshop is raise awareness of how anti-money laundering legislation around the world is intended to apply to lawyers. (Oops! It would seem that the CIMA and government’s legal department missed that concept, huh?)

    I am not done yet! I now turn my attention to Detective Chief Inspector Claudia Brady: Did D.C.I. Brady make no mention in her press release regarding the due diligence procedures that local law requires of parties participant in fiduciary relationships? (Bear in mind that she is one of our “Financial Cops”.) I wonder if the cops are reviewing the law firm’s compliance to any applicable regulations? At any rate, God help us as a financial centre if the best a top law enforcement officer can advise in a situation like this is that “people need to be extra vigilant”. (Duhhhh! Really now?) People need to adhere to the islands financial laws, dammit! As reported, this whole affair stinks so far.

    Could someone with a thorough knowledge of the applicable financial laws please weigh in on this? Inquiring minds want to know.

    Any way you cut it, and I am just commentin’, morons have been at work yet again and the crooks are smiling.

  4. Anonymous says:

    Clearly the law firm involved did not follow any due diligence procedure, KYC procedure nor proper trust account procedures. The law firm should be charged for breach of all of the mentioned infractions noted above.

    • anon says:

      XXXX Receiving a large payment into theirclient account and making a similar payment overseas to an unverified account in these circumstances is unbelievable.

      No wonder the firm wants to remain anonymous. C’mon fess up! Who was it?

      • LegalCanary-ImeanEagle says:

        This was a total failure of the KYC and money-handling requirements.  What a shambles.

        XXXXX

        • LegalCanary-ImeanEagle says:

          Oh come on CNS, what you xxxx’d out was so obviously a joke. 

          I mean who would think there really was a firm named "The Law Offices of Bob Loblaw"? 

          "Bob Loblaw"… as in what a lawyer does … get it???? 

          Man oh man….

    • Anonymous says:

      I agree their KYC/DD was sadly lacking,crocks though can get around this.
      Basically any foriegn/overseas cheque should be held (before paying out funds) for 28 days and then check with your bank.
      No guarantees even then but at least you are in with a chance!

  5. Judge Dredd says:

    I’ve heard they are helping out the son of a Nigerian chief and the executor of the will of a man who died in a plane crash in Poland too.

  6. Right ya so says:

    Must be a very out of touch law firm! Unbelievable…

    • Anonymous says:

      Hey, yes, they should have known better, yes they are a law firm, but remember they are staffed by human beings and humans do err from time time. Everyone lay off the insults – they lost money, no need to add insult to the injury. Save the insults for the scumbags who engineered this.

  7. Anonymous says:

    Lawyer rips off client?

    Oh no…

    Client rips off lawyer!

    Sorry for my silly misunderstanding…

  8. anonymous says:

    Maybe the Law Firms and the Banking Industry needs to come together to learn one anothers trade of Business.  Do not pay out cash, until the cheques are cleared.  Simple bookkeeping Mr. Lawyer.  Scammers are trying to ruin every financial centres in the world.  Don’t think they have not damaged Wall Street and others around the world.  They are everywhere.  The key to combating them is to not become a victim to their cause.  Due Diligence is required in every industry in these Islands. So do it!!  Perform your checks, as the financial scawengers are everywhere.

  9. Usual Story says:

    If its from "a foreign" it must be good! Only local checks are under scrutiny, some of us believe anything from overseas has the Queens seal of approval!

     

  10. Frank says:

    Why would a law firm pay a check before it has cleared? This is the most ridiculous thing i’ve heard all week!

  11. Anonymous says:

    SERIOUSLY! every debt collectors know that all cheques as to be cleared through the bank first, and it’s at that point they hand the money over to their client. Some collectors even go as far as way until 30 days before they forward money to client, espcially the fact that they are new client and overseas.