Beware the scammers are attempting to gain access to your trust accounts. Recently, an attorney who received an email advising that a Swedish company needed the assistance of an attorney to complete a business transaction contacted Sage Investigations LLC.
The Swedish company, ISEA AB—represented by Olle Stenberg, was selling medical equipment to a large healthcare supply company with a contract price of $9,737,700. The sale required an experienced Austin, TX attorney to draft a Sales & Purchase Agreement. It required an inspection of the equipment before transportation to the United States, and the healthcare company needed an escrow agent to handle the inspection. As a test, the attorney accepted their offer after fleshing out more details through email.
With an Engagement Letter in place the attorney received an overnight package purportedly from the ISEA AB. The package contained a Transmittal Letter, two cashier’s checks, one for $5,000 (retainer) and the second for $468,885.00 (inspection fee), along with a Letter of Intent for Purchase of Medical Equipment all dated May 6, 2016. The transmittal required: deposit of the checks within 24 hours, payment of the retainer fee, the requirement that the initial deposit be made seven days after the inspection, and the Sales & Purchase Agreement sent to the seller.
Red Flags Review:
With minimal due diligence, Sage Investigation, LLC determined that ISEA AB is a consulting company and not a supplier of medical equipment. The website for ISEA states it is “a professional service organization that represents a large number of senior executives and experts with proven records of commercial or societal achievements. ISEA’s experts deliver strategic advice and operational support within a wide variety of expertise areas, leveraging the accumulated knowledge from previous experiences.”
The Transmittal Letter for the healthcare company contained a logo that was different than that on the Letter of Intent. The Letter of Intent addressed to the attorney was dated May 6, 2016, but the date signed by the healthcare company’s CFO as Buyer, and Olle Stenberg as Seller was shown as May 5, 2016.
The email contact and communications were mainly through Gmail accounts which are uncommon for companies with their own domains. Also, the email address for the CFO contained his name and a letter that was not easily noticeable, which diverted the email to the fraudsters and not the large healthcare company.
The cashier’s checks displayed the Citibank N.A. logo and the address Citibank N.A., One Penn Way, New Castle, DE 19720, the MICR routing number 031100209 was correct but the checks were not numbered sequentially and did not have any security features.
Sage contacted the Security Department of the healthcare company who asked their name not be used and determined that a number of similar scams using their company name, fraudulent letter head, fraudulent documents, and bank transactions were perpetrated. Unfortunately, in some instances the attorney lost money from their client’s trust funds.
All the communication and checks were a subterfuge to gain access to the attorney’s trust account and to access the trust account by the fraudster, thus creating fraudulent checks so that they could drain the trust account by writing checks on the account. The cashier’s checks once deposited would take a few days to attempt to clear, and in the meantime, checks would be presented to the bank for payment on the trust account.
In this case study, Chase Bank forwarded the cashier’s checks for collection and received a notice the next day from Citibank stating, “Checks were refused by payor bank on first presentation as fictitious alterations.” The attorney’s trust account was closed and no damage was sustained.
Sage has seen similar schemes in the past whereby the fraudster and his team met face-to-face with the target of the scam and induced him with words and documents of authenticity, (including stamps and embossed seals). Today the Internet opens fraudsters to the world, and allows them to remain invisible. They cast a broad net and entangle the most knowledgeable members of society: lawyers, doctors and other professionals.
If you or your client needs a knowledgeable retired IRS Special Agent, fraud investigator, and forensic accountant call Edmond J. Martin Chief Investigator, at Sage Investigations, LLC call 512-659-3179 or email firstname.lastname@example.org and visit our website at www.sageinvestigations.com.