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Detecting duplicity
Law Society Gazette – 7 February 2003

Mark Smulian talks to solicitors about the four main scams currently being targeted at the profession, and urges firms to stay alert to any early indications of fraud

The scene: a busy office in a fair-sized law firm. A notice arrives headed 'Data Protection Agency' stating that the firm has failed to submit data protection registration details. But, fear not, if the firms are required to do so, completing the attached form and paying 95 will put things right

People at the firm are dimly aware of this change in the regulation. The letter looks genuine. Do they send off the 95, or do they contact Barrie Mayne?

Mr Mayne heads the fraud investigation unit at the Office for the Supervision of Solicitors. So far this year, seven lawyers have notified him of this questionable demand for data protection registration, and he fears it is the latest in a long line of scams to which members of the profession will fall victim.

Generally speaking, the larger the firm, the greater the risk. This is because many of the scams rely on sending invoices for relatively small amounts of money for a commodity or service that sounds genuine but in fact does not exist.

The fraudsters assume that an accounts department junior is unlikely to bother a busy partner to ask whether the firm agreed to pay 49 to appear in a directory, or 24.98 to settle an order by a deceased person for whom it is executor. If even 10% of these bogus invoices are paid, the fraudster can net a handsome return.

Alex Wheadon, a conveyancing partner at two-partner Sutton Coldfield firm Wheadon & Co, confirms that in a smaller firm, scams are easier to detect. She says: 'I've had a couple of the so-called "Nigerian" letters, and also this data protection registration approach.

'Apart from being aware of warnings in the Gazette and so on, I immediately knew that the data protection letter was totally wrong, because I process all of the registrations and subscriptions that the firm orders in, and I didn't recognise it.' She adds: 'Lawyers need to keep a close eye on payments like this, but I imagine the problem is greater at bigger firms, because here we wouldn't pay out anything that shouldn't be paid out.'

Mr Mayne says: 'There are four principal frauds being perpetrated against solicitors: the west African 419 letters, bogus invoices for the Christian Book Club, the fax directory invoice, and the data protection demands.'

The '419' is named after a section of the criminal code of Nigeria, from where most - but not all - scams of this type originate.

Typically, an e-mail arrives spinning a story in slightly poor English. The sender has come by a vast sum of money but needs a bank account overseas in which to store it for safekeeping.

Any solicitors kind enough to offer their client account for this purpose will be rewarded with 25% of this fortune, so long as they supply full bank details and pay an arrangement fee.

Needless to say, the arrangement fee disappears, and so do large amounts from the solicitor's account if the fraudsters manage to get hold of a letterhead, sample signature and bank details.

'I know of one solicitor who fell for this, travelled to Lagos and lost a lot of money. I do not know if other solicitors have succumbed, but if they have, they might well be too embarrassed to admit it,' says Mr Mayne.

Hundreds of thousands of such notices are sent out by e-mail each year. 'Police regularly make arrests of cells in the UK promoting this fraud but other cells regroup. The perpetrators are at a distance,' he says.

'People see it as a scam on individuals, but information from police says that the proceeds are used for the class A drugs trade, illegal immigration and prostitution.' Tony Alexander, a tax and probate partner with Milton Keynes-based Heald Solicitors, is becoming an old pro at spotting dodgy letters. He says there are usually a number of things that should scream out 'danger' to someone opening the envelope.

'Recently I received a letter purporting to come from the Ministry of Energy and Mineral Resources in South Africa. It was signed off by a "doctor" from the "project and engineering department". Before reading the letter there were a couple of problems: I anticipated a ministry such as this would have good-quality headed paper, rather than tatty photocopies, plus the phone number on the letterhead did not have a South African code. Then I read the contents with talk of "huge sums", "confidential transfers" and "30% commission fee". You'd have to be pretty thick really not to notice.'

But the point about checking the details is an important one. He adds: 'We have also been approached about sums of money people want to send to the firm which on thorough questioning have never materialised. You always need to check every detail to be sure.'

The Christian Book Club is an entirely reputable organisation, but someone is using its name to send letters to solicitors stating that a recently deceased client had ordered bibles worth 24.98. One tell-tale sign of the scam is that the letters come from France.

This relies on the amount being too small for many to query, on the possibility that those with a short time to live might well have ordered religious works, and on solicitors' reluctance to bother bereaved relations with an apparently trivial enquiry.

Mr Mayne says: 'If you send enough of these out, the receipts mount up. It is a simple fraud.'

Telefax directories are a variant on the old scam of sending a bogus invoice for a small sum for an entry in some plausible-sounding, but non-existent, trade directory.

Mick Buggy, a detective constable in the specialist crime branch of Scotland Yard's fraud section, has come across many of these scams.

He says: 'Trade directory scams are around. We usually refer them to trading standards, but we find they often come from Switzerland and Holland, and that makes it difficult for us to do anything. We pass the information to our colleagues in Europe.

'It can be an annoying crime because they will send an invoice to a large firm, and if someone in accounts sees it they may assume it is genuine. If only 10% of these get paid out someone has not done badly. It is starting to creep back in.'

Last year the '419' scam led to 1,400 calls to Mr Mayne's office. Questions about bogus Christian publications were raised by 72 firms, and 15 solicitors called about dubious directories.

His section is looking into the newly emerged data protection letters, and has contacted the Office of Fair Trading (OFT) and the police.

'No one had admitted to having fallen for it, which is not to say that no one has,' he says. The OFT says it has received many complaints from businesses about these letters.

According to Mr Buggy, the data protection letters are 'at the edge of civil or criminal law', and has been an issue mainly for trading standards.

This is because it is not illegal to offer a registration service and charge a professional fee.

'We have had many calls from small firms of all kinds about this,' he says. Ultimately, the invoice scams come down to how robust a firm's systems are for checking that payments are authorised, and the data protection scam to knowledge of the real regulations.

The 419 scam is a matter of simple greed, and - like all the best frauds - there is little to guard against that.

Mark Smulian is a freelance journalist