Sooner or later, anyone who has an email account, or just an old-fashioned mailbox or telephone, is going to get an offer that seems to be too good to be true. Maybe it’s a message that you’ve won a sweepstakes and need only to forward “processing fees” to claim your prize. Or perhaps some “tycoon” on the other side of the world is prepared to let you in on the ground floor of an incredible business opportunity. Again, all that’s required is to dispatch a bit of earnest money – something an individual of your business acumen will surely understand.
The old adage is correct, of course. If it seems to be too good to be true, well, you know the rest.
News that Frankfort’s oldest extant bank and one of the community’s senior attorneys were victims of an international scam based on a fictitious debt collection plan and fabricated communications borrowing the identity of a legitimate business should serve as a reminder that no one is immune to trickery.
The State Journal’s Kevin Wheatley reported last week on Farmers Bank & Capital Trust Co. and local lawyer Jack Flynn being sucked into a scheme built on a $900,000 debt purportedly owed by Albert B. Crush Company of Frankfort to a businessman in the United Kingdom.
It all started last year when Flynn responded to an email from a man identifying himself as Steven Lawson, asking the lawyer’s help in collecting the bill. Court records indicate Flynn did not contact Crush to determine if the story was true.
Lawson (a name connected to a number of similar scams, according to the scamwarners.com site) later emailed Flynn saying Crush had volunteered to pay the debt and asked the lawyer to handle the financial arrangements. A man identifying himself as James Walker, who claimed to be a payment and financial consultant with Intact Financial of Canada, advised the attorney to deposit a $350,000 check from the Royal Bank of Canada in his escrow account at Farmers Bank, deducting a retainer fee. A second $350,000 check was received and deposited later.
Both checks would prove to be bogus, but not before Lawson directed Flynn to wire $330,000 to Inoue Yuju at Yokohama Shinkin Bank and $345,000 to Corin Co. Ltd. and Wakabayashi Hisaki at Resona Bank in Japan, and Farmers fulfilled the requests. It’s unclear why the local bank apparently failed to verify the checks first.
With the cash on its way, Farmers Bank heard from a man calling himself Peter, who said the deal was a scam – and he was no longer involved in it. It was too late to recall payment, however. Flynn received and held onto a third check, for $200,000, as evidence.
A frenzy of legal finger-pointing ensued. The bank charged Flynn’s account with a $691,000 overdraft to cover the payments to the swindlers and sued him, arguing he should have authenticated the checks himself. Flynn countered that verifying checks is the bank’s job, one it should have performed before dispatching big money overseas. Flynn’s insurer, Lawyers Mutual Insurance of Kentucky, sued both the bank and the lawyer. It said money-handling errors are not covered by the attorney’s legal practice insurance.
Now the real Intact Financial is warning customers that someone’s been counterfeiting its checks, so they should beware. An implicit warning for the rest of us: When a historic bank and an experienced lawyer become the targets of a shell game of this magnitude, we’d better watch our own steps, too.