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A scam averted: Familiar ploy still being tried on Virginia attorneys

RA Stafford lawyer says he wants to sound the alarm about a sophisticated scam that almost cost him a six-figure loss.

It’s a shakedown attempt that has been tried on law firms in Virginia and across the country, with occasional success. This time the intended victim got wise.

Attorney Richard R. Nageotte was getting ready to handle a debt collection matter when a suspicious check hit his desk and alerted him that his “client” might not be what he claimed.

The scam started several days before with a phone call purportedly from an out-of-state company. The caller claimed he shipped goods to a local business and had not been paid. He hoped to hire Nageotte to collect the debt of nearly $300,000.

The local “debtor” checked out – it was an actual small business in the Stafford area. It was plausible that the business might have ordered the goods in question.

As for the supposed “client,” that company also seemed legitimate at first glance.

“Darius Industrial Inc.” was the name of a real Michigan company that had gone out of business about five years before. The firm’s fairly recent demise meant there were still plenty of Internet references to the company that appear with a quick Google search.

The initial request for representation carried no warning flags.

“At that point in time, it’s very benign; it seems very legitimate,” Nageotte said.

Nageotte told the “client” to send a signed engagement letter and a $5,000 deposit. The caller said he would have to check with his board, a plausible condition.

Soon, a signed engagement letter appeared, but without any check for $5,000.

A few days later, however, the mail brought what appeared to be a pleasant surprise. A representative of the supposed local debtor wrote saying the good reputation of Nageotte’s firm had persuaded the company to resolve the debt.

The letter was on apparently authentic company letterhead.

Along with compliments, the envelope contained a check for $198,750, payable to Nageotte’s firm.

Nageotte was told he should deposit the check, keep his fee and wire the balance to “the client.”

“That’s when you better get your antenna up,” Nageotte said.

The check appeared to be drawn on a Nova Scotia bank account.

“We were immediately suspicious,” Nageotte said. The outcome seemed too good to be true.

If he believed the letter, Nageotte said he would be thinking, “I must be really a great attorney.”

Nageotte said he talked to his bank and checked with Michigan regulators. He learned the check was not in proper form, and the supposed client had not been in good standing as a corporation for five years.

Nageotte called the purported client and proposed to have a replacement check sent to Michigan, with the understanding the client would send the $5,000 fee to Nageotte.

“Now everything goes dead,” Nageotte said. Phone calls were no longer returned. The attorney called the local sheriff’s office.

A detective told Nageotte the scenario represents a growing scam in Virginia, and chances of prosecution were “slim to none.”

The phone numbers and emails were untraceable, the detective said.

“At this point, it looks like it’s going to be one of those out-of-country scams. It has all the hallmarks,” said Stafford County Detective Eric D. Chinault.

Another red flag for suspicion is the odd and formal language often used in scammers’ emails, the apparent handiwork of someone using English as a second language, Chinault said.

Since potential victims are leery of wiring money to overseas bank accounts, Chinault said some well-organized thieves have recruited U.S. contacts to open bank accounts under false pretenses in order to relay the ill-gotten gains.

Nageotte said he hoped to spread the word to fellow attorneys to be cautious with any check arriving under similar circumstances.

“Once you get the money and put it in your account, you’re screwed,” Nageotte said.

“I’m glad we were cautious enough to catch this, and I would feel terrible if I did not act to alert other Virginia lawyers about it so they can avoid it as well,” he said.

There appears to be no end to the imagination of would-be scammers. The situation described by Nageotte has been attempted on other Virginia lawyers, according to warnings in the past from the Virginia State Bar.

Another scam affecting real estate attorneys involves a phony request that appears to come from the seller of property. The purported seller makes a last-minute request for proceeds of the sale to be wired to a different account.

If the professionals involved don’t catch the scam, the money is gone.

The redirected-funds scam has worked in both Virginia and North Carolina, according to reports.

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