Scams have been around for quite a while, but the Internet has made them easier to initiate, and thus more common. It no longer seems odd to be contacted by a stranger from far away, presenting a business proposal or seeking professional advice, because that is how many of us make and develop those contacts overseas. The early Internet scams were unsophisticated, often involving a victim in another country seeking help or funds to get out of a serious problem. Most Internet users are familiar with the standard appeals or scams, and know just to ignore them.
Over time, online scams have grown more sophisticated, and consequently more difficult to spot. A trusted colleague recently introduced me – via email – to two scientists at a small biotech company in Northern Europe. They wanted an attorney in the US to negotiate a deal with a large multinational biopharma company located in the Northeastern US. They were quite eager to start, understood the terms of the engagement, and, unlike some smaller companies, didn’t balk at the quoted retainer fee or hourly rate. Their English usage was generally sophisticated, a bit stilted on occasion, and their sentence structure was quirky at times. Judging from the timestamps on their emails, they appeared to be on Central European Time. The domain name in their email addresses led to the website of a real biotech company in Europe, although that company’s website was spelled slightly differently. They sometimes used gmail addresses when emailing outside of standard business hours. The two scientists did not have much in the way of Internet presences, although that of the US-based executive at the multinational partner was significant.
All of these quirks and oddities could be explained by differences in business culture and employment laws outside the US, so they were notable, but didn’t necessarily raise red flags. Wanting to investigate a little more deeply, I found that googling the scientists’ names led to the actual company’s website. But there was no mention of the two scientists on the true site. That was curious. On the other hand, I have worked with some small European companies that listed very few names on their websites, and even some senior managers with the authority to bind the company had not been included.
This combination of factors made me cautious about getting involved. But the deal sounded interesting, and the US partner was a serious participant in the market. I tried to figure out any potential harm of continuing the discussions, including providing wiring instructions for the initial payment, and spoke to a few colleagues who were as perplexed as I was. In the meantime, I engaged a colleague who is a private investigator, and asked for some preliminary background on the two scientists and the company. Very quickly, I learned that no one with the name of either scientist worked at the company, at least not at the headquarters or at the location listed on their email signatures. Their phone numbers used a non-standard format for that country. I then learned that their email domain name had been set up three months earlier (not anything like the decade that the real company had existed), and had as its legal address, the street address of a technical college in New York City, not an address in the European country they claimed to be from. The domain name registration included a list of linked web addresses, nearly all of which were slightly wrong spellings of the names of existing company. It was clear that everything important about this was fake, and I suddenly realized what the scammers’ modus operandi was. They would:
- engage an unsuspecting lawyer, accountant or other business professional;
- wire retainer amounts (that were probably stolen electronically from an unsuspecting third party) to the professional’s account;
- have the professional do less work than the retainer amount; and
- ask for the unbilled funds to be returned to an untraceable account somewhere outside the reach of US law enforcement.
All of this had to be done fairly quickly, before the professional became suspicious. The professional’s bank account would be the vehicle used for laundering stolen funds, and they would, at the very least, be caught up in an unpleasant, disruptive investigation that could have serious, long-lasting effects on his or her professional reputation. The scammers could do this because they were able to hack into the company’s website, seemingly connect themselves to that company, and give themselves an aura of respectability.
Fortunately, I stopped things before any money could be wired, so no funds were transferred into my firm’s bank account. I contacted the actual company to let them know that someone was posing as their representative, and that their website had been hacked in order to make it appear that the scammers worked at the company. The company was aware of the problem, and I provided the information that the private investigator had given me about the origins and registration of the domain name, which the company was pleased to receive.
It was shocking to see how much effort the scammers made to confuse and reassure my referring colleague and me. A few more steps on their part and I might have been taken in completely. A week later, I got another overseas referral from a different trusted source. Having just mastered the steps of an effective inquiry into the validity of a potential client, I was eager to try them out. I did, and it turned out to be another scam, although more obvious this time. I didn’t even bother responding except to tell my colleague to beware!
What I have learned is to take more time in vetting referrals that are not known to the referring source, and pay close attention to feelings of suspicion. When something seems odd or off, ask a lot of questions of both the prospect and yourself. This is the most important one to ask: is this client/prospect/transaction something for which you are willing to risk damaging your professional reputation, possibly for the rest of your life?
Compliments of Anne Wolfson, PLLC – a member of the EACCNY