 By ANDREW McINTOSH Sacramento Bee December 06, 2005
To claim the rest of your $250,000 prize, all you have to do is cash the check and wire back $2,950 to a "claims agent" to pay what a Nova official called "nonresident government service tax payable in Canada." Fall for this scam, and you'll find you're not nearly as lucky as you thought.
There's no such thing as a nonresident-government-service tax in Canada. The $4,900 check was a clever counterfeit now under investigation by the U.S. Secret Service, bank security officials in New York and police in Canada. The scheme is one of the many ways criminals are making growing use of fake checks to defraud consumers. "Counterfeit checks are now the second-largest scam in the United States after identity theft," said Peter D'Angelo, the security manager at Mattituck, N.Y.-based North Fork Bank. The Sacramento Bee found that unidentified con artists operating in British Columbia manufactured a Nova Financial Trust check, purportedly drawn on a North Fork Bank account at a branch in Stony Brook, N.Y. The check forgers used a phony financial trust name, along with a genuine New York address and a real account number belonging to a North Fork Bank client. North Fork Bank security officials called in Secret Service agents after unidentified criminals used the bank's name to distribute counterfeit checks to potential marks in New York, Wisconsin, Alabama and now California. "Our clients haven't suffered a loss yet, but people who received these checks and fell for the fraud have suffered," D'Angelo said. North Fork Bank is not alone as it grapples with counterfeit-check woes. San Marino, Calif.-based East West Bank, which operates 56 branches catering to California's growing Asian-American market, has warned the Federal Deposit Insurance Corp. that counterfeit cashier's checks bearing its name are in circulation. A week ago, two other California banks issued similar warnings about counterfeit checks circulating. Chino Commercial Bank of Chino reported it had a counterfeit-cashier's-check problem, saying the fakes could be spotted because they displayed the words "Official Check." The real items say no such thing. Redondo Beach-based Bay Cities National Bank also reported counterfeit-check problems, warning that fake cashier's checks are circulating that display a toll-free number not associated with bank operations. The growing number of counterfeit checks and related schemes - and the increasing number of consumers and bank tellers falling victim to them - has led the National Consumers League and the American Bankers Association to warn consumers about the problem. The league, based in Washington, D.C., said consumers reporting fake check scams to its National Fraud Information Center lost an average of $5,000. Counterfeit-check scams are a variation of age-old advance-fee and lottery schemes, said Brady Mills, the resident agent in charge of the Secret Service's Sacramento, Calif., office. "We have victims here, but the money lost is difficult to follow when it leaves the country. There's just so much of it going on, ranging from a couple of thousand dollars to cases involving as much as $15,000," Mills said. The scam artists send people a counterfeit check and instruct the intended victim to wire them back thousands of dollars to cover tax payments in return for a larger lottery or other payoff. The unsuspecting consumer deposits the check, which is so realistic it fools his bank teller. "People look at their account and say, 'They credited my account, so the check must be good,' and they wire the money. They need to know that's not necessarily true," Mills said. After wiring money to the crooks, often located in Canada or elsewhere, victims then wait for the larger payoff to arrive. It never comes. When the counterfeit check bounces 10 or more days later, many victims discover they have been fleeced and most will never see their money again. Worse, because bank customers are responsible for checks they deposit, people who withdraw money against a counterfeit check deposit must refund it all. "Whatever the setup is, the bottom line is if someone you don't know wants to pay you by check but wants you to wire money back, it's a scam," the consumer league's National Fraud Information Center warns. In the case involving the check from Nova Financial Trust, the letter identified a claims agent with the name of "Paul Newman" as the key contact. The recipient is told to call Newman to make arrangements to send the $2,950 tax-fee via Western Union or Moneygram to get the rest of his prize. No Nova Financial Trust could be found in Canada. The address given for a U.S. affiliate of Nova Financial on Main Street in Stony Brook, N.Y., is the home and office of physician John Faigle, who was stunned that his address was being misused. "That's really odd. We get no mail for them," he said. The branch and account number on the North Fork Bank check issued by Nova were real, but the account belongs to a food business, not Nova, the bank said. A Sacramento Bee reporter called the telephone number on the Nova Financial Trust letter and reached a man on a mobile phone who identified himself as "Paul Newman." Questioned about the check irregularities, he avoided answering and snapped: "Why don't you go and do some real work and stop bothering people?" He then hung up. The mobile phone is registered to a customer in New Westminster, British Columbia. Police in that city of 55,000 people, 12 miles east of Vancouver, are now looking into the matter.
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