'Check scam' snags Hanover attorney



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Hanover-based Ledyard Bank is suing a Hanover attorney who was the victim of a $195,000 check scam.W.E. "Ned" Whittington's liability insurance company won't cover the loss, arguing that the lawyer simply fell for a variant of the "Nigerian Check Scam," making this more of a banking than a legal matter, the insurer asserted in federal court."The matter is most unsettling," Whittington said in a prepared statement to NHBR. "The sophistication of this particular fraud is alarming."The fraud is detailed by the insurer, the Attorneys Liability Protection Society, in a filing last week in U.S. District Court in Concord.According to the filing, Whittington allegedly fell for an email sent in July by someone purporting to be a Fairfax, Va., lawyer seeking assistance with a business litigation matter because he would be incapacitated due to a knee replacement surgery.The insurer's filing says that after Whittington indicated he was available, he received a follow-up email in August from "Martin Joachim," the director of international marketing for "Bendtsteel A/S" of Denmark, which was allegedly in a collection dispute with "Mill Street Supply" in Manchester. Mill Street supposedly owed Bendtsteel $885,790.After Whittington sent off an engagement letter, the insurance company says, he received a United Parcel Service package on Aug. 31 from Ontario containing partial payment -- an "official check" purportedly issued by Citibank Investment Services on behalf of Mill Street and payable to the Whittington firm for $195,790, according to the filing.Whittington, a Ledyard customer since 2003, deposited the check that day at the bank's Lyme branch.The next day, according to the filing, "Joachim" emailed Whittington that his bank should immediately wire $188,978 to MS Car Factory Company LTD in Japan, and should keep $2,000 for his retainer. Whittington tried, but due to an error, the funds were not actually transferred until Sept. 6.The delay did not prevent the scam, however, according to the court filing.Ledyard learned that Citibank was refusing to honor the check on Sept. 7 because, it turned out -- according to the insurer's filing -- Joachim, Bendtsteel, Mill Street Supply and the Virginia attorney were all figments of the perpetrator's imagination."The Whittington Firm were victims of a variant of what is sometimes now generically called a 'Nigerian Check Scam' (though its practitioners are by no means unique to that country), in which a bank account holder is fraudulently induced to make a foreign transfer of money from his local bank," according to the ALPS filing.Ledyard ended up seizing the $18,958.59 still left in Whittington's account and sued him for the rest, arguing that he violated the agreement made with the bank when he opened the account.Whittington, who said Ledyard also seized his business, personal and family funds at the bank and elsewhere, said he was "disappointed" with the bank, "which could have prevented this fraud with a simple phone call to Citibank, or by just telling me that the funds weren't good yet. Instead, Ledyard advised in writing that the funds were 'available.'"In Ledyard's suit, filed in Merrimack County Superior Court back in November, the bank said that the check "did not appear altered or fraudulent" and that as a normal course of business, funds are made available the next day."Moreover, because Whittington is a long-standing customer, no suspicious activity was suspected," the bank said.But Whittington said the bank should treat its customers better."Despite its own conduct and representation, Ledyard has now sued me," he said. "After years of being a very good Ledyard customer, I certainly expected better of this local bank." -- BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW Edit ModuleShow Tags