Bank told top pay ï¿½100k over a Nigerian cash scam

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Posted: Sun Aug 19, 2007 9:15 pm

sunday life

'Foolish' Tyrone builder swindled not ONCE but TWICE by African conmen will get some of his lost dosh back
Sunday, August 19, 2007

By Ciaran McGuigan

The Ulster Bank will have to fork out over ï¿½100,000 to re-pay a " foolish" customer who was ripped off by Nigerian conmen.

Caught by a classic sting, red-faced builder Sean MacMahon paid out tens of thousands to Nigerian fraudsters who asked for his help to transfer millions of dollars out of west Africa.

And the "naive" Tyrone man was then stroked a SECOND time as he tried to claw back his money through another Nigerian conman.

But it is the Ulster Bank that will have to stump up most of the cash lost out in the second swindle to hit Mr MacMahon, after High Court judge Sir Donnell Deeny found it had been negligent in its handling of his banking transfers.

In his judgment, Mr Justice Deeny said Mr MacMahon's problems started when he "left the calm waters of the building trade in Northern Ireland for the choppy seas of Nigerian finance".

The millionaire Cookstown man, the boss of JJ MacMahon Ltd, said he was lured into the swindle after being invited to tender for a building contract at the Nigerian embassy in Dublin.

Although he did not get the job, he said that he had been later approached by a man claiming to be linked to the embassy, who wanted to free up $$9.6m from the Nigerian banking system.

He offered to hand almost $$1m to Mr MacMahon if he helped him.

The judge said Mr MacMahon foolishly agreed and paid over tens of thousands in alleged charges to transfer the money. The builder then went on to pay on similar amounts to "clear" the money through a clearing house in Washington, but still no money appeared.

The desperate Ulsterman eventually approached a contact in South Africa in a bid to claw his money back and was put in touch with another Nigerian businessman, who promised to help him reclaim his money, but instead just ripped him off again!

The man, who the High Court heard has since been jailed on fraud charges in Nigeria, asked Mr MacMahon to transfer a number of cheques for him.

He set up a US dollar account at the Ulster Bank in Cookstown and used it to it transfer over $$50,000 to his new Nigerian contact after receiving a cheque for the same amount.

The businessman did not suspect anything was wrong and accepted another cheque from the Nigerian for $$210,645.

When he sought assurances from the Ulster Bank that it was safe to pay out on the second cheque, Mr Justice Deeny found "that he was told the funds had cleared in early November (2002) with regard to the second inwards cheque".

The judge added: "I find that was not in fact the case and it was therefore a negligent statement by the bank's official. The plaintiff lost as a result."

Mr Justice Deeny said: "I accept the bank would never have opened the dollar account in Cookstown if they had known it was designed to process cheques from Nigeria."

However, he added: "The bank had seemed to have been content to recoup their loss from the plaintiff's company without making any attempt to recover the funds in question or even clarify how the situation had arisen."

Following a court judgment published last week, the bank now faces having to pay back over $$200,000 - plus interest - that had been transferred from Mr MacMahon's personal account to the Nigerian conman in 2002.

Posted: Sun Aug 19, 2007 9:25 pm

Quote:

... swindled not ONCE but TWICE by African conmen ...

Sounds good.

But he'll probably use the money to respond to the next "I NEED YOU URGANT HELP!" email. Confused

Posted: Sun Aug 19, 2007 9:38 pm

Totally wrong signal, in my eyes. The guy is a friggin tool. What scammer is he going to fling his money at next?
This basically says "You are responsible for my stupidity!". I totally have to disagree with that.
Now, when we have a host of a fake website that has been informed a month ago that they are hosting a scam site and they do nothing and the scammers running the fake site continue to fleece people THEN it would be a case where I'd agree that suing the hoster is the right thing to do.
But you can't hold a legitimate business responsible for the fact that their customer is a brainless fncking fruitcake.

Posted: Sun Aug 19, 2007 9:50 pm

I disagree, think about what is being paid back. The money that was lost in the initial scam is not what the bank is being held responsible for. The bank is being held responsible for the checks, that they had previously said were clear.

If the bank had done due diligence it would have found the checks to be fraud and they and the victim would not have lost money.

I welcome that ruling, and I hope more come down like it around the world. This will force banks to do a better job at clearing checks before the money is available.

How many victims have we heard from here in check scams, that have said they checked with the bank weeks after depositing the money and the banks said the checks were good? Only to find out later the checks were bad and the victim is not only broke but facing criminal charges.

Posted: Sun Aug 19, 2007 9:50 pm

Interesting that a millionaire gets his money back, whilst most people who are barely getting by and fall for a straight up no-millions of $$s cheque scam wind up owing thousands of dollars to their bank. Confused

Posted: Sun Aug 19, 2007 9:52 pm

@slingblade> So you basically say that it I can actually behave like a dork and feed my money to scammers and then sue my bank?
Think again.

Call me a cynical bastard, but I have no sympathy for victims who not only fall for an obvious scam but then blame their own stupidity on others.

Posted: Sun Aug 19, 2007 9:57 pm

slingblade wrote:

... This will force banks to do a better job at clearing checks before the money is available. ...

Hmmm, how often do have to deal with foreign checks?

What you are proposing would bring a portion of international commerce to a standstill. Only a very small percent of checks are fraudulent.

Just imagine ordering a present for grandma's 83rd birthday from a forgein country, using a check to pay, and then bringing the gift to her funeral when the check finally clears and the gift arrives 6-8 months later.

It just don't work thatta way.

Posted: Sun Aug 19, 2007 10:03 pm

KD is dead on. It can take months for a foreign cheque to clear the issuing bank. Can you imagine how many people would scream bloody murder if they were forced to wait until a cheque actually cleared to get access to the funds?

Not quite a Newb Joined: 14 Jul 2005 Posts: 41

I'm with LV.

This guy is just a money-recovery victim waiting for the email.

Posted: Mon Aug 20, 2007 1:59 pm

This article makes me feel thoroughly conflicted. On the one hand, I like to see a victim getting at least some of their money back. On the other hand, I'm thoroughly ticked off that, without fail, the people who do get money back seem to have bags of money in the first place, are usually not in danger of ending up on the streets from their losses, while people who literally lose everything they have are told to get lost by the banks and the police. They're not "important" enough or "worth" the time and effort.

And there's that incredibly nagging feeling that this guy should have known better. You're an evidently successful businessman, capable of earning millions, yet... you don't recognize a proposal to launder money when it's presented to you? You don't, I dunno, run it by your/the company lawyer, first?

On the one hand (I'm running out of hands...), I think banks should be required/forced/coerced/encouraged/whatever to be more diligent about actually explaining the very important legal difference between clearance and funds made available. They use the terms interchangeably entirely too much. Even when customers ask if the check has cleared, they usually answer the question "Is the money in my account?". Paying back the losses jut might encourage a little more care when answering that question. If they bothered to explain that "Yes, the funds are there, you can withdraw them if you like, but we can legally take them back until they fully clear, which could take X weeks..." that might save a few fake check victims. Most people's eyes would probably glaze over and they would ignore it, but it might save a few. There is a bit of precedent for fake check victims getting their Financial Ombudsman Service to dispute seizure of funds when the bank thoroughly misled the victim in regards to clearance, so maybe this isn't totally unexpected.

On the final hand (yes, I'm Kali...) I know we can't all be legal whizzes, but shouldn't someone who is trying to conduct international business as a contractor know (or hire someone who knows) a little something about banking law and who knows money laundering when it hits him/her on the head? And who is ultimately going to pay the fine? Not the Ulster Bank. The innocent bank customers. Guaranteed. And I bet Mr. Justice Deeny won't intervene on their behalf.

*sigh* I try to be sympathetic, but I agree it's much harder to dredge up sympathy for a victim who was already a millionaire and successful businessman, who could have easily had access to financial and legal advice (and more importantly, could have afforded it and should have known the importance of doing so before leaping into a business deal) that would have kept him from going for the scam in the first place. Most fake check victims don't have the opportunity and resources he had, nor the business background. He certainly didn't have the excuse of being desperate for money to improve his lot in life. And you know that money he's getting back isn't really going to come from the bank's pockets. It's going to come from their customers.

Posted: Mon Aug 20, 2007 3:23 pm

Quote:

When he sought assurances from the Ulster Bank that it was safe to pay out on the second cheque, Mr Justice Deeny found "that he was told the funds had cleared in early November (2002) with regard to the second inwards cheque".

The bank should be responsible if they made false/negligent statements that assured the victim that he was not being scammed.

Beyond that, I have no sympathy for anyone in this case.

Posted: Mon Aug 20, 2007 4:26 pm

I have another hand for you Mrs. Bean:

just what is stopping me from wiring the money to myself for a fake first scam, and later on wiring the money to myself again on the fake recovery scam?
looks a perfect way to launder money, plus the bank will give me a little bonus on top

embezzled the company for a million?
[sob] "but judgiwudgy it was for those evil Nigerians" [/sob]
get a low jail sentance, walk out in half the time and retire

Posted: Mon Aug 20, 2007 6:27 pm

Agi Hammerthief wrote:

... what is stopping me ...

Nothing, except for the fact that the authorities aren't completely stupid. They certainly followed the money trail as far as possible.

You'd need international accomplices = mob = you're screwed.

Posted: Mon Aug 20, 2007 6:40 pm

^^^
thanks KD,
that stopped me just in time Smile

I still suspect there are some cases of "I'm the poor victim" going on
no need to discuss how it might work though

Posted: Mon Aug 20, 2007 6:45 pm

Well, I think the chance that the bank might not cooperate and be vague/wrong enough when answering your question, and the possibility that the ombudsman/judge might not agree with you could be a bit of a damper on the idea. And you have to be somewhere there's an Ombudsman service or have the money to hire a good lawyer and get a good fake check.

Is the Ombudsman thing more of a European approach, by the way?I can't find any trace of an ombudsman service for U.S. residents on the scale of the one in the UK, darn it...

I remember reading an Ombudsman page (New Zealand or UK, maybe?) some months ago that briefly described some cases and the outcomes. The burden on the customer to prove that the bank had been asked, explicitly, about clearance, not just funds available, and that the bank had badly bobbled the question, was pretty heavy. The customer had to prove that a reasonable person would expect the bank to have answered differently based on the question.

The way I read the article above, the bank wasn't asked if it was a scam, and didn't ask the customer any questions to see if it was a scam. If he had said "Oh, I'm opening this to process checks from Nigeria...", I think the bank would have immediately put the brakes on if they had heard that. I'm not sure if maybe privacy laaws prevented them from asking the question themselves.

Instead, the bank seems to have been nailed for claiming the check had cleared back in November 2002, when, evidently, it hadn't. Which leads me to wonder, when did he ask the bank about the clearance of the second check, and when did the bank discover the check was bad? The timeline wasn't all that clear there. Looks like maybe the judge thought the bank could have reasonably saved him from the loss if they had told the truth (or bothered to actually check, as the case may be) about the clearance, when the customer asked. ETA: Or possibly that they could have easily recalled the transfer before the scammers withdrew it rather than taking it out of the victim's hide.

Sounds a bit like me asking my garage manager if the mechanic fixed my bad brakes, being told "yes", paying for the brake work, then finding myself wrapped around a telephone pole when it becomes apparent that the mechanic actually didn't fix my brakes.

Posted: Mon Aug 20, 2007 7:16 pm

slingblade wrote:

How many victims have we heard from here in check scams, that have said they checked with the bank weeks after depositing the money and the banks said the checks were good? Only to find out later the checks were bad and the victim is not only broke but facing criminal charges.

By that logic, the next time you go to cash your paycheck, you might have to wait 4 weeks until it's cleared. See how much you like that idea now. I, personally, would not want to wait until every check I put in the bank is clear. If I know the source, I will not be worried. Again, it is MY responsibility to know the checks I am cashing.

The problem with people is that they constantly want to play the victim role. Yes, he was a victim. However, the blame lies in his court for his continuing stupidity. Falling once, understandable. Falling twice, it's his problem. In any event, the bank is not responsible for negligence on the part of the consumer.

Elite Baiter Joined: 03 Jan 2006 Posts: 1455

Banks here are soon under an obligation to clear cheques for definite pretty quickly and then swallow any subsequent losses themselves. Be interesting to see what happens; my money is on they stop accepting foreign cheques.

Posted: Tue Aug 21, 2007 6:33 am

For my sad, lonely, two penneth worth...
In this electronic day and age....what happens to the money that's waiting to be cleared?
I got an English cheque from my Mom. I put it into my Nz bank account and was told it would take at least 21 working days to clear.
The money was removed from my Moms account within 3 days.
It didn't get to me account for 27 days.
Where was it in the meantime?

Just a question I've always wanted to know the answer to really, and still a bit on topic...

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