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While many victims of the so-called “Nigerian e-mail scam” would be too embarrassed to trumpet that fact, others end up infamous for their victimhood like the appellant in a published opinion of the California Court of Appeal in Riverside. Also known as an advance-fee fraud, the Nigerian scam baits the victim with an advance sum of money now in the hopes of realizing an even larger payment later.

In March 2009, Brian Peters received an email from someone purporting to be a citizen of Malaysia. The e-mail informed Peters that certain third parties in the United States and Canada owed the purported Malaysian money, but that “they can not transfer the funds to any bank account outside America continent due to their new company policy [sic].” He asked Peters to “assist me in receiving the funds and forward to me.” He offered to pay Peters 12 percent of the money. Peters agreed after apparently negotiating an increase of his fee to 15 percent.

Peters deposited the $808,988.90 in checks received from the purported Malaysian at Chino Commercial Bank. After the bank notified Peters that the checks had cleared, Peters wire transferred $468,000 to Hong Kong. Shortly thereafter, the checks were dishonored after the bank detected that they had been altered. Since Peters was personally liable for any overdrafts on the account, which had only a few thousand dollars, the bank sought to attach property owned by Peters to collect on the overdraft. The trial court granted the bank’s motion to attach against Peters in the amount of $458,782.60.

Peters appealed and lost again, this time in Riverside’s District Court of Appeal. (Chino Commercial Bank v. Peters (Dec. 13, 2010, Case No. E049170).) The court held that the bank had demonstrated the probable validity of its claim, citing California Uniform Commercial Code sections 4201, subd. (a), and 4214, subd. (a)- the bank’s notification that the checks had cleared gave only provisional credit until that collection was final.

Despite the obvious life lessons, the legal one is this – don’t transfer funds received unless and until you know that collection of the original deposit is final. This is particularly true for lawyers and others who receive funds in trust.

David G. Moore is a Senior Attorney at Reid & Hellyer law firm in Riverside, CA, where he began his legal career after completing law school in 1964. Reid & Hellyer practices business, real estate, litigation and bankruptcy. He may be reached at dmoore@rhlaw.com or via phone at (951) 682-1771.

Slashdot - Charles Peters Nigerian E-mail ScamUpdate from Reid & Hellyer (12/20/2010): This blog post made the front page of Slashdot.org on Dec. 19, 2010 and was mentioned in The Press-Enterprise on Dec. 20, 2010.

Update from Reid & Hellyer (1/3/2011): This blog post was mentioned in inland Southern California’s Business Press.

Update (10/02/13): California Bar warns lawyers to be wary of the Nigerian scam.

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About David G. Moore

David G. Moore is a Senior Attorney with Reid & Hellyer law firm in Riverside, California and has been with the firm since he completed law school in 1964. He practices litigation focusing on business, real estate and personal injury defense. Dave has achieved an "AV" rating from Martindale-Hubbell, was a 2009 and 2010 Super Lawyer, has been listed in "The Best Lawyers in America" for business litigation, and is a member of two prestigious legal organizations: the American College of Trial Lawyers and the American Board of Trial Advocates.

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Comments

  1. […] “From California Litigation Attorney Blog: ‘While many victims of the so-called “Nigerian e-mail scam” would be too embarrassed to trumpet that fact, others end up infamous for their victimhood […]

    Reply
  2. avatar
    Skaperen

    So how can one “know that collection of the original deposit is final”? I know my bank has never, ever, given me any notice of this in any checks I have ever deposited. While I would never fall for a scheme like this, it is possible that someone may want to pay me for something I advertise for sale, by check. Do I need to ask for my bank to give me such notice and then I delay shipping the goods until the check clearance is final? Or do I just demand cash and be equipped with a bill test pen?

    Of course, you are not my lawyer. I don’t expect a personal reply. But maybe a general answer for the general public can be informative.

    Reply
  3. avatar
    Sammy Moshe

    It’s interesting that he’s getting away from all this with his freedom. Most of these scams require you to conspire to do something illegal. I’m not even talking about the part where you get scammed out of the money. Seems like almost all of them are prima face money laundering operations. They actually ask you to help them launder money as a pretense for the deal! You don’t have to be a rocket scientist to understand that participating in a 419 is dumb. Even if the whole things was totally legit, how on earth do you bring yourself to do something involving this amount of money, and not wait until the check has cleared? The mind boggles.

    Reply
    • If you read the story carefully the checks did clear.. the bank deposited the money.. and eventually withdraw it back!!

      Reply
  4. […] This post was mentioned on Twitter by Alain Raynaud, Sam Bowne, Kyle Roberts and others. Kyle Roberts said: A man who fell for the Nigerian email scam…and tried to sue. http://kyler.co/dHI5zI You just can't protect ALL stupid people from harm… […]

    Reply
  5. […] “From California Litigation Attorney Blog: ‘While many victims of the so-called “Nigerian e-mail scam” would be too embarrassed to trumpet that fact, others end up infamous for their victimhood […]

    Reply
  6. avatar
    Martin Johansson

    Checks. Are you still using slips of paper with amounts on them? Sheez, the rest of the world has moved on. No wonder 419 scams target the US.

    Reply
  7. Interesting dilemma: when to proceed and use deposited funds–lacking a final notification? Wells Fargo refused any meaningful response when I asked this question of two or three agents. They simply would not say when, how, or even if there was *any* final notification, ever, that would be provided. Indeed they pointedly stated that long after the deposit, for reasons they could not specify, a deposit could be dishonored.

    Reply
  8. avatar
    Mike Stone

    I’m surprised, not only that neither party spotted the UCC issue, but also that neither the parties nor the Court of Appeal spotted Federal Reserve Regulation CC that requires banks to credit the full amount of a deposited cashier’s check within one business day (12 CFR § 229.10(c)(v)). Banks are liable under the regulation for failure to use ordinary care, § 229.38(a), and may refuse credit if there is a factual basis to doubt the check’s collectibility, but a bank may not refuse to immediately credit a cashier’s check on grounds of possible uncollectibility “based on the fact that the check is of a particular class or is deposited by a particular class of persons.” § 229.13(e) . Regulation CC supersedes the UCC. § 229.41.

    Reply
    • Where in this story did you see a deposit of cashier’s checks? couldn’t they be personal checks?

      Reply
    • avatar
      Sparky

      They weren’t cashier’s checks. So no Reg CC issue.

      Reply
  9. avatar
    gw307

    I’m the administrator for a law firm and often we have a need to know if escrow checks deposited have “cleared”. For many years the situation has been that the funds are “available” within a matter of days due to our good customer status, but that the safest way to determine if a check has “cleared” is to wait a week to 10 days to receive a rejection notice. Extremely inefficient.

    Reply
  10. avatar
    redstorm_

    That’s what you get when you let GREED rule your actions. Plain & simple, this guy Peters got scammed because he thought he found a way to make easy money. I’m amazed any court allowed this action at all…on what grounds? Because the bank was doing their job? The bank was only processing the checks….why would anyone think they should bear some responsibility IF someone, Peters in this case, was just gullible? Last time I checked, banks aren’t in the business of protecting us from our own bad decisions. We’ve all made bad assumptions in our lives and have had to deal with the consequences. This is simply another attempt to “blame someone else” which has become a prevalent attitude in this country.

    Reply
  11. avatar
    Patrick

    We are in 2010 ppl …I can’t believe some people still do not understand …

    There is no EASY way to make money!!

    Well, maybe for scammers … lol

    Reply
  12. How did the bank even ALLOW Peters to wire money from an account after depositing a check that “cleared” but wasn’t “finalized” yet?? He didn’t have nearly the amount of money available to back up this withdrawal. This makes no sense! That’s A LOT of money. It’s not just $50 or $100, but nearly HALF A MILLION that the bank allowed him to wire. This means that someone could deposit fake checks that look legit, wire money to their partner in another country, and then flee the country. I would think the bank would be more careful than this. In THIS case, they can go after Peters, cause he sounds like a victim of a scam and has not fled the country. But, what if it were a case where Peters left the country to enjoy the $0.5 million with his friend in Hong Kong??

    WOW!

    Reply
  13. avatar
    Neeneko

    @Martin Johansson

    Actually, checks are still generally used for many large transactions. For instance a down payment for a mortgage is often done via check (Wells Fargo even requires it).

    As for the actual piece.. I kinda wish this had not gotten dismissed. The whole ‘we pretend the check was good, but weeks or months later we might decide it is not and you are responsible’ has always struck me as really slimy. I understand it is legal, but I would bet it was a law the banks helped write.

    Reply
  14. avatar
    Fred Peterson

    Its pretty standard for a financial institute to give you two numbers: One the available balance and the other the “awaiting clearance” balance (or whatever the term used is). At least, the smart financial institutes do this.

    If his did and he ignored it, thats his problem. If it doesn’t, drop the bank and move to a different one.

    Reply
  15. avatar
    Max Grant

    I think I’m still hung up over the fact that the bank said the check cleared, and then let him wire money out on the cleared check.

    The bank screwed up. There is no question of this. Regardless of the fact that this was a scam, it was their responsibility to verify the validity of the check before they released funds based on it. I can’t believe our court system is jollying along this incompetent bank . . . it’s no wonder our financial system collapsed, with banks being this lazy about whether or not the money they’re cheerfully zipping hither and yon around the world is actually real.

    No wonder.

    Reply
  16. avatar
    Constantine

    It is easy to understand how this happened.

    When you deposit a check, the new balance will immediately be reflected on your account. The account will also show available balance + suspense amount(the check waiting clearance)

    In this case the mistake Peter made is acting too fast.

    Reply
    • The checks cleared. There was no suspended amount or uncleared amount.. it all cleared. the bank deposited the money. That’s how he was able to wire it. Later the bank tried to withdraw the money only to find it gone. Plus he can’t wire funds if they were suspended/uncleared.

      Reply
  17. avatar
    bobby

    i dont think this was confusion of available balance + suspense amount.
    i didnt end up getting screwed but have had my bank do the same thing to me.
    was a check refund for a broken item purchased on ebay
    a week goes by after deposit, bank tells me its clear.
    3 weeks later they take the money back and tell me “insufficient funds”
    my explanation was” it was clear but not really “

    Reply
  18. avatar
    Yvonna

    It’s quite simple. Following law, the bank doesn’t have another chance than telling it’s customer within short time that the check has cleared. Using a bit of common sense, you can only withdraw the money if he bank statement is final. When ever I get a email from any unknown person I immediately check it on http://www.scamalert4u.com. They have a huge online database with email adresses of scammers. It already helped me twice.

    Reply
  19. avatar
    Kevin Walton

    I don’t understand how banks can let this happen. Depositing these checks against a balance of a few thousand dollars is a red flag. Not putting a hold against out of the country checks for at least 2 weeks upon clearing is asking for trouble. True the depositer was acting out of greed and there should be a penalty for that but not for the full amount. Same goes for identity theft, banks make it too easy. Unnatural activity should be red flagged and pulling out the siganature card should be mandatory….but it’s not.

    Reply
  20. avatar
    Victim2

    Justice? Not really justified.
    The bank screwed up:
    The amount was available on his bank account, we’re not talking about peanuts but about big bucks. Whatever his reason was to agree on the deal, he received a check and the bank cleared it and put the actual money freely available onto his bank account. That’s how he could wire it to this scumbag.

    Now imagine someone like selling his car: receiving a cheque for 36k, staying on the safe side by keeping the car until money is on my account, freely available, withdraw this and other money to buy a new car. Cash.

    The guy collects “his” car and drives off, never seen again as he exports the car.

    3 Weeks after the bank tells you: you’re screwed, you owe us the money, sell the new car and repay us.

    It’s not greed what motivates everyone, those decisions display that the Banks write the Laws and we are pawns in their game of chess.
    You can’t trust anyone.
    I want the good old Gold Dollar back, no paper, no cheque. Real Value.

    Reply
  21. Is there a better use of their English Skills? is there a place to post all the nigerian email scams that I get? just for the fun of it?

    Reply
  22. avatar
    Joanna

    SCAM OFF by Online Loan Lender – WILLIAM JONES LOAN LENDER (willamjones.loanlenders@gmail.com / willamjones.loanlenders@gmail.com )
    I have applied the Loan from this firm since Oct 2011, I am a victim him of paying only and I am yet to get my Loan released to me until today. This Company will have lots of hidden payment for me to pay and pay, I will have to pay again and again the payment. He will keep promising me that this is the last and final payment, Mr. William Jones will keep giving me empty promises and swearing, I will get my Loan released after my payment but finally he will give some other excuses, broken all his promises and swearing, then I am require to make another payment, payment after payment will pop up for me to pay, where there is no ending. I am now into deeper debts.
    He is a real scammer, I lost $3,500 usd to this Company.
    I do not know what to do now, is there a genuine Loan Lender in this world?

    Mr. ONUWA IKENNA
    Mr. IDIALU MOSES
    Mr. WILLIAM JONES
    PLOT 22 COOK ROAD EDO STATE OF NIGERIA WEST AFRICA
    Phone Number: +234-805-560-6401

    Reply
  23. avatar
    Joanna

    SCAM OFF by Online Loan Lender – Daniel wizy Financial lender Service Company Inc.(danielwizyinvestment@gmail.com)
    I have applied the Loan from this firm since May 2011,
    Mr. JEAN COLE the Director/CEO
    Mr.Daniel wizy Loan Consultant ,
    Barrister William Ruddy

    I lost $8,500 usd to this Company.

    Daniel wizy Financial lender Service Company Inc.
    Address: 2 Wusain Zone II Abuja, Nigeria.

    DIRECTOR / CEO: Mr. Jean Cole
    License No.: 98267 Phone: +234-806-058-6186

    Chamber – BARRISTER WILLIAM RUDDY
    11, Sabo Road, Benin City Edo, 009 Nigeria.
    I.D Number:0312754804 Seria Number:00703999701
    Phone: + 2348153363947 / 08153363947

    Irabor Osagie Phone no : ……..+2348153363947

    Reply
  24. avatar
    Joanna

    SCAM OFF by Online Loan Lender – BISHOP FREDRICK PETERSON (fredrickpeterson.loanfirm@gmail.com)
    WARNING – please be careful with the below Loan lender .
    Mr. Fredrick Peterson
    PAROUMOUNT LOAN INVESTMENT,
    15,OYOMON UROMMI EDO STATE.
    08084174789
    phone number is +2348153295585.
    Home Address : 15 Palm Garden Avenue Plot 101 Itaba Road Edo State.
    Bishop Fredrick Peterson from Saint Benedit Church of God, Adekenle Ajacent Road, Uromi Edo State, Nigeria.

    The below is the Union Bank Accountant info.
    Mr Barda Francis
    Accountant/Transfer Director
    Union Bank Of Nigeria Plc. 125.Sapele Road, EKPOMA-City, KOGI State. Nigeria.

    I have applied the Loan from this firm since September 2011, I being assure that The Company Does Not Require me to pay any fees apart from The Registration Fee of usd155.00, from then on I am a victim him of paying only and I am yet to get my Loan released to me until today. This Company will have lots of hidden payment for me to pay and pay, I will have to pay again and again the payment. He will keep promising me that this is the last and final payment, I will get my Loan released after my payment but finally he will give some other excuses, broken all his promises and swearing, then I am require to make another payment, payment after payment will pop up for me to pay, where there is no ending. I am now into deeper debts. Both of them is a real scammer, I lost $3,500 usd to this Company. I do not know what to do now, is there a genuine Loan Lender in this world?

    Reply
  25. avatar
    erggtwrgtgwre

    This is why Nigeria should exterminated off the face of th earth. Damn spammers

    Reply

 

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