Increasingly, scam victims have asked Watson Goepel LLP's Litigation & Dispute Resolution Group to help recover funds stolen from a bank account. To do so, we have often sought an exceptional remedy known as a "Norwich Order" to track down information about where the stolen funds have gone and who is behind the accounts that received the money. That order takes its name from Norwich Pharmacal Co. v. Commissioners of Customs & Excise, [1974] A.C. 133 (H.L.) at 175 which permitted Norwich Pharmaceutical to obtain the identity of a party from customs authorities
In most cases, we have been able to find out where the stolen funds were transferred and who they were initially transferred to, and are able to retrieve frozen funds and return them to our clients. We also collaborate with law enforcement authorities to hold the perpetrators of the scam accountable.
In this article, we describe and explain the legal steps taken on behalf of one of our corporate clients who fell victim to a $13.5 million scam and explain what we did to ensure the return of 99% of it.
Background
Our corporate client entered a resource purchase agreement with another company ("Company B") in April. As part of that agreement, our client was obligated to pay approximately $13.5 million to Company B by wire transfer.
In August, our client received an email, which appeared to be from Company B, providing new wire payment instructions, including a new payee bank account. Our client did not realize these instructions were sent from a scam email address which was indistinguishable from Company B: the two email addresses were identical except that the scammer used a lower case "L" in place of an upper case "I". Our client was the unfortunate victim of what is colloquially known as a "man in the middle" scam.
The day after our client transferred the full $13.5 million to the scammer's bank account, Company B inquired as to the status of payment. At that point, our client realized it had sent the money to the wrong person and had become the victim of a fraud. Meanwhile, the scammer transferred portions of the $13.5 million to various other bank accounts and began drawing up cheques for further transfers.
Legal Action and the Norwich Order
Our firm was retained to, among other things, assist in recovering the stolen funds and commence an action against those individuals that had received and used the money.
First, we reached out to the banks that the scammer had used to facilitate the scam in order to coordinate our response and ensure the stolen funds remained frozen in place. Next, we filed a petition on behalf of our client in the British Columbia Supreme Court. We sought what is called a Norwich Order, which would require the banks to disclose documents and information we needed to commence legal proceedings and get the money back.
Owing to the urgency of the situation, the petition hearing occurred less than a week after it was filed. At the hearing, on behalf of our client, we received all of the orders sought and served the banks with the filed orders shortly thereafter.
Banks retain account information identifying the names of account holders and the individuals who operate them (if they happen to be different, such as with corporations). Through the Norwich Order, we received the information necessary to identify the scammer and connect them to a numbered company (the "Numbered Company") and its director (the "Director"), both of which were based in Ontario. We filed a Notice of Civil Claim in the Supreme Court of British Columbia on behalf of our client against the Numbered Company and the Director and the other parties that had benefited from the scam by receiving a portion of the stolen funds from the scammer's bank account. We have since received judgment against multiple parties.
We also forwarded the identity information we received from the bank to law enforcement authorities in order to facilitate the criminal proceedings against the parties who benefitted and were responsible for the scam.
The Garnishing Order
Separately, and even before we received judgment against the scammer, we brought an application to garnish their bank account where over $500,000 of our client's stolen funds were frozen.
The law normally requires that a party being garnished be located within the jurisdiction of the Court. Since we were bringing the application in British Columbia, the account being garnished would normally need to be located in British Columbia. However, a garnishing order can still be enforced when a debt exists outside of the province, if the party being garnished has a connection to British Columbia (such as having a bank branch located here) and the party seeking the order (like our client) gets special permission.
Because the stolen funds were in a bank account in Ontario, we asked the Supreme Court of British Columbia for permission to serve that order ex juris (outside of the Court's jurisdiction) on the bank branch located in Ontario which was holding the funds. We were granted a garnishing order and permission for ex juris service. Subsequently, we obtained further orders from the Court to disburse all of the funds back to the client.
Ultimately, of the $13.5 million that was stolen, over $13.3 million was returned to the client because of the actions of the banks and the orders we secured on behalf of our client.
Conclusion
The increasing popularity of these sophisticated scams has led to a corresponding, and unfortunate, increase in victims. That does not mean, however, that parties are helpless. Many banks offer information and advice to protect their clients from these types of scams. Nevertheless, these kinds of scams can be difficult to catch, even for the most scrupulous clients. Even if you know where your stolen money ended up, securing its return and finding out who was responsible can be a confusing, frustrating, and complicated process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
