Getting Scammed in 2017... Don't Let It Happen To You

We hear about scams all the time. The most popular scams in the tax industry are the call centers pretending to be the IRS. They call random people all day and tell them they will go to jail if they don't send money ot pay a "tax bill". It is a simple scam, but it must be effective to some extent if people are still doing it. I am aware of this and my clients are aware of this, so we obviously don't send them money. The IRS doesn't call people.

A scam will have one of two characteristics, it is either "too good to be true" or "someone demanding money via threats".

Be wary of offers that are too good to be true

I try to stay aware of different scams, and whenever something that falls into either of the above categories comes up, I am skeptical. I don't trust things blindly and I do my due diligence. Here are some examples of people trying to scam me (none have worked)

• I was looking on craigslist to buy a car, the person listed it locally but the car was "actually in Kansas" and she asked that I give her all my information so that amazon could ship it to me. It was an incredible deal, so clearly a scam.
• I was helping a friend find a job. A person was offering $25 an hour to watch her wheelchair bound son. After many messages and picture exchages, she asked my friend to front money to help hold her goods in shipping because they weren't able to move in yet. I later learned this was a common scam.
• IRS scam callers (from above)
• I was selling my Jeep on Autotrader.com and someone offered to buy. I just had to ship it and he would pay paypal. He was in the navy and stationed on a boat so couldn't pick it up. I read about this scam online as well.

That's all I can remember offhand. Despite my experience, I was recently close to getting scammed again last month. Because I couldn't find anything online at the time about the recent scam attempt, I am writing this article to review exactly what happened. In reading this you should become more aware of how thorough new scams can be, show some ways to identify scams and reinforce the base rule, if it sounds too good to be true, it probably is. Always do your due diligence and most importantly, wait for checks to clear before transferring money.

It all started with an email...

My partner received an email from a representative at "Shenzhen Machinery". The email was different from all prior scam attempts. The grammer was good, the email address, [email protected], had a company domain and it was very brief. Their website was linked and looked goo. The email went something like this.

"We are looking for a representative to handle our accounts receivable in the US. We don't want to have to open an office there, and accounts receivable has become a burdon for us. If this is something you could handle, please let us know when you are available for a call."

So we took the call. Our questions were to do with what they needed and how they found us. Here is a basic overview of the convo with my beloved bullet points.

• "She" found us on the NAEA registry (my partner is an EA)
• They were looking at us because big firms said the engagement was too small
• The company, Shenzhen Machinery, was a Chinese subsidiary of a Japanese publicly traded company (we checked this).
• They were going to send an agreement outlining the terms, for us to review and sign

So after the call I did more and more research to verify the claims and information. I was very skeptical as this fell into the "too good to be true" scenario. They had a great working website, we spoke to them and everything was clean. The agreement was well put together and had reasonable terms. HOWEVER, there was one small red flag we uncovered. Their website was being hosted by a company that is commonly used by scammers as privacy is paramount. No Godaddy or Hostgator. Big red flag.

Oh, I forgot to mention. The reason I believed this was legitimate is because I thought the company wanted to hire an agent to avoid triggering permanent establishment. To heavily summarize: Per the U.S. and China Tax Treaty, if a Chinese company hires an agent to do stuff here for them, they don't have to file U.S. tax returns.... I was too smart for my own good on this one..

So we sent back the agreement and not even a week later did we have a check in our office for $150,000. We were to get a 5% cut and they would get the rest. Super skeptical, we called a contact at Wells Fargo (the originating bank) to confirm that the signer was real, the amount reasonable for the transactions, and the account number correct.... All checked out according to them.

So I took the check to my banker at Citibank and of course they reviewed it and told me it was fake. I thought it looked ok, but clearly I have no idea about check fraud.

Not suprised but still dissapointed in all the wasted time, I contacted fake Shenzhen and told them the check was fake and to stop scamming people.

In conclusion

These scammers use the information of real companies both the buyers and sellers, to facilitate fake transactions using fake checks. I really hope noone is depositing the check and sending money the same day. That money is gone forever.

Real company website? I'm not sure. Looks to be fake as the real company does screen printing. You can find a profile of what looks to be the actual company here

The only way to stop scams from working is to share information. Share this so your friends and colleagues can learn from my wasted time.