Email fraud is depressingly common in Hong Kong, and as such litigation lawyers are often instructed to try to recover assets paid over to the fraudster by various deceptions.  The injunction is a central part of the recovery process.

Every situation is different, yet there are a number of practical issues which arise and which we should be aware of.  Of course it goes without saying that what follows below is for general information only, and legal advice should be taken if you discover that you are the victim of an email fraud.

You’ve made what you have thought was a bona fide payment into a bank account and suddenly realize you’ve been cheated.

The person you thought had told you to make the payment suddenly asks you when you will make it.  Or you notice that the email address of a person who you thought had written to you has been changed by just one letter.

A letter should be sent to the Bank to which the money has been transferred, informing them that there has been a fraudulent transfer into an account held with them and giving the name and account number of the account into which the money has been transferred and any other relevant details available.  If the money is still there, this may cause them to freeze it and make an urgent suspicious transaction report to the Police who hopefully would then issue a letter of no consent to the money being paid out.  At the same time, a report should be made to the Police to get them working on their side as soon as possible.  An e-report should immediately be filed with the Police followed up by a visit to the Police to make a statement.

Try to obtain Information
Information should be sought from the Bank over the telephone as to whether the money is still in the account, and typically a person on the phone who knows about the matter, will say that they can’t provide this information, but then they may give a sense or indirectly indicate whether the money or a substantial sum of money is still in the account.

The Police should be written to after the report has been made to them and asked what action they have taken and how much money remains in the account.  The letter should immediately be followed up by a telephone call.

Assess the Next Steps to Take
When the above has been done, an assessment as to the risk of the money being paid out of the bank account if there is no injunction put in place to freeze it should be undertaken.  There are a number of relevant factors, for example the amount of money defrauded, and what information if any has been obtained from the Bank/Police as to what the Bank and Police have done.  Having determined that there is sufficient money in the bank account making it worthwhile to apply for an injunction, the next step is to apply for an injunction to freeze the money in the account. In practice 2 types of injunctions can be applied for, one called a Mareva injunction to freeze all assets up to the value of the amount for which you have been defrauded, and a Proprietary Injunction to freeze the money in the bank account to which it has been transferred.  There are a number of hurdles to overcome when applying for an injunction, but the Courts will usually be sympathetic to a party who has been defrauded.

The purpose of the Injunction is to freeze the money in the bank account to which it has been paid to stop it being paid out to the fraudster whilst a claim is brought against the bank account holder, usually a Hong Kong registered company, to obtain a Judgment.  Once that has been done steps should be taken to obtain payment of the money in the bank account, up to the amount of the Judgment, to the cheated party.

There are different ways of doing this.  The simplest way is to get a Judgment for the amount of the money defrauded, plus interest and a fixed sum for legal costs, and then through a two-stage process called Garnishee proceedings apply to the Court to have frozen it to answer the judgment and then paid over to the victim.  Another method is to join the bank in proceedings in addition to just the bank account holder, get an order that the bank discloses the bank statements for the account, and then if the money in the bank account is the victim’s, obtain what is known as a vesting order directly ordering the bank, when obtaining the Judgment, to pay the money over to the victim.

The particular method which should be used will depend on the facts and circumstances of each individual case, and there are similarities and differences between each set of circumstances which may arise.

The key is to act quickly and thoughtfully to try to freeze the money in place pending the working through of the legal action.  Good lines of communication will need to be established with the Bank and the Police, and it is important and worthwhile to try to establish a rapport with the relevant officer from the Police and the relevant bank officer.

 

Of course, the ideal situation would be that you were never cheated in the first place, and when receiving email messages requesting a payment make sure that there is nothing strange or unusual in the contents of the email.  A particular suspicious request to look out for when payment is requested by a vendor is for the payment to be made into a different bank account to that into which payments are normally made.  The fraudster may say something like there is technical fault with the regular account, or the regular account is being audited, as a pretext for why payment should be made into a different account.  As a matter of good practice, when a payment request is made by email, a telephone call verifying the payment details with a person you know should be made before payment is made.  You should also carefully check email addresses of emails sent to you to make sure there has been no change in the email address.  In a word, you must have your wits about you at all times!

Jeremy Levy

 

For specific advice on email frauds, injunctions and related matters in Hong Kong, please contact:-
Jeremy Levy  | jeremy@robertsonshk.com | +852 2861 8403

Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.