A Drummondville transportation company, the victim of a major fraud that has left it in financial difficulties, is suing the Caisse Desjardins de Drummondville and the Fédération des caisses Desjardins du Québec for $1.5 million and interest for inaction and negligence.
TYT Group suffered a “presidential fraud” (see further text below) totaling $2.380 million between June 8 and 15, 2020 in five international money transfers to Hong Kong and China from Desjardin’s accounts.
The lawsuit alleges that the institution failed to act as a prudent banker either at the time of the transfers or after TYT uncovered the fraud. Worse, after Desjardins refused to support its client and deny responsibility for the fraud, Desjardins placed TYT in segregated accounts on the day the crime was discovered, threatening the survival of the company of 225 employees.
TYT had been a customer of Desjardins for ten years during the events. As it only operates in North America, money transfers to China were atypical actions. In addition, Desjardins was aware that the security of TYT’s information was at risk following the massive data theft of 4.2 million members uncovered in June 2019 .
In that regard, the lawsuit alleges that Desjardins “should have been immediately alerted by the obvious signals that TYT was a victim of fraud” and should have taken preventive action.
No verification…
On June 8, 2020, TYT’s new chief accountant received an email from a scammer posing as President Patrick Turcotte. This fake president hired the accountant to keep a priority file and asked her to follow the instructions that would come from a Deloitte attorney.
Photo from the Groupetyt.com website
Patrick Turcotte, the company’s big boss whose identity was hijacked by scammers in a “presidential scam.”
Thus began the series of money transfers involving hundreds of thousands of dollars without the legitimacy of the transfers being verified by Desjardins employees, who nonetheless had to closely monitor the company’s finances.
… except for the credit limit!
Desjardins called TYT when the credit limit was reached. Faced with the disbelief of the real Patrick Turcotte, the account manager finally noticed the scam. Who should be contacted urgently to recover the lost funds? Nobody could tell. It was 4:30pm and the International Services department was closed!
Finally, on the advice of the President of the National Bank (BN), TYT was able to take action at its own expense, which eventually allowed it to recover about $700,000.
SCAMPS IN USE AT GROUPE TYT ON JUNE 8, 2020
- The new chief accountant receives an email from a scammer who has hijacked President Patrick Turcotte’s identity.
- The fake president hires the accountant to complete a takeover bid, a high-priority file.
- He insists on the confidentiality of the transaction: everything is done via email.
- He asks to follow the instructions of lawyer X.
- He inquires about TYT account balance before making any transfers.
The President’s scam, a well-known scheme for banks
Chairman’s fraud is a type of fraud that has victimized companies and that banking institutions have known about for more than a decade.
The phenomenon has grown during the pandemic in the context of teleworking. In fact, it is a type of phishing via email or SMS, in which the scammer manipulates an employee by giving him importance: he has the privilege of being chosen by the “President” for a special task.
Obviously, this task requires a transfer of funds and very often allows for the disclosure of sensitive information, whether bank information, passwords or customer lists.
The employee through whom the scammer commits his crime is not chosen at random, but someone who has the desired access. The scammer will have found out about her through social media and will have gathered enough information to make her communication believable.
Costs in excess of $26 billion
Recent cybercrime statistics show that the presidential scam has stolen more than $26 billion worldwide. Phishing, which includes CEO scams, is one of the most frequently reported scams by the Canadian Anti-Fraud Centre. In the first six months of 2021, reported domestic losses totaled around $26 million.
In 2014, Olymel and Unimat each lost more than $4 million. In 2020, Dancause was robbed of $400,000. And we could add to the list of presidential fraud victims.
In the case of TYT with Desjardins, the lawsuit, led by lawyers Caroline Biron and Carolan Villeneuve, mentions that the institution set up a security office at the end of 2019 to better protect its customers. However, five suspicious transfers were made in a week without his staff notifying the real President, Patrick Turcotte.
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