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Nigerian Nightmare

James Adler, Chula Vista resident and Tijuana business owner, is out $5.2 million. He fell victim to an international financial scam perpetrated by Nigerian nationals and, his court case proved, the Nigerian government.

Starting in the early '90s, business owners in San Diego and around the country started receiving official-looking letters printed on corporate letterhead. They came from Nigerians offering to enter into lucrative business partnerships. "Several years back," Adler's attorney, Richard McCarthy, explains, "I think just about every person in town who owned a business got one. It was almost as if, if you didn't get one, you were nobody. At first, they would actually show up by mail. Finally, the U.S. Postal Service, at the behest of the Secret Service, started intercepting all mail from Nigeria because thousands and thousands of letters were arriving postmarked from Nigeria and virtually all of them were scam letters. That, for a while, did a pretty good job of stemming the tide. Then the Nigerians started using fax, which obviously can't be intercepted. I wonder if e-mail is next."

According to a recently published appellate court ruling, Adler received one such letter in 1992 signed by a man named Chief Abba Ganna. "The letter proposed," the appellate ruling explains, "a 'business transaction' between Adler, Ganna, and the chief accountant of the Nigerian National Petroleum Corporation."

Adler's side of the transaction was to send four stamped and signed copies of letterhead and invoices from his Tijuana furniture business, El Surtidor de Hogar, and the number to a foreign bank account where $130 million could be deposited. (The $130 million, if it ever existed, was made up of funds stolen from the government, the letter stated, by officials of a previously ousted regime.) Adler would also pay for first-class air travel between Nigeria and Mexico for Nigerian officials coming to collect their money. For compensation, he was to be paid a 40 percent commission on the $130 million. He never received it.

Over the next year and a half, Adler made three trips to Nigeria, where he visited the home of the Minister of Finance and the offices of the Central Bank of Nigeria in the capital city of Lagos. In the presence of John Olisa, deputy governor of the Central Bank, Adler signed a contract he didn't read and was shown a bank draft for $60 million made out to El Surtidor. Olisa told Adler he would receive a copy of the contract after depositing "shortfall" funds to cover the difference in the exchange rate between the dollar and the Nigerian nira. Adler was also led to believe that his company, El Surtidor, would receive an interest in some Nigerian oil fields. "Beginning with Olisa's request," the appellate ruling states, "individuals whom Adler believed to be officials of the Nigerian government repeatedly requested payments from Adler. They described these payments variously as shortfall deposit funds, taxes, processing fees, confirmation fees, surcharges, legal fees, travel expenses, and gratification. Almost every time that someone requested a payment from Adler, that individual told Adler that as soon as he made that payment, the $60 million would be deposited into his account."

The $60 million never was deposited into his account, despite frequent mail and telephone correspondence with various Nigerian officials and two more trips to Nigeria. On his December 1992 trip, he again met with Olisa. In February of 1994, Adler hired two former congressmen, Mervyn Dymally and Jim Bates, to assist him in collecting the $60 million. Dymally went to Nigeria, investigated and returned to tell Adler that the deal was a scam. Apparently unconvinced, Adler made yet another trip to Nigeria in April 1994 and met with Paul Ogwuma, governor of the Central Bank of Nigeria. Nothing came of that and, in May of 1994, he filed suit in San Diego district court against Olisa, Ogwuma, and 15 other Nigerians, plus the Central Bank of Nigeria and the Republic of Nigeria. The suit alleged fraud, conspiracy to commit fraud, and negligence. Still, even after filing suit, Adler continued to make payments to Nigerian officials. His total loss on the scam: $5,180,000.

After an eight-day trial, district court Judge Irma Gonzalez found that the Nigerian government was not immune to suit as a foreign sovereignty due to the commercial nature of their dealings with Adler, that at least one government official (Paul Ogwuma) participated in the conspiracy against Adler, and that the government allowed co-conspirators to use the Central Bank of Nigeria offices to further the fraud. However, the court also found that the original letter to Adler proposed a criminal activity on its face in which Adler knowingly participated. And it found that Adler paid bribes totaling $2.11 million to Nigerian offices in violation of the California Bribery Law. Therefore, the court decided the "unclean-hands doctrine" barred Adler from recovering any money.

Richard McCarthy explains the unclean-hands doctrine as "a rule of equity that says if the court is presented with a situation where it prefers to leave the parties in the same situation as they were in when they came to court, it may do that. In our case, for example, we proved that the Nigerian government participated in a scam to defraud our client. Notwithstanding that, the court, in its discretion, did not choose to assist him."

Both sides appealed the court's findings, but the Ninth Circuit Court of Appeals in Pasadena upheld the district court's findings by a two-to-one majority. The one dissenting judge felt the case should never have been allowed to proceed, writing in his dissent, "The contract was criminal in nature and criminal in purpose.... As the truth has come out at trial, we have no jurisdiction now, nor had the district court. This disgraceful effort to make us parties to a criminal conspiracy should never have darkened our doors. It is time to expunge it wholly."

Through his lawyer McCarthy, who describes his client as "very old and in extremely poor health," Adler declined comment on the case. "It's the family's strong desire," McCarthy says on their behalf, "to try to put this behind them."

Though it didn't help him recover any of his money, Adler's case broke new ground; the Nigerian government was found to be party to the scam. "That was the one big noteworthy thing about our case," McCarthy explains. "Up until then, there had never been a judicial finding that members of the Nigerian government were involved in these fraud schemes. Part of our district court judge's factual findings is that we proved that. The evidence that came in at trial was very compelling. We had phone records, and, in fact, there was a bank official from London who did due diligence on part of the monies that were sent over to Nigeria -- because our client had to actually get a loan from a Mexican bank, which has a branch in London, to make some of the payments on the contract. So this bank official contacted the Nigerian commercial attaché in London. They gave him the phone number for the Central Bank of Nigeria. Of course, later we verified through discovery that the number he called was the official number for the Central Bank of Nigeria. So he called and said, 'This is who I am, and I'm trying to verify the particulars of this contract.' He was then transferred to one of the deputy governors there -- who we later confirmed to be the correct deputy governor -- who said, 'Oh yes, I'm familiar with the contract, I have it right here in front of me, all you need to do is make the payment and the contract proceeds will be released.' So we had extremely compelling evidence that the Nigerian government was telling everybody that it was a legitimate contract and the money is needed to be paid."

McCarthy says it's this imprimatur from the Nigerian government that makes these scams attractive. "They are presenting themselves as being associated with the Nigerian government. And if you're an American -- and this is worldwide, the United Kingdom has also been a heavy recipient of these things -- you tend to think if it's involving the Nigerian government, it's probably okay. You tend to think that members of a government wouldn't be involved in a scam to defraud."

He also warns that these scam letters are still around. "I see them every once in a while. A client or a friend will send one in," he says. For information on how to recognize 419 scams -- 419 is the Nigerian penal code for these fraud schemes -- and for sample proposal letters, he recommends the 419 Coalition website at http://home.rica. net/alphae/419coal/.

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James Adler, Chula Vista resident and Tijuana business owner, is out $5.2 million. He fell victim to an international financial scam perpetrated by Nigerian nationals and, his court case proved, the Nigerian government.

Starting in the early '90s, business owners in San Diego and around the country started receiving official-looking letters printed on corporate letterhead. They came from Nigerians offering to enter into lucrative business partnerships. "Several years back," Adler's attorney, Richard McCarthy, explains, "I think just about every person in town who owned a business got one. It was almost as if, if you didn't get one, you were nobody. At first, they would actually show up by mail. Finally, the U.S. Postal Service, at the behest of the Secret Service, started intercepting all mail from Nigeria because thousands and thousands of letters were arriving postmarked from Nigeria and virtually all of them were scam letters. That, for a while, did a pretty good job of stemming the tide. Then the Nigerians started using fax, which obviously can't be intercepted. I wonder if e-mail is next."

According to a recently published appellate court ruling, Adler received one such letter in 1992 signed by a man named Chief Abba Ganna. "The letter proposed," the appellate ruling explains, "a 'business transaction' between Adler, Ganna, and the chief accountant of the Nigerian National Petroleum Corporation."

Adler's side of the transaction was to send four stamped and signed copies of letterhead and invoices from his Tijuana furniture business, El Surtidor de Hogar, and the number to a foreign bank account where $130 million could be deposited. (The $130 million, if it ever existed, was made up of funds stolen from the government, the letter stated, by officials of a previously ousted regime.) Adler would also pay for first-class air travel between Nigeria and Mexico for Nigerian officials coming to collect their money. For compensation, he was to be paid a 40 percent commission on the $130 million. He never received it.

Over the next year and a half, Adler made three trips to Nigeria, where he visited the home of the Minister of Finance and the offices of the Central Bank of Nigeria in the capital city of Lagos. In the presence of John Olisa, deputy governor of the Central Bank, Adler signed a contract he didn't read and was shown a bank draft for $60 million made out to El Surtidor. Olisa told Adler he would receive a copy of the contract after depositing "shortfall" funds to cover the difference in the exchange rate between the dollar and the Nigerian nira. Adler was also led to believe that his company, El Surtidor, would receive an interest in some Nigerian oil fields. "Beginning with Olisa's request," the appellate ruling states, "individuals whom Adler believed to be officials of the Nigerian government repeatedly requested payments from Adler. They described these payments variously as shortfall deposit funds, taxes, processing fees, confirmation fees, surcharges, legal fees, travel expenses, and gratification. Almost every time that someone requested a payment from Adler, that individual told Adler that as soon as he made that payment, the $60 million would be deposited into his account."

The $60 million never was deposited into his account, despite frequent mail and telephone correspondence with various Nigerian officials and two more trips to Nigeria. On his December 1992 trip, he again met with Olisa. In February of 1994, Adler hired two former congressmen, Mervyn Dymally and Jim Bates, to assist him in collecting the $60 million. Dymally went to Nigeria, investigated and returned to tell Adler that the deal was a scam. Apparently unconvinced, Adler made yet another trip to Nigeria in April 1994 and met with Paul Ogwuma, governor of the Central Bank of Nigeria. Nothing came of that and, in May of 1994, he filed suit in San Diego district court against Olisa, Ogwuma, and 15 other Nigerians, plus the Central Bank of Nigeria and the Republic of Nigeria. The suit alleged fraud, conspiracy to commit fraud, and negligence. Still, even after filing suit, Adler continued to make payments to Nigerian officials. His total loss on the scam: $5,180,000.

After an eight-day trial, district court Judge Irma Gonzalez found that the Nigerian government was not immune to suit as a foreign sovereignty due to the commercial nature of their dealings with Adler, that at least one government official (Paul Ogwuma) participated in the conspiracy against Adler, and that the government allowed co-conspirators to use the Central Bank of Nigeria offices to further the fraud. However, the court also found that the original letter to Adler proposed a criminal activity on its face in which Adler knowingly participated. And it found that Adler paid bribes totaling $2.11 million to Nigerian offices in violation of the California Bribery Law. Therefore, the court decided the "unclean-hands doctrine" barred Adler from recovering any money.

Richard McCarthy explains the unclean-hands doctrine as "a rule of equity that says if the court is presented with a situation where it prefers to leave the parties in the same situation as they were in when they came to court, it may do that. In our case, for example, we proved that the Nigerian government participated in a scam to defraud our client. Notwithstanding that, the court, in its discretion, did not choose to assist him."

Both sides appealed the court's findings, but the Ninth Circuit Court of Appeals in Pasadena upheld the district court's findings by a two-to-one majority. The one dissenting judge felt the case should never have been allowed to proceed, writing in his dissent, "The contract was criminal in nature and criminal in purpose.... As the truth has come out at trial, we have no jurisdiction now, nor had the district court. This disgraceful effort to make us parties to a criminal conspiracy should never have darkened our doors. It is time to expunge it wholly."

Through his lawyer McCarthy, who describes his client as "very old and in extremely poor health," Adler declined comment on the case. "It's the family's strong desire," McCarthy says on their behalf, "to try to put this behind them."

Though it didn't help him recover any of his money, Adler's case broke new ground; the Nigerian government was found to be party to the scam. "That was the one big noteworthy thing about our case," McCarthy explains. "Up until then, there had never been a judicial finding that members of the Nigerian government were involved in these fraud schemes. Part of our district court judge's factual findings is that we proved that. The evidence that came in at trial was very compelling. We had phone records, and, in fact, there was a bank official from London who did due diligence on part of the monies that were sent over to Nigeria -- because our client had to actually get a loan from a Mexican bank, which has a branch in London, to make some of the payments on the contract. So this bank official contacted the Nigerian commercial attaché in London. They gave him the phone number for the Central Bank of Nigeria. Of course, later we verified through discovery that the number he called was the official number for the Central Bank of Nigeria. So he called and said, 'This is who I am, and I'm trying to verify the particulars of this contract.' He was then transferred to one of the deputy governors there -- who we later confirmed to be the correct deputy governor -- who said, 'Oh yes, I'm familiar with the contract, I have it right here in front of me, all you need to do is make the payment and the contract proceeds will be released.' So we had extremely compelling evidence that the Nigerian government was telling everybody that it was a legitimate contract and the money is needed to be paid."

McCarthy says it's this imprimatur from the Nigerian government that makes these scams attractive. "They are presenting themselves as being associated with the Nigerian government. And if you're an American -- and this is worldwide, the United Kingdom has also been a heavy recipient of these things -- you tend to think if it's involving the Nigerian government, it's probably okay. You tend to think that members of a government wouldn't be involved in a scam to defraud."

He also warns that these scam letters are still around. "I see them every once in a while. A client or a friend will send one in," he says. For information on how to recognize 419 scams -- 419 is the Nigerian penal code for these fraud schemes -- and for sample proposal letters, he recommends the 419 Coalition website at http://home.rica. net/alphae/419coal/.

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