Due Diligence Fee Scam: Paying for Work That Is Never Performed

Charging fees for due diligence is a common feature of corporate advance-fee fraud. The term 'due diligence' lends professional credibility to the fee request, but complainants report that no due diligence work is actually performed. This page examines the pattern in the context of Corinth Group allegations.

Legitimate vs. Fraudulent Due Diligence Fees

In legitimate corporate finance, due diligence is a comprehensive investigation into a company's financial position, operations, legal compliance, and business prospects. It involves teams of lawyers, accountants, and industry specialists producing detailed reports. Legitimate due diligence fees are: (1) proportionate to the scope of work; (2) supported by engagement letters from the professionals performing the work; (3) itemised so the client can see what they are paying for; and (4) paid directly to the professionals performing the work or held in escrow.

In the advance-fee variant, “due diligence fees” are a justification for collecting upfront payments. The due diligence is either never performed, or consists of minimal desktop research that does not justify the fee charged.

The Corinth Group Due Diligence Pattern

Complainants against the Corinth Group describe being charged substantial fees for due diligence and related preparatory work. The fees are specified in engagement contracts (LEF) and must be paid before the financing transaction can proceed. After payment, complainants report [Third-party complainant accounts]:

• No due diligence report is produced or shared with the client
• No third-party professional firms (law firms, accounting firms) are engaged on the client's behalf
• No evidence of work product corresponding to the fees paid
• Delays are attributed to external factors (“market conditions,” “regulatory requirements,” “bank policy changes”)
• The engagement eventually terminates with no financing arranged and no fee refund

The Role of Professional Language

The use of terms like “due diligence,” “compliance review,” “legal structuring,” and “bank introduction” creates an impression that the fees are paying for genuine professional services. When combined with Swiss corporate addresses and references to European banking relationships, this language constructs a credible-seeming engagement. The Corinth Group's website (cgoch.com) and marketing materials reinforce this with professional design and industry terminology [cgoch.com archived content].

Protecting Yourself

Before paying any due diligence fee: (1) Request specific details of who will perform the due diligence; (2) Ask for the engagement letters from the law firm or accounting firm that will do the work; (3) Insist that fees be held in escrow until work is delivered; (4) Request examples of due diligence reports produced for previous clients; (5) Verify that the arranging entity has completed similar transactions — ask for reference clients; (6) Check the entity's regulatory status with the relevant financial authority.

Key Facts

• Legitimate due diligence produces detailed reports from qualified professionals
• Complainants report no due diligence work product delivered despite fees paid
• No third-party professional firms engaged on clients' behalf
• Professional terminology may give an impression of genuine services not supported by documented outcomes
• Always insist fees be held in escrow until deliverables are produced
• Request engagement letters from professionals who will perform the work
• Check entity's regulatory status before paying any fees

Complaint Reports

People Involved

Related Entities

Related Investigations