By: LISA R. WILSON
Internet scams can happen to anyone, at any time, but one latest scam is targeting lawyers across the nation.
This Internet scam starts with a solicitation, primarily through e-mail, from a seemingly legitimate foreign company looking for legal representation, as they are involved with some legal issue with an American client. The foreign company states that their American client has agreed to settle a claim that they owe; whether it be money court-ordered in a Family Law case, overdue debt from a business transaction, or any other debt collection case. The foreign company tells the attorney that their client is aware that they have hired a U.S. attorney to become involved to handle the transaction.
Once the solicited attorney agrees to be contracted for the job, usually within a few days the attorney will receive what appears to be a legitimate cashier’s check from a U.S. bank, with the American client listed as the remitter, and deposits the check into a trust account. When it appears the cashier’s check has cleared, the lawyer sends the debt amount (minus his processing fees) via wire transfer to the bank account supplied by the foreign company. Once this wire has been deposited, the scam is complete, and according to bank officials, nothing can be done to retrieve the money.
How this scam works is that scammers know how to delay confirmation that the cashier’s check is fraudulent by changing the nine-digit MICR lines at the bottom of the check. And banks often make funds “available” to good customers; i.e. reputable law firms, before a check has cleared—even though technically, there is no money in the account yet. By the time it is discovered that the check is no good, the wire has usually been sent, and the lawyer is left empty-handed. Losses reported have ranged from $100 to over $800,000.
This scam is unfortunately becoming so common that the Comptroller of the Currency Administrator is now informing banks and other financial institutions about these foreign scams, and the fraudulent cashier-type checks involved. Banks that have been targeted as remitters of these fraudulent cashier’s checks include Citibank, Wells Fargo, and Wachovia. In a memo from the administrator, there are recommendations to banks that include “methods of identifying potentially suspicious items, and criteria for placing holds on deposits.” The U.S. Secret Service agency is currently investigating similar cases totaling approximately $23 million.
In this economy, Internet scams are not going to stop anytime soon, but there are ways to avoid becoming a victim. Know who you are doing business with. If you
receive a large check, know where and from whom that money is coming from. Take time to get to know your clients. Ask questions, and be up front about
needing confirmation that the contact is who they are and what they claim to be. Also, be wary of the need for speed in processing the transaction and wiring any money. Get to know your clients’ case in thorough detail.
If you are an attorney who has been contacted by what looks like such a scam, report the incident immediately to the Internet Crime Complaint Center at www.ic3.gov. If money has already been lost, notify local police or the FBI, as well as the Federal Trade Commission at uce@ftc.gov.
