Sophisticated Scams Target Attorneys

October 7, 2008 - Attorneys nationwide have become the targets of sophisticated email scams that feature seemingly credible requests for legal representation from con artists posing as officers of overseas businesses. Ultimately the scammers rely on fake cashier’s checks to bilk their targets before the checks come bouncing back.

The California Bar Association reported in its July magazine that several of its members have been victimized by schemes that begin with a solicitation for legal representation via email (fax, letter and telephone scams have also been reported). The article profiles one such scam that featured what appeared to be a bona fide cashier’s check from a well-known U.S. bank that the intended victim then deposited in his client trust account. Fortunately for this attorney, the scam was uncovered before any of his funds were actually transferred to an account provided by the con artist.

A Georgia lawyer fared far worse, as this Law.Com article explains.

The ABA has also warned attorneys in an August 26 ABA Journal article to be on the lookout for scams involving counterfeit checks, which often include steps that disrupt normal check processing procedures:

Ted Kitada, senior counsel for Wells Fargo & Co., told the bar journal that the scammers change the nine-digit numbers at the bottom of the check so that it is wired to a different bank than the one named. That causes a delay in processing. Since lawyers are good clients, banks often make funds available even if a check has not cleared.

But even if this particular gimmick isn’t used, the scammers have other ways to accomplish the same result. The Comptroller of the Currency (OCC), part of the U.S. Treasury Department, offers this advice whenever you are not 100% certain about a check’s authenticity:

… contact the issuing bank directly to report receipt of the check and to verify authenticity. Only the issuing bank can verify the authenticity of the item. When contacting the bank, do NOT use the telephone number provided on the instrument, as this number is generally not associated with the financial institution but rather with the scam artist. To locate a bank's contact information, you can check the FDIC's website.

The OCC issues alerts regarding counterfeit official checks on a weekly basis on its website. Information about the proliferating (and rapidly mutating) scams is also available from several federal agencies, including the following resources identified by the OCC:

• US Postal Inspector Service - by telephone at 1-888-877-7644, by mail at U.S. Postal Inspection Service, 222 S. Riverside Plaza, Suite 1250, Chicago, IL 60606-6100 or electronically at https://postalinspectors.uspis.gov/forms/MailFraudComplaint.aspx
• Federal Trade Commission (FTC): by telephone at 1-877-FTC-HELP or file an electronic complaint via their internet site at www.ftc.gov
• Federal Bureau of Investigation (FBI) Internet Fraud Complaint Center (Scams that may have originated via the internet): www.ic3.gov

The problem is by no means limited to the U.S. LawPRO, a Canadian firm that provides risk management, claims prevention and law practice management information to Ontario lawyers, recently noted on its website that:

Over the last several months there has been an epidemic of frauds targeting lawyers, both in Ontario and in other provinces right across Canada. LAWPRO has seen a significant number of fraud related claims, and we are also aware of many lawyers that have narrowly avoided being victims; sometimes due to their own diligence, sometimes only by good luck. A big part of being vigilant is being aware of the common fraud scenarios. Fraud is no longer solely a concern for real estate lawyers. Litigators and corporate/business lawyers need to be aware that they are now being targeted. There are two common fraud scenarios we are seeing: business loan fraud and debt collection fraud.

LawPRO published an instructive article this summer detailing examples of scams (and highlighting effective steps taken by some lawyers to protect their interests).

Because the scammers continually develop new variations and techniques, there is no one-size-fits-all shield available to fend them off. LawPRO advises that the best response is for attorneys (and their staffs) to educate themselves and to ask lots of questions to avoid becoming the scammers’ next victim.