E-Mail Scams and Lawyer Trust Accounts
Internet fraud schemes are increasingly
targeting lawyers and law firms and the banks where lawyers have their client
trust accounts. While many of these scams appear outwardly questionable and, as
a result, are usually ignored, there have been reported cases throughout the
country where lawyers have fallen prey to these scams resulting in the loss of
hundreds of thousands of dollars out of their respective trust accounts. See ABA
Journal, Six Indicted in $32M Internet
Collection Scam That Snagged 80 Lawyers (Nov. 22, 2010). Scam artists can be persistent, creative and
determined; their schemes can be elaborate and sophisticated. Lawyers should be
aware that these scams are out there, to be alert to the possibility of fraud,
and to proceed with caution and vigilance in dealing with potential clients
whose only contact with the lawyer is via the Internet or who request legal
representation that requires the use of the lawyer's or law firm's trust
account to receive and disburse funds. There are many variations on how these
schemes are set in motion but the motivation is the same: to get the lawyer to
send them money.
The Way it Works
The most common scenario involves an alleged overseas company that contacts
a
Red Flags
- A prospective client e-mails the lawyer likely
through a blast e-mail (e.g., addressed to “Dear Counselor” and vaguely
refers to the lawyer's practice as “your jurisdiction”);
- The requested representation usually involves
the collection of a debt or other obligation;
- One of the parties is out of the country;
- The debt or other obligation resolves itself
quickly and easily without much effort by the lawyer;
- Lawyer receives what looks like a very
convincing cashier’s or certified check (a bank may tell the lawyer that
the instrument looks “good”) for deposit in the trust account; and
- “Client” wants the funds, minus the lawyer’s
fee, immediately wire transferred to an out-of-the-country account.
Avoiding the Scam
- Wait for a check, even a cashier′s or certified check, to clear
before using the money; provisional credit by your bank is not sufficient.
Although your financial institution may quickly make funds available or
may tell you that the deposit has been credited to your account within a
few days after the deposit (i.e.,
provisional credit), that does not mean that the check is good or has
cleared through the original issuing institution. That can take many days.
Sometimes it can take weeks to discover a very good forgery, and the check
won′t bounce until then. Therefore, verify the authenticity of the check
with the issuing bank and confirm with your depository bank that the check
has gone through the check clearing process.
- Be suspicious of a client who insists that you send funds by wire
transfer or otherwise pressures you to act quickly before you know the
payment you received is good. A lawyer who decides to wait for final
clearance of a check, before disbursing funds, is acting properly and is
not in violation of a lawyer's duty of prompt delivery of trust funds.
- Know with whom you are dealing before accepting the representation.
Take reasonable steps to verify
that the “client” is who they say they are, particularly if there are
generally no face-to-face communications with the client. Also, verify the
information the prospective client provides concerning third parties or
even a source of the referral to you. If you are dealing with a stranger,
make sure you have that person′s name, address and phone number, then
verify those independently using reliable online directories or other
third party sources.
- Your deposits are your responsibility. If you have deposited a
check that then bounces, the bank may withdraw the original dollar amount
credited to your trust account and it may result in the conversion of
other clients' funds in your trust account. If your trust account does not
have enough money to cover the deduction, the bank may freeze your trust
account or the bank may sue you to recover the funds. See Wachovia Bank v. Bartko, No. 1:08-CV-2636 (
If You Receive A Counterfeit Check
If you think that you have received a counterfeit check, do not deposit it; contact your bank.
In addition to contacting the appropriate bank, you may report:
·
Scams generally
- Federal Trade Commission (FTC): by telephone at 1-877-FTC-HELP or file an
electronic complaint via their Internet site at www.ftc.gov
·
Internet-based
scams - Federal Bureau of Investigation (FBI)
·
Mail-based scams
- U.S. Postal Inspective Service by telephone at 1-888-877-7644, by mail at
U.S. Postal Inspection Service, Office of Inspector General, Operations Support
Group, 222 S. Riverside Plaza, Suite 1250, Chicago, IL 60606-6100 or via e-mail
at https://postalinspectors.uspis.gov/forms/MailFraudComplaint.aspx
If you have a complaint or problem involving a check written on or deposited in an account at a national bank, and you cannot resolve the problem with the bank, contact the Office of the Comptroller of the Currency’s Customer Assistance Group, by calling 800-613-6743 or by sending an e-mail to: customer.assistance@occ.treas.gov.
For further information and tips on recognizing and
avoiding fake check scams, please go to:
Comptroller
of the Currency - http://www.occ.treas.gov/ftp/bulletin/2007-2.html;
Federal
Bureau of Investigation - http://www.fbi.gov/majcases/fraud/fraudschemes.htm.
For general questions or
concerns about the ethical responsibilities of lawyers in
Attorney Registration and Disciplinary Commission of
One Prudential Plaza
130 East
Chicago, IL 60601-6219
312/565-2600 or 800/826-8625
217/522-6838 or 800/252-8048
Web Site: www.iardc.org