Lawyers all over the country are being targeted by a collection-case scam. The Mississippi Bar has just sent out a warning:
An internet scam targeting attorneys in states around Mississippi and across the country is prompting warnings from bar associations and federal authorities. Please exercise extra diligence when presented with circumstances similar to those noted below.
The scam works like this: a law firm receives a referral from someone posing as an out-of-state attorney to enforce a simple contract dispute or collect a debt from a local corporation owed to a foreign company. The firm, believing it is exercising due diligence, confirms that the prospective client is a real company, then enters into a fee agreement. It sends a demand letter, and later receives a cashier’s check made payable to the law firm. The client is pleased and directs the law firm to wire the money, after deducting its fees and costs. The law firm deposits the money in its client trust account, waits for the check to clear the local bank, and wires the money to the client. Things fall apart when the bank on which the check is drawn notifies everyone that the check is a counterfeit fraud – by which time it is too late to stop the wire transfer, and the law firm’s client trust account is now out the proceeds, which the firm has to replace. The scam works because the law firm erroneously believes that the check is good when it clears the law firm’s bank. That is not the case. The first clearance is only provisional. The bank on which the check is drawn has additional time under the law to verify the check.
An article on the Wisconsin Bar site from April has more. As far back as January, Law.Com reported that lawyers in Texas, Oklahoma, Illinois, New Jersey, New York, Pennsylvania, California, and the Virgin Islands have received the email. The email identifies a real lawyer in New Jersey and a real Chinese Company that is legitimate (and is a client of the New Jersey lawyer!). The reply email address for the New Jersey lawyer is fake.
Didn’t some law firm in Texas fall for the scam and lose big money?
Here it is:
http://www.law.com/jsp/article.jsp?id=1202427717175
I have been deleting all such emails I receive. If I do not have an ongoing relationship with a client, with established protocol, then I do not respond to cold emails requesting legal representation. They all sound pretty bogus. But, even if they appeared more legitimate, I would still be highly skeptical. Most of my new client relationships have begun with a phone call or personal visit, then are followed up by written and email correspondence. Maybe I am a prude and might miss out on a legit case one day by ignoring such cold email representation requests, but I’ll take my chances.
Thanks for the info NMC.
I been getting 3-5 emails like this every weekday for about six weeks. All of them identify a Chinese company.
I get them pretty steadily and have been getting them for a long time. I never made an attempt to do anything to check them out, just deleted and moved on.
A bulk email folder/bin is a very good thing to have. Downside of it that legit emails end up there too somtimes. My bulk mail folder is trainable, learns by what I mark as spam!
Bradley Arant was reported to have gotten hit for over $400k on this scam.
http://www.abajournal.com/weekly/bradley_arant_reportedly_scammed_out_of_more_than_400k
I have a couple of clients right now targeted by a similar scam via a Secret Shopper solicitation, and it’s been around in a variety of forms for years now. This is very clever variant. It’s interesting to me that the scammers have moved up the food chain. I will be curious to see if this prompts some legislation now that influential folks are getting scammed.
In regards to legislation, the “Can Spam” act could simply be enhanced to include such solicitations via email. There are already ample laws covering fraud, counterfeiting, forgery, mail fraud, wire fraud, bank fraud, etc.
So many of the reports on this scam are inaccurate. The suspects are not in Asia, however their money laundering accounts are. The Asian’s that control those accounts charge the scammers between 20-30% of the amount passed through.
The actual scammers are highly concentrated in the Toronto area as well as in the UK. The first and most successful gang operating this scam is now ‘sharing the territory’ with 3 other copycat groups. The scam is now also in the wild, as non-associated scammers and much smaller groups are now attempting to get in on the success.
Attorney to attorney referrals are not the only ploy utilized. More often than not, the scammers contact the firms directly posing as a possible client.
Also probably inaccurate, was the report of a “quick arrest” by the FBI. We are attempting to verify this.
What we find interesting is that other than a few state bar associations making the attempt to notify their members, most were slow on the uptake. When we broke the story to the ABA last year, it was assumed that word would filter down. Unfortunately, this was not the case.
It took the preventable loss of millions for action to be taken. Millions more will be lost unless all are advised of the scam.