Greenville Estate Attorney: “A Scam A Day ….”
September 25, 2010
This post is off topic, but I think it merits a discussion in case there are any attorneys out there who still don’t know about this. The issue is scam emails that make the promise of you earning a legal fee for a small amount of work, but are really targeting your IOLTA account.
These scams target attorneys and they work like this. The attorney will receive an email from a potential client who needs assistance in some sort of a debt collection or enforcement matter. The context will be a debt collection case, or a family court order enforcement case, an estate matter, or any other type of case you can think of where the attorney will demand a third party to make a payment to his client pursuant to a contract.
If you get one of these emails, it can be difficult to tell straight off that you are dealing with a scammer. If you respond to the email, you will probably immediately be sent documents that support the claim to be made. In the family law context you will receive a family court order stating that money is to be paid to your client; in the debt collection context you will receive a contract and possibly a demand letter to be sent.
The scam continues as follows. The attorney will make a demand on the third party, and low and behold will receive in the mail a check payable to the attorney in the amount of the claim. The attorney will deposit that check into the IOLTA account as required. Then the client will request the funds to be wired to his/her account, while the attorney retains a portion of the proceeds as the legal fee. It is not until days later that the attorney’s bank discovers that the check was fraudulent.
The attorney is then in lots of trouble as the missing funds need to be replaced, and if any valid instrument has been denied payment by the bank for non-sufficient funds, the attorney is going to be reported to the bar association. These scams are remarkably sophisticated, and small firms and big firms alike have fallen prey to them. I have even seen some scams that try to make you feel like you are working with another attorney on the matter, ie, that attorney is in the state where the client is but obviously needs to hire you as local counsel, but it is all part of the scam.
How does an attorney protect against this? First, never wire funds out of your escrow account in this manner unless you are certain the funds are collected, or you have no doubt that the available funds will be collected. There is a difference between funds being available and funds being collected. Second is to avoid the situation of having to deposit such funds into your IOLTA account. If you accept this type of case, do so only if the client pays you upfront. This way, you will not have to deposit funds into your IOLTA account in order to be able to receive your fee. I was able to sniff out a scammer who was trying to tell me they were owed hundreds of thousands of dollars pursuant to a contract, but would not pay me a small retainer fee to get started. Third, if you do receive a certified bank check and are in doubt as to the authenticity of the check, enlist your own bank to help make a determination as to the authenticity of the check. A phone call to the payor bank can confirm whether the check is a forgery or not. (But do not just call the telephone number printed on the check, if the check is forged, rest assured that number is fake as well.)
