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Noteworthy > VSB NEWS
Internet Scams Target Lawyers
by James M. McCauley, Ethics Counsel, Virginia State Bar
The Federal Bureau of Investigation continues
to receive reports of counterfeit
check schemes targeting U.S. law firms.
In the most recent series of schemes,
scammers send e-mails to lawyers in
which the scammers claim to be overseas
and seeking legal representation to collect
delinquent payments from parties in
the United States. Often, the scammer
will cite a connection with a legitimate
company. The law firm is asked for its
retainer agreement. The “client” returns
the signed agreement along with invoices
reflecting the alleged amount owed and,
shortly thereafter, a check payable to the
law firm. The firm is instructed to
deduct its legal fee, including any other
expenses associated with the transaction,
and wire the remaining funds to banks
in Korea, China, Ireland, Canada, or
another country. By the time the check is
determined to be counterfeit, funds have
already been wired overseas.
In one version of the scheme, the
scammer identifies himself or herself as
a corporate officer of a legitimate overseas
company. The con artist sends a
legitimate-looking e-mail to the law firm
seeking legal assistance in the collection
of a debt from a business or other debtor
in the lawyer’s geographical area. A
proactive call to the “debtor” will generally
reveal that the “debtor” has not done
business with the overseas company and
that the alleged debt is fictitious. But if
the law firm agrees to assist the “client,”
it will receive the signed engagement letter,
and falsified documentation.
Typically, the scammer will shortly
thereafter send the law firm an e-mail
stating that the debtor has agreed to settle
the debt to avoid litigation and that
the debtor has agreed to pay a specified
amount, usually a six-figure payment,
out of which the law firm is to take its
fee for the collection. A cashier’s check is
sent to the law firm payable to the law
firm, with the remitter’s name being that
of the “debtor” company. The law firm
then deposits the check, keeps the agreed
upon legal fee, and, after confirming
VIRGINIA LAWYER | April 2011 | Vol. 59
with the law firm’s bank that the subject
funds are available, wires the remaining
money to an overseas account designated
by the scammer. The cashier’s
check mailed to the law firm turns out to
be counterfeit; no funds were ever paid
for it. By the time the law firm is
informed the check is not legitimate, the
wired amount has been collected, and
usually the foreign account into which
the funds were wired is closed and cannot
be traced to the actual scammer.
In another version of the scheme, the
fraudulent client seeking legal “representation”
describes herself as an ex-wife “on
assignment” in an Asian country, and she
claims to be pursuing collection of
divorce settlement monies from her exhusband
in the United States. The law
firm agrees to represent the ex-wife, sends
an e-mail to the ex-husband, and receives
a “certified” check for the settlement via
delivery service. The ex-wife instructs the
firm to wire the funds, less the retainer
fee, to an overseas bank account. When
the scam is executed successfully, the law
firm wires the money before discovering
the check is counterfeit.
What should lawyers do to avoid
falling prey to these scams? First, be
mindful that you have received an unsolicited
e-mail from a company or person
about whom you will probably know
nothing and with whom you will not
have any prior contact or introduction.
Second, beware of statements in the email
that say that you were recommended
by the bar association, as bar
associations do not usually make referrals
except through a bona fide lawyer
referral service — in which case you
should have received a communication
from that lawyer referral service. Third,
the purported client will want you to act
quickly and will ask nearly every day
when the funds have been delivered to
you and when you will deliver the funds
to the “client.” Fourth, a “cashier’s check”
drawn on a reputable bank will arrive
very quickly with little or no effort on
your part. Have an experienced banker
look at this instrument, as there are signs
he or she may recognize and specific
inquiries that can be made that will
reveal the check as fraudulent. Do not
deposit the cashier’s check into your
trust account unless you can obtain verification
that the check is legitimate; or,
alternatively, advise the “client” that you
will not wire any funds unless and until
the check has cleared. Consider depositing
the cashier’s check into an escrow
account separate from your Interest on
Lawyers’ Trust Accounts or general trust
accounts until the check’s status can be
determined. Your bank may tell you that
there are funds available for you to disburse,
but this does not mean that the
check has cleared. If you disburse and
the check proves to be counterfeit, the
bank will charge back against your
account for the loss. Finally, if you suspect
you have been scammed or are
being targeted for a scam, you should file
a complaint with the Internet Crime
Complaint Center at http://www.ic3.gov.
You may also call the Virginia State Bar’s
Legal Ethics Hotline at (804) 775-0564.
Some lawyers ask if it is ethical to
report the scam after they have agreed to
undertake representation, citing the duty
to keep client information confidential.
Although a formal opinion from the
Standing Committee on Legal Ethics has
not addressed this issue, the communications
by and between the Internet
scammer and lawyer are not protected as
confidential. The initial uninvited e-mail
communication from the scammer and
the communications that follow are not
for the purpose of obtaining any legal
advice or legal representation. The scammer
does not have any “reasonable
expectation of confidentiality” in the
communications used to obtain the
lawyer’s money under false pretenses.
Therefore, reporting such information to
the appropriate law enforcement authorities
is not a breach of the lawyer’s duty
of confidentiality.
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