While practicing lawyers are meeting challenges caused by COVID-19, scammers are seeing opportunity.
OBLIC recently learned of a new scam whereby the fraudster, posing as a client, retained the Insured law firm to sue the fraudster’s former employer for sexual discrimination and wrongful termination after his severance was purportedly withheld.
The fraudster returned the fee agreement and a set of doctored letters and emails between himself and his employer. Shortly after returning the fee agreement a person claiming to be an officer of the employer (a participant in the fraud) contacted the firm to confirm the six-figure liability to the fraudster. The insured received a check nearly overnight, which was deposited into the law firm’s IOLTA account. The law firm waited
a short time for the funds to be made available (but not long enough to ensure good funds were received) and then
WROTE A CHECK
rather than wiring the funds. Before the check they wrote could be processed, they received notice that the bank declined the fraudulent check and the firm issued a stop payment. Thankfully, nothing
was lost since the funds were to be sent via check and not
The fraudster employed the names of real people and real companies, and used an email address that closely resembled that of a recognized employer in the area. He doctored emails that appeared to be communications between executives of the employer and himself. Despite the effort that went into the scheme, there were red flags throughout. The biggest red flag was the email from the employer.
Before the insured sent a notice of representation, the purported employer contacted the insured to completely admit liability and alert the insured that a check would arrive the next day at the insured’s office.
The best safeguards for these fraudulent check schemes are to inform the purported client that you will have to wait until good funds have been actually received into your account from the issuing bank, which can be at least ten or more business days, to confirm the issuing check and account are valid, before proceeds can be paid over by your firm. Then wait until such occurs before issuing any payment from your account. When informed of these steps, the fraudsters will often disappear.
When dealing with a large check and a request for wiring from the purported client,
please consider using this bank confirmation form
. If nothing else, it will help put the bank on notice that you are seeking confirmation that the check was actually negotiated and accepted and not just that the funds are made available. And, always remember, if it is too good to be true, it probably is.