CBJ - January 2012 #07. Counterfeit check scams continue to target law firms.


California Bar Journal


CBJ - January 2012 #07.

Counterfeit check scams continue to target law firms

The California LawyerJanuary 2012Counterfeit check scams continue to target law firmsA lawyer receives what appears to be a legitimate solicitation email from a prospective client seeking representation in a debt collection matter. The terms of a relationship, including a fee agreement, may be negotiated. The lawyer then receives what appears to be a valid cashier's check, supposedly a settlement check from a debtor, from a reputable bank. After the money is deposited in the lawyer's client trust account, the "client" asks that the funds, less the fees, be wired to a foreign bank.

The cashier's check was fraudulent and the lawyer is left holding the bag.

This scenario continues to be replayed as part of a sophisticated Internet scam that often targets collection lawyers. The Santa Clara District Attorney's office recently was alerted by a local law firm that was contacted by a "client" who said his east coast company provided materials to a local medical company that hadn't paid its bill. The out-of-state company provided legitimate-looking documents, such as contracts and invoices, to support its claim, and the law firm found a website for the client's company. A retainer agreement was executed.

The client said it would make a last ditch attempt to collect the debt before authorizing a lawsuit. Two days later, the firm received a $270,000 cashier's check from the medical company. The client told the firm to withhold its fee, plus a little extra, and wire the remaining funds to an account that turned out to be overseas. Despite pressure from the client for the money, the law firm waited for the check to clear.

That never happened.

The alleged debtor was a real company that was not involved with the "client," who remains unidentified and may be located overseas. According to Santa Clara County Deputy district Attorney Mike Fletcher, the suspects "generated very authentic-looking documents, created a website and are executing a sophisticated scheme with the potential to significantly harm law firms."

But in addition to winding up with an overdrawn bank account, victims can face...

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