Fraudulent schemes designed to deprive people of their money are nothing new, and most people have been on the receiving end of an email that can easily be disregarded as a hoax. Con artists have become more sophisticated, though, and a new scam targeting attorneys could cause significant financial losses for those who don’t employ stringent fraud protection measures.
Recently, one Maryland firm was the target of this scheme. While the firm ultimately discovered the scam before suffering any losses, the experience should serve as a cautionary tale for other attorneys.
The scam began with an email requesting that an attorney review a lease for medical equipment. It read:
I want to inquire if you review medical equipment lease agreements. I found your contact details from a referral service online.
Kindly refer me to another reputable attorney if this is not within your line of practice.
The attorney replied that he had relevant experience in that particular area of the law.
The scammer then sent a second email that contained numerous details regarding the lease, including the payment amounts, type of equipment, duration of the lease, and the identity and address of the company that wanted to lease the equipment. The scammer also asked the attorney to forward a retainer agreement if there were no conflicts and he wished to proceed.
Unlike many scams, the emails did not contain misspellings, unusual phrasing, typographical errors, or any other red flags. Additionally, the company had an online presence and appeared to be legitimate. As such, the attorney proceeded to send a retainer agreement, which was signed and promptly returned.
A second actor then entered the scheme, posing as the broker. He emailed the attorney, asking that he hold the initial lease payment in a trust account, until the lease was finalized. The broker asked for wiring instructions, but sent the funds in the form of a check via FedEx. The attorney found this somewhat unusual, but deposited the check into his IOLTA account regardless.
The broker then asked the attorney to send the money to a bank in Mexico via wire transfer after deducting his retainer fee, noting that funds must be sent immediately. At this point, the attorney became suspicious, and questioned the broker about the use of a Mexican bank. The broker offered the explanation that he was purchasing new equipment which was manufactured in Mexico. The attorney also inquired about the urgent need to transfer the funds, noting he had not even begun the lease review and the check had not cleared. Before the broker could respond, the attorney’s bank alerted him that the check was fraudulent. Had the bank not alerted the attorney in time, though, it could have potentially cost him thousands of dollars.
While the attorney was able to discern the warning signs that his client was in fact a con artist, not all attorneys will be as alert. There are numerous best practices attorneys can employ when vetting potential clients to avoid being defrauded. Most importantly, attorneys should always wait until funds clear before agreeing to transfer money to another party. Additionally, they should also check the validity of email addresses and companies involved in a transaction.
They should also analyze the language and content of the email for red flags. If emails are being sent from multiple unrelated accounts, or address the attorney in a vague manner, it is possible that they are being used to conduct a fraudulent scheme. For example, in this instance the initial email was addressed to “counsel” and the emails were sent from firstname.lastname@example.org and email@example.com.
It should go without saying that many of these problems can be avoided by taking one’s time and paying attention to detail, but that may be easier said than done in today’s fast-paced environment. These scams give new meaning to the old adage that “time is money” – it could end up costing a lot of money if you don’t invest some time up front.