Wisconsin lawyers regularly receive email messages from prospective “clients” whose goal is only to trick the lawyers into transmitting funds to the message senders. Learn how to spot such messages so that you won’t fall for this 21st-century fraud.
In the September 2010 Wisconsin Lawyer, I wrote about various scams and frauds targeting lawyers. A year later, the scammers are still at work and are as prevalent as ever, maybe more so. On occasion, some lawyers have let their guard down and been victimized by fraudulent schemes.
Ken Axe of Lathrop & Clark, Madison, has been contacted online by scammers several times. He says the apparent increase in fraudulent contacts with lawyers does not surprise him. “I think part of it is the recession. Lawyers are targets because many of them need the business in this difficult economy and scammers know that. Some lawyers probably aren’t as cautious as they might otherwise be in better economic times.”
So, it’s time for an update – and a reminder to stay away from these inquiries.
No lawyer is immune to scammers. Lawyers throughout the United States and Canada, including in Wisconsin, are still being targeted. Business loans, commercial litigation, family law, and real estate appear to be the areas of law most commonly used by these scammers.
One recently reported scam targeted Milwaukee-area lawyers. A person claimed to be a woman who needed the help of a lawyer to collect a divorce settlement from her ex-husband, who allegedly lived in Brookfield. The email sender used different names, including Kara Muneoka, Elizabeth Nakamura, Peggy Higashi, Beverly Kawashima, and Rita Takahashi.
In May and June, more than two dozen lawyers in Alabama, California, New Mexico, Ohio, Texas, Wisconsin, and Wyoming reported receiving emails similar to the one from the purported Elizabeth Nakamura. These are similar to past divorce- and collaborative-family-law-related fraud attempts.
An example of the fraudulent email messages appears below. Different email addresses are used, including firstname.lastname@example.org; email@example.com; firstname.lastname@example.org; email@example.com; and firstname.lastname@example.org. The message usually reads something like this:
My name is Elizabeth Nakamura. I am contacting your firm in regards to enforcement/collection or possible litigation of divorce settlement with my ex husband Collins Nakamura who resides in your jurisdiction. If you are in the position to represent me at the moment kindly advise immediately.
Real estate lawyers in Wisconsin also have been targeted. The following email message and ones similarly worded have been circulating recently.
I want to purchase a property and I need an attorney to represent me as I do not know much about this procedure, please get back to me so I can give you more details about the property. I anticipate your immediate response. Thank you.
Emails like this have also come to lawyers from someone purportedly named Douglas Parker.
Patent attorney Jim Lowe, New Berlin, was recently aggressively targeted by someone claiming to need help with a debt collection. The email read as follows:
From: Cheng Wu <email@example.com>
Subject: LEGAL ASSISTANCE NEEDED.
Date: July 1, 2011 11:23:59 AM CDT
To: [Mr. Lowe’s email address.]
This is an official request for your legal consultation services on behalf of Wu Co. Ltd. We are based in China and also have a local office in the UK. Our principal activity is manufacturing of stationary/office equipments, as well as being professional exporter of various stationery items. Other activities include constructing, leasing and selling residential and commercial buildings and provision of investment services.
We are presently incapacitated due to international legal boundaries to exert pressure on our delinquent customers in your locality and we request for your services accordingly. We got your contact information via lawyer/attorney online directory, as a result of our urgent search for a reliable firm or individual/firm to provide legal services as requested.
Please accept my sincere appreciation on behalf of our company in advance for your willingness to render your services as we look forward to your prompt response to our request.
Mr Cheng Wu (UK office Managing Director)
Wu Co. Ltd,
Surrey, KT22 8UX
Lowe responded by email and suggested that further communication be by a phone call or video call. Instead, he received another email stating that he would be receiving a check in the amount of $388,900, along with a check for his retainer fee of $2,000. Lowe replied, again by email, that he did not agree to receive any funds, and any checks would be destroyed. They arrived anyway.
Lowe says he “knew that what was happening was probably a scam.” He says, “Although I was being very cautious, the person contacting me kept pushing. Even after receiving the checks, I received a phone call from a second person, who identified himself as Richard Smith. He had a Chinese accent. He asked if I deposited the checks. When I told him I don’t deposit checks from people I don’t know, that ended the conversation.”
Lowe then called the bank whose name was on the checks, but found no one at the bank interested in pursuing it. “The routing numbers were confirmed as correct. The check was drawn on the bank cashier’s account and could not be confirmed or denied as a real check. It had watermarks, everything. I thought the bank might want to be aware of this, thinking it would be a bad thing if one of these fake checks got through. But I got nowhere with them.”
Sally Anderson, vice president – claims at Wisconsin Lawyers Mutual Insurance Co., says the fraudulent checks are well done. “There are examples of it taking the banks up to a month to determine the check is bad, and that can happen especially where the funds are international, and not subject to FDIC regulation.”
Don’t be a Victim
Why have some lawyers fallen victim to these scams? Anderson says several policyholders she has spoken to were wrestling with whether they had a fraud or a real client. Lowe agrees. “It seemed wrong to just ignore a client request of this nature.”
Anderson says if you get an inquiry you’re not sure about, and you don’t want to simply ignore it, there are several things to consider. “Why does the ‘client’ need to have the funds run through you? Is there any logical connection that would have brought the person to your firm? Why a wire transfer to them? Have you done any ‘work’ for the ‘client’? If not, and if you are just a clearinghouse, be extra wary.”
Lowe says, “The first emails seemed sincere. And my questions were generally answered. The lack of ultimate cooperation, though, was the tip off. Lawyers should just use common sense. Get to know your client. If your client won’t even call you when you ask them to, then something is not right.”
Axe recently received an email inquiry from Pennsylvania. “It looked pretty real and I asked for documentation. It was sent and looked authentic. But of course, something didn’t feel right about it. The tipoff was when I got the same inquiry again, as though I had never corresponded with this person.”
Axe adds that there are some obvious signs that make ignoring these inquiries easy. “If the grammar is bad, that’s an obvious signal. The old adage, ‘if it’s too good to be true, it probably is’ also applies to most of these things. Sometimes, they’re willing to send you more money than you’re asking for. Why would anyone want to do that?”
He says scammers will often get the name of a real person and use that in their inquiry. In the case of one of the inquiries to Axe, the scammer used the name of someone who happened to be his neighbor. The inquiry came from someone purportedly named George Graham. “I went over and showed it to my neighbor, so he knew what was out there.”
Axe also says scammers find the names of other lawyers and claim those lawyers provided the referral. Finally, Axe cautions, “If you correspond with someone, especially by email, make sure you haven’t assumed the representation until you know the client.”
Some lawyers have reported receiving a message from “Larry Mason,” seeking to retain a lawyer for a commercial litigation matter. It appears similar to other debt-collection scams made under the names Richard Abramovic and David Lawson. Here is the email message:
From: Larry Mason firstname.lastname@example.org
Subject: New message
I am inquiring about the possibility of your firm representing me in the litigation of a loan matter.
Amount Paid $58,000.00
Balance $230,000.00 plus 10% annual interest.
If you or your firm can be of any assistance, please get back to me at your earliest convenience so I can send you related documents.
Taking the Bait Can Hurt You
It’s easy to think you would never fall for one of these scams, but unfortunately, some lawyers have taken the bait. Aside from the financial problems that could result, there’s always the possibility of a malpractice claim.
Anderson tells of one lawyer who was contacted by an offshore company to collect an account owing from a Wisconsin company.
“The company contact asked for an engagement letter, and returned a signed copy via email. Several days later, the lawyer received a cashier’s check, payable to the law firm from the delinquent company. The money was deposited in the lawyer’s trust account.
“The representative from the offshore company had been emailing that these funds were necessary to pay obligations of the company in the Far East, so the sooner the insured could get the funds out, the better. The lawyer was instructed to keep the agreed-upon fee, and to wire transfer the remaining funds to an account in Japan. The lawyer made arrangements with his bank to do so. The wire transfer amount was $280,000. Two days after the wire transfer was authorized, the bank called to report that the certified check was fraudulent.”
It is unlikely that a lawyer’s malpractice insurance policy would cover the lawyer’s loss in this situation, because there is no “client” making a claim.
Trust Your Gut Instinct
So what should you do if you receive a suspiciously worded email?
- If you are being encouraged to wire funds, stop and investigate! Why is it necessary for you to be part of this deal? If a check to you is okay, why isn’t a check directly to the “client” okay, too? Why are you being paid?
- Is the fee too good to be true for doing nothing except transferring money? If so, it probably is not a legitimate deal.
- Is this work you typically do?
- Have you independently verified the client’s identity, using other resources, not those provided by the “client”?
- Have you contacted your bank to ask it to check on the sender and the sender’s bank? Banks have fraud officers, and you can consult yours.
Beware of Hackers
Pretending to solicit legal representation is not the only fraudulent activity targeting lawyers. A year ago, I also wrote about hackers getting into lawyers’ bank accounts. The Florida Bar Association last year reported a case in which a solo practitioner in that state discovered someone hacked into her computer files, gained control of her passwords, and emptied $35,000 out of her trust account.
Thomas J. Watson, Marquette 2002, is senior vice president and director of communications at Wisconsin Lawyers Mutual Insurance Co., Madison. Contact him at Tom.Watson@wilmic.com.
The attorney hired computer consultants to help her determine what happened. The consultants told her the malware on her computer system most likely came in the form of a benign email and captured her passwords as she logged into her trust account, even though she had antivirus software.
What’s worse is that the bank in that case insisted it had no responsibility in the theft. Many legal experts believe that if the bank has security measures in place and authorization for the transfer comes from the customer’s computer, the bank is not liable for the loss.
The moral of these stories is the following: be wary (and extremely skeptical) of clients who make contact only by email, especially if they reside in foreign countries. And be careful with your online banking system, particularly when it comes to your trust accounts.
Clearly, lawyers are still popular targets. Hundreds of law firms around the country, including some in Wisconsin, have reported email scams. If you are contacted, consider the warning signs, remember the precautions you should take, and make sure you know who you’re dealing with. When in doubt, don’t reply.