The Supreme Court of Ohio Office of Attorney Services issued a warning to lawyers about an internet scam affecting lawyer trust accounts. Multiple individual attorneys and law firms have contacted the Ohio Supreme Court about the scam.
Here’s how it works: An Ohio lawyer receives an e-mail purportedly from another lawyer for collection of a debt. A follow-up e-mail arrives from the supposed debtor (who is also the client), seemingly legitimate, who sends a bogus check (often drawn on an overseas account) for payment.
The Ohio lawyer is instructed to pay the debt by wiring some of the funds to the creditor and to keep a portion of the funds as payment for his/her attorney fees. The Ohio lawyer then deposits the check in his/her Interest on Lawyers Trust Account (IOLTA), wires funds to the creditor, and retains the agreed upon amount as attorney fees.
Meanwhile, the check goes through international banking channels until it’s eventually discovered that insufficient funds are available in the account to cover the amount. The bank debits the IOLTA for the amount of the returned check, while the lawyer has wired “good,” client funds to the purported creditor. The proposed client is often an actual Asian-based company so it sounds legitimate but the scammers have no real connection with the company at all.
To make it even more convincing, the scammers use real lawyers’ names in the initial e-mail. The moral of the story is clear: be careful.
If an unknown attorney asks you to become involved in a financial transaction involving a foreign company, be wary. Since your Trust Account funds are not your money, an attorney who disburses funds, before a deposited check actually clears the bank, is taking a very big risk. Don't do it until you can verify that in fact the international check has cleared and the funds are in your bank account.
You can report a suspected online crime by contacting the FBI at www.ic3.gov.
Ronald L. Burdge
Helping lawyers protect their clients, and themselves, since 1978.