State Bar of Texas Blog

New IOLTA Scam Targeting Attorneys

Texas attorneys should be extra-vigilant regarding potential scams involving IOLTA accounts. We recently received reports of numerous email messages addressed to employees of National Bankruptcy Services bearing forged service@citibank.com return addresses and from Gil_Norris@NBSDefaultServices.com, claiming to represent the National Bankruptcy Services, LLC. Messages allege that the recipient’s IOLTA account has insufficient funds to pay an outstanding check and includes a .zip file attachment purportedly containing additional information and presumed to contain malware. 

There is a strong possibility that these messages are part of a broader phishing attack targeted to legal professionals. Email headers indicate that these messages were sent from several different email servers scattered across the globe.

The representative messages are as follows:

"Please see the attached Iolta report for 7448-1996.
We received a check request in the amount of $19,521.42 for the above referenced
file. However, the attached report reflects a $0 balance. At your earliest
convenience, please advise how this request is to be funded.
Thanks."

"Please see the attached Iolta report for 2794-3646. We received a check request in the amount of $19,480.81 for the above referenced file. However, the attached report reflects a $0 balance. At your earliest convenience, please advise how this request is to be funded."

These scams are increasing in sophistication, sometimes involving innocent third parties who seek legal services at the request of a scam artist.

The bottom line is this: Never issue a check from a trust account until deposited funds have been collected.

Scam scenarios include:

  • messages alleging that the recipient’s IOLTA account has insufficient funds to pay an outstanding check
  • a request for help in collecting a divorce settlement from an ex-spouse
  • unsolicited email requests for legal help collecting money or judgments, sometimes apparently coming from actual professionals whose identities have been stolen
  • a real estate transaction for an overseas client (whose identity was stolen by a scam artist) involving an innocent third-party realtor
  • impersonation of law firms by scam artists who issue bogus checks and attempt to charge a fee for the checks to clear
  • a bogus check received by a law firm, purportedly for payment regarding representation of an inmate
  • impersonation of a lawyer and law firm by a scammer "collecting debts" under the attorney's name

Again, be vigilant and do not disburse funds from your accounts until underlying funds have cleared your bank (and not simply been made “available”).

Cases involving bank fraud are investigated by the Secret Service. If you are targeted, contact an office in your area. Internet fraud should be reported to the Internet Crime Complaint Center.

If a scam has targeted you or your firm, please leave a comment below describing the scenario or tactics the scammer used.

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Steve Graves - October 8, 2013 1:51 PM

Received numerous calls from around the country from folks who had been contacted by a bogus payday loan collector who identified himself as a representative of my firm and threatened garnishment, arrest, etc. Apparently the scammer just hijacked my contact info and went to work. The calls stopped within a few weeks; he probably just moved on to using somebody else's info.

I've also been targeted frequently by emailers who say they want me to collect accounts or enforcing support and property orders.

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