State Bar of Texas Blog
New sophisticated scam targets lawyers
A high-level scam involving collection with a fraudulent certified check has affected at least three Texas attorneys in recent years, and one victim is warning that more lawyers might be targeted.
“I was contacted by email by an out-of-state company (OSC), acting through its alleged president, to collect an alleged past-due account from a local business (LB) in Amarillo that the out-of-state company claimed owed it about $200,000,” said the victim. “The OSC supposedly desperately needed the money to pay on an account it owed someone else on the same job. They wanted to ‘soft-pedal’ the claim, though, as they had a standing business relationship with LB that they wanted to try to preserve if possible.”
The victim said that all correspondence with the out-of-state company seemed legitimate. The company first contacted the victim by email, prompting the victim to research the business online. The victim found a number of Internet listings and information, including the company’s employee retirement plan, that supported its validity. The victim even spoke with the alleged company president about the matter on the phone.
Shortly after the victim obtained a signed engagement letter from the out-of-state company, the company reported that the local business had agreed to pay $98,750 on the account to forestall legal action. The out-of-state company explained that the president of the local business had recently collected on a big job in Canada and would send money via certified check to pay on the account to the out-of-state company, payable to the victim’s trust account, so it would then be wired to the company.
The victim received a $98,750 check, drawn of CitiBank, via airmail from Canada with the official local business letterhead attributed to the business’s manager (a name that was verified online). The victim waited four days until the bank showed that funds were available, then wired money to the account of a business in Florida, as the out-of-state company had instructed. Two weeks later, the victim’s bank called to say that CitiBank, on which the check was drawn, could not find the corresponding account number and expected the victim to return the $98,750.
“I have now found out the alleged ‘manager’ of [the local business] here in Amarillo, who supposedly signed the letter and check, has not been at his location for several years and [the out-of-state company] … apparently no longer exists, even though I searched quite a bit on information on the Internet about it before I took on the matter,” the victim said.
Furthermore, the local business had never heard of the out-of-state company and did not owe it any money.
Fortunately for the victim, the funds were restored five weeks after the check was returned because the company in Florida did not draw the funds out of the account.
Unfortunately, others have not been so lucky. The victim explained that another Amarillo attorney lost about $200,000 to a similar scam, and a Houston lawyer lost several hundred thousand dollars a few years ago.
“Watch out!” the victim warned in his statement on the incident. “These scammers were extremely savvy and had all the right information to make the whole thing look legitimate.”