80 Lawyers Caught in Collection Scam

♬ Red alert! Red alert!
It’s a catastrophe..♬

Lyrics and music by Buxton Ratcliffe, recorded by Basement Jaxx.

It reads like a bad lawyer joke. How many lawyers does it take to get caught in a fraud scam? Apparently the number is 80. The ABA Journal reported on Nov. 22, 2010 that Federal prosecutors have indicted 6 people in a $32 Million dollar internet collection scam that caught 80 lawyers in Pennsylvania, Massachusetts, Alabama and Georgia.

The scam operated in Canada, Nigeria, the UK, South Korea, Japan, China, Singapore as well as the USA.

The modus operandi is as follows:

The scam worked this way: An e-mail would seek a lawyer’s help collecting a debt, divorce settlement or other money. Then the lawyer would be contacted by a purported representative for the person or company owing the money who would offer to pay the debt. When the lawyer received the check, he or she would deposit it, and then would wire the funds to an Asian bank before discovering the check was fraudulent.

However, what is also interesting are the comments that are being posted to the ABA Journal blog. To say that they are not complementary is putting it mildly. There is some doubt on the sophistication of the scam. But one comment (by “HokeySon”) apparently a lawyer who has received a debt collection email, is as follows:

But one of them was indeed very sophisticated in that it had all indications of legitimacy—the scamsters used the persona of a real lawyer and two real companies, then set up phony websites and contact information for each of them. It looked legit—really—but I searched for and found the correct contact information for the lawyer whose persona was hijacked and called him. He did not know anything about it and was shocked that he had been used to make it all look legit.

I know of one example of scamsters hijacking the internet ID of a Victoria BC firm; the scamsters went to the trouble of setting up a fake website that appeared to look legitimate and used actual lawyer names as well as the firm name (the fake web site address was slightly different than the real firm’s web site and the telephone and contact info in the fake web site were different from the real web site). This was uncovered when one of the potential ‘marks’ in the scam did an Internet search, found the real law firm’s web site and called the lawyer whose identity had been faked. When the ‘mark’ called and spoke to the real lawyer, the fraud was uncovered.

Accordingly, if there is a lesson to be pulled from this awful situation, it is to do independent verification when a new client appears seeking services. Conduct due diligence by undertaking such steps as performing a Google search on the companies or persons involved and calling the numbers on the Google search (rather than those on the potentially fraudulent communication) to verify that you are dealing with a legitimate client rather than a potential fraudster. There may be other steps that may be taken in addition to these.

A proactive method to be warned if any lawyer or law firm is having their ID hijacked would be to set up a “Google alert” for all of your lawyers and firm – that way you get advance notice if any of the lawyers or the firm name appears somewhere on the web. From there you can determine if the reference is legitimate or whether it raises a ‘Red Alert.” (for more info on Google Alerts click here).

(Hat tip to my colleague Reid Trautz for pointing me to this story).