FBI Warning: Lawyers Are Stupid

Two law firms in Honolulu lost a combined $500,000 in an obvious scam that is extremely easy to protect against.  Here’s how the scam works:

Scammer sends a cashier’s check to a firm in an amount that far exceeds the firm’s retainer rate.  The firm then contacts the purported client to say they have over paid, and the client asks the firm to wire a refund.  The firm obliges and then finds out that the cashier’s check is a fake.  D’oh!

So here’s how you defeat this scam: deposit the check before wiring a refund.  You then discover the check is fake and never wire the money.  Easy peasy.

What’s more surprising than the fact that two law firms fell for this is that it appears the scammers only targeted 6 firms.  A full third of the law firms targeted fell for the scam.

[Note: There is a pdf of an FBI warning that has been released, but it is not loading at the moment.  When it becomes available I will update this post with the names of the firms if the FBI report lists them.]

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2 Responses to “FBI Warning: Lawyers Are Stupid”

  1. Mark Bennett Says:

    So imagine Bizarro World, in which BL1Y gets money to represent people.

    Someone sends a cashier’s check to BL1Y for BL1Y to represent Mr. X. BL1Y’s fee is $10,000 and the cashier’s check is for $20,000. Mr. X asks BL1Y to wire the balance to him.

    BL1Y, thinking himself smarter than the average lawyer, deposits the cashier’s check and waits for the funds to become available before wiring the money to Mr. X.

    Guess who just lost 10 grand.

    The bank, you see, will make the funds available on an instrument appearing to be a cashier’s check when you deposit it. So you think it is good and wire the 10k to the “client.” Weeks later the forged cashier’s check works its way through the system, and you are responsible for it. So your solution is no solution at all.

    HTH.

  2. bl1y Says:

    Mark, I should have been more clear. Deposit the check and wait for everything to go through before wiring the money. This is exactly the advice the FBI suggested.

    Checks get processed pretty quickly; I remember a law being passed a few years ago that greatly speeds up the process. We’re not living in the days of Frank Abignale.

    The other option is to offer to void the check, send it back, and have the client send a new check. Odds are they’ll just give up.

    In any event, always follow the rule that if someone you don’t know asks you to send them money, don’t do it.

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