There is an internet / email scam that has been preying on attorneys for some time now that usually involves the following fact pattern or something very similar:
- Attorney (usually a solo practitioner or small firm) gets an unsolicited email from an alleged creditor (usually a foreign company) claiming that the creditor is owed a substantial amount of money from a debtor located in that attorney's home state. The creditor states that it is interested in retaining the attorney's services for a very large contingent fee.
- After a response from the attorney, the creditor then states that the debtor is very close to settlement, but that the creditor still would like the attorney to stay involved and essentially oversee the settlement. To make things appear legit, the creditor may ask for an engagement agreement from the attorney.
- As soon as the engagement happens, the creditor sends another email (note the trend of no phone calls at all) saying that, low and behold, the debtor has given in and will be sending a check to the attorney ASAP for some or all of the debt. The creditor also will provide wiring instructions to a foreign bank and instruct the attorney to keep his substantial fee (for doing nothing - wow- quick, easy money).
- A check arrives, usually a bank draft/cashiers check (or at least it appears to be).
- Attorney deposits check into trust account, initiates wire to foreign bank, and withdraws contingent fee. Happy days - right?
- Wrong. Turns out the original check was either bad or counterfeit, there were never any good funds in the trust account, the funds that were wired overseas are long gone, and the attorney is completely screwed for the amount of the funds that were wired out (of course the easy money fee is gone too).
I get these all the time, and occasionally respond for shits and giggles. Recently, I received a fairly sophisticated one where the creditor claimed to be a business in Colorado that was owed a debt from a business located just a few miles from me. This guy used the name of an actual Colorado business, the name of an actual Indiana business as the debtor, actual names of the owners of each business, and even provided a Colorado phone number to call. I did some research on both businesses - and noticed that the phone number and email address the scammer gave me was different from that which was listed on the creditor's website. So I called the number on the website - and of course the creditor business guy had no clue what I was talking about.
So I decided to mess with the scammer just to see what would happen.
Here is some of the original email chain (names of course have been changed to protect the innocent):
The original contact email and ensuing emails:
Your Name: Andrew ScammerYour Email: andrewScammer4u@gscammerbla.comSubject: Collection MatterMessage: Dear Counsel,On behalf of Scammer Machinery Inc., we request your legal servicesand possible representation on a Debt Recovery matterinvolving Scammer Machinery Inc and a client in your jurisdiction.Our legal representative won't be able to take on thismatter since it is out of their jurisdiction.Do let us know if you are currently accepting new clients.We look forward to a prompt response from you.Thank you very much.Sincerely,Andrew ScammerScammer Machinery Inc.--------------------------Mr. Scammer:Thank you for the email. Do you have any availability to chat about this sometime on Tuesday - perhaps in the morning?Best Regards,Brian Powers--------------------------Dear Brian Powers,Thank you for your prompt response to my email.However,this is an official request for your services on behalf of my firm towards debt recovery.I will be calling your office to further discuss this matter with you or you can reach me via the telephone number below at your earliest convenience.We are currently facing severe pressure from our supplier to pay up the balance funds that we owe to them.This debt is as a result of an outstanding payment for goods supplied to Debtor Machinery LLC ,valued at $485,760.00. (Four Hundred and Eighty Five Thousand,Seven Hundred Sixty Dollars).The said outstanding payment was for goods delivered in good condition. Due date for payment was set for the 27th of October,2009 as stipulated in our supplier's invoice. After this agreement was breached,we had a lengthy negotiation,and consequently agreed to extend payment to a deadline of 27th of January, 2010.Quite unfortunately, the extended deadline was not also honoured.We will like to draw your attention to the relationship with our customer which has been cordial and we have had a successful business relationship over the past few years,and it is in our position to maintain this relationship after collection of the outstanding sum owed to us.If your firm is retained, our expectation of your services for now will be within the scenario of a phone call or demand letter to our customer. This approach will trigger the much needed response from our customer towards payment,Otherwise,litigation will be the next option.We intend to give out a certain percentage of the payment if a lawsuit is not filed before we reach a settlement with our debtor.To be precise we are ready to give out 10% of any amount collected before a lawsuit is filed, this will compensate for your retainer amount and all other legal expenses.We do hope our customer responds to this informal approach of resolution,otherwise,we will pay up your retainer amount and all other charges before we commence the litigation process.I will also provide you with all relevant documents as soon as we are ready to go into the litigation process.If this is acceptable to you and its a case that you can handle,please do let me know as soon as possible and also provide me with an engagement letter.We look forward to your prompt response.Thank youSincerely,Andrew ScammerScammer Machinery Inc.
Andrew:I do not need a formal engagement letter, just please reply that you agree that any debt collected on your behalf will be paid directly into my attorney trust account, from which I can deduct a 10% fee and then wire the balance directly to your account. The amount of my fee would be 10% of anything collected on your behalf.Also, I would need to see a copy of any relevant invoices and /or contracts with the debtor. Please scan those in and send them to me via email.Best Regards,Brian Powers---------------------------------------Dear Brian Powers,Thank you for your email,however my firm will prefer a formal engagement letter stating the agreed terms for documentation purposes.Please do email it to me for my review and signature.I look forward to hearing from me.RegardsAndrew Scammer-----------------------------------------Mr. Scammer:I appreciate the fact that you require proper documentation prior to the begin this process, therefore I look forward to receiving your signature to the attached engagement letter. Once we are engaged, please also provide any documentation regarding the outstanding debt.Best Regards,Brian V Powers, Esq
Dear Brian V. Powers,Attached is the signed copy of the fee agreement.Please,do acknowledge receipt.I am looking for a way forward in this matter and I am satisfied with the details portrayed in the agreement.I will be sending a hard copy of the documents in the mail to your office.We have been communicating with our debtor Mr. Larry Debtor of Debtor Machinery LLC,over the past few days regarding our intention to take legal action against them,we have informed them that your firm will be handling this case from henceforth and that any further communication should be directed to your office.However,they have stated clearly that they want an out of court settlement,thereby pleading for more time to set up the payment.As I have earlier anticipated,We prefer to reach an informal resolution and still maintain a good relationship with our client.This morning, I received a call from Mr. Larry Debtor,that he will be making a partial payment of the money owed to us to avoid any legal action against them.We strongly believe that they have resolved in making this payment due to our recent legal stance.They have promised that they will be sending the partial payment directly to your office on or before 30th of July, 2010 and the balance will be sent out on the 6th of August, 2010 to avoid any lawsuit.I suggest we give them the requested time to come up with the payment,and if they should fail to make good their promise this time,then you can send out the demand letter and consequently litigation.Please,be rest assured that if your office should receive this payment as promised by our debtor,your 10% fee still stands according to our agreement.I await your acknowledgment of this email and also give me a call if you have any question.Thank you for your services.Sincerely,Andrew Scammer
Wow - this is going to be some easy money - I'll believe it when the check shows up...
Dear Brian Powers, Esq.
I have been reliably informed by my debtor that payment has been delivered to your office.Please confirm this payment and as well deposit it in your firm's trust account pending further instructions.
I look forward to your timely response.
Huh - ok - I'll still believe it when the check shows up...then POOF:
Wait a minute, why is this debtor with an address right across town from me sending me Air Mail from Canada? Wierd.
Wait a minute - looks like someone is not as sneaky as they thought. The bottom of the letterhead has a Canadian address. Or maybe the scheme here was to say they have a Canadian division that was responsible for sending the check - who knows.
Eager to make some quick money, I got greedy and tried to change my deal:
Sorry to hear about your dilemma with the supplier in Duck Dong. I will deposit the check into my trust account and await further instructions. Although, Hong Kong is really far and across an ocean? Are you certain a wire transfer would make it that far? We can try, and if the wire can't go that far, I could always fed ex a check. I would also be happy to review the contract with your supplier to see if you have any cause of action, butt that is unlikely.
Finally, please be advised that I must adjust my fee to 33% for the additional admin work of negotiating a settlement with your supplier and for initiating an international wire(that can't be easy to do...just so far).
Brian V Powers, Esq
To that, I got nothing but crickets.
Needless to say, I did not deposit the check, nor did I ever have any intention to do so. I made some law enforcement contacts to no avail. It is crazy to me that (a) people are falling for this, (b) the banking system is set up in a way that would allow this scam to happen, and (c) that there is little or no recourse for an attorney when it does happen.
So, the best way to avoid this whole mess is to spot the scammer at the get go. Some tips:
- Be wary of ANY potential clients that contact you via email to collect a debt and immediately offer up a substantial contingent fee.
- Be especially wary of such a potential client if it is an international client (or claims to be).
- Do some due diligence on the potential client before you email them back. Google them. Look for websites, yellow page listings, LinkedIN entries...etc. But don't trust just what you find easily on the Internet.
- If there is a website for the potential client, run a Whois search to see how long the domain name has been registered - and to whom it is registered.
- Try to find contact information for the potential client that is independent of what you received in the email - then use that information to contact the potential client.
- ALWAYS call the potential client - don't just rely on email.
- If you receive mail from the potential client, pay attention to the postage markings - if mail is being sent from somewhere other than the address the potential client is claiming (especially a foreign address) - stay away!
- Never, ever wire funds from your tryst account until all funds have completely cleared from any underlying deposit.