Lawyers need to be aware of a scam that has bilked banks and Missouri attorneys out of hundreds of thousands of dollars, and is apparently working its way across the United States.

The rip-off works like this:

A lawyer will be contacted, usually via email, by someone claiming to be a prospective client representing a foreign corporation who is seeking to hire a lawyer to assist in collecting outstanding debts accrued in a business transaction with a “debtor” corporation, or to act as a “settlement agent.”

The prospective client will agree to a contingent fee on any amounts recovered by the lawyer. The prospective client will provide the lawyer with the contact information of the “debtor” corporation and a plausible story about the underlying business transaction. In some instances the “client” may state that it will send one final demand letter instructing the “debtor” to remit payment to the attorney.

In fairly short order after being hired, and sometimes before actually sending a demand letter to the “debtor” corporation, the lawyer will be pleased to find the “debtor” responding quickly with a fraudulent-but-convincing-looking check in payment of the debt. The check may even pass initial deposit fraud review at the bank. The law firm is then instructed by the “client” to take its fee out of the check and wire the rest to a foreign bank account.

Invariably though, the fact that the check is fraudulent surfaces, at which time the bank backs the deposit out of the lawyer’s account, and just as invariably, that fact surfaces after the lawyer has transferred the funds to the now long-gone “client.” The client and debtor are later determined to be fictitious.

Some banks that have gotten wrapped up in this scam have indicated that the checks are always in the amount of $197,980.00.

Lawyers should remember to carefully consider all prospective clients and every “too good to be true” opportunity. If you receive a “check” which is about to be run through your firm bank account, please make sure you do not distribute those funds to anyone until sufficient time has passed for your banking institution to do its due diligence in determining whether good funds have actually been transferred to your account from the remitting institution.

In the electronic age we live in today, the ease and speed with which such transfers can be accomplished is a great convenience in bona fide transactions. However, that same convenience is also a great opportunity for an unscrupulous con artist to take advantage of. Don’t be pressured by a client to act immediately in transferring funds until you are certain the check has cleared.