The ingenuity of criminals is amazing.
Con artists do not advertise
The following is a new scam:
The client has a real estate sale which is being handled by the attorney.
When the property closes, the buyer makes the check to the order of the seller’s attorney. It is deposited into the seller’s lawyer’s client trust account.
When the check clears, the seller’s attorney hands an escrow check to his client for the net sale proceeds. They thank each other, and the client leaves.
The client returns about fifteen minutes later with the check. The client requests that instead of a check the attorney should make a wire transfer which would be easier for the client since the client’s bank is out-of-town. The attorney obliges, and he takes back the check. The attorney then makes the wire transfer to the out-of-town bank through his computer. The transfer occurs instantly upon the attorney clicking “enter”.
Client and attorney bid each other farewell, and the client leaves.
A few days later the attorney learns that the client scanned the check on his smart phone and made a deposit from this check. The check deposit cleared, and the funds were taken from the attorney’s account. The wire transfer immediately cleared, and those funds were gone too. The lawyer paid-out twice. Needless to say, the client has disappeared, and the client’s bank accounts were closed.
Bingo! The attorney was scammed.
We foresee this fraud increasing due to the greater use of making deposits from scans either from smart phones or office scanners.
The foregoing confidence game can be varied, such as having the client institute a collection suit.
One way to combat this fraud is to refuse to take-back a check once it is tendered to the client. The alternative is to take-back the check, but wait 7 days until either issuing a new check or making a wire transfer. This will allow the attorney to issue a stop-payment order and confirm with his bank that the check has not been presented.
Mark E. Seitelman, 3/15/12, www.seitelman.com.