Posted Jan 25, 2012 02:57 pm CST
Losing $285,000 in a scam by a virtual client has proven to be doubly painful for a Florida law firm.
In addition to losing the money, which federal prosecutors are trying to regain through a bank forfeiture action, the KEL Law Firm is also facing a Florida Bar inquiry about its related due-diligence and financial practices, reports the Orlando Sentinel.
Contacted over the phone by a purported client it never met, who gave his name as David Benson and claimed to be a business consultant seeking to sue a former boss, the law firm got in touch with the man “Benson” identified as his former boss, Fred Sanders. He sent the firm a purported settlement check, which KEL deposited into a law firm account.
The firm then wired a settlement check to its seeming client at Shinsei Bank in Japan. The entire amount was withdrawn before KEL realized that the “Sanders” settlement check—as well as a $500 retainer check from “Benson” had bounced, the newspaper recounts.
A law firm spokesman says KEL did nothing wrong but has tried to learn from the experience and is cooperating with investigators.
As detailed in earlier ABAJournal.com posts, a number of law firms have fallen victim to such flim-flams. They are characterized by virtual clients who never actually set foot in a law firm’s offices, quick settlements that materialize soon after a matter is opened and a need for the law firm to send money to a foreign bank account.
Fake cashier’s checks are also a hallmark of such schemes, and may seemingly clear a law firm’s account only to be subsequently identified as fraudulent.
ABAJournal.com: “FBI Warns Law Firms: Beware of E-Mail Clients (and Counterfeit ‘Settlement’ Checks)”
ABAJournal.com: “Relieved Pa. Attorney Says He Dodged a Bullet in Alleged $32M Bad-Check Scam Targeting 80 Law Firms”
ABAJournal.com: “Reports: Fake Law Firm Site Targeting Lawyers in Real Estate Scam Uses Actual Law Firm Info, Photos”
ABAJournal.com: “Prosecutors Seek Forfeiture of $285K Lost When Orlando Law Firm Fell Victim to Scam”