Law firm loses bid to hold banks accountable for its $287K loss in cashier's check fraud
A New York lawyer who was defrauded of $287,450 in a cashier’s check scam by a purported client has lost an initial effort to recover from the bank that deposited the check in his trust account, as well as the bank that purportedly issued the check.
Apparently victimized in what a federal judge described as “an unfortunately commonplace scheme targeting attorneys,” immigration and real estate lawyer Oliver Zhou said he got a call from a woman in Japan who asked him to represent her in a post-divorce matter concerning her ex-husband. Zhou, who has a number of clients from Japan, agreed to do so and soon received a cashier’s check for nearly $300,000 to cover the cost of emergency surgery for the couple’s child, the New York Law Journal (sub. req.) reports.
Told by a teller that the cashier’s check was, as he understood it, good and provided immediate availability to the funds, Zhou deposited it to his Citibank trust account, took a $10,000 retainer for himself and wired $287,450 to the client. However, the cashier’s check was in fact a fake, and the bank soon sought reimbursement from the attorney. At that point, it was too late to reverse the wire transfer.
Initially filed in state court in New York and removed by the defense to federal court, the suit sought to recover Zhou’s loss from Citibank and PNC Bank. It contended that the banks should have detected the fraud, which may have used a missing stolen PNC Bank blank check form, before Zhou suffered a loss.
However, U.S. District Judge Edgardo Ramos last week dismissed the case against both banks. He found no duty of ordinary care supported the suit’s contention that the banks had failed to timely detect fraudulent routing numbers or perform other investigations concerning the counterfeit check.
The judge said the Law Offices of Oliver Zhou could replead two of the nine counts it brought against Citibank, which were based on a breach of contract claim (unsupported, at this point, by an actual contract) and a fraudulent concealment claim. It alleged that the bank “had knowledge of multiple instances of forged or counterfeit instruments, yet intentionally concealed said information necessary to protect the public in order to maintain a positive corporate image and for other purposes.”
Reuters also has a story about the Manhattan case.
