It should be no news to attorneys in general, and to New York attorneys in particular, that a new breed of crooks has been trying to take a foot hold in profiteering on lawyers who place their trust before client verification. Plenty of articles has been written on this subject, plenty probably will be written. For the shear volume of literature on subject one can just type “attorney scams” in the google search engine. The point of this article is not to rewrite what is generally known, but to rather bring up a different angle on these developments.
This law firm has been targeted by similar solicitations. Brief communication with alleged client revealed many red flags:
- Use of a common domain name in the email (e.g. @outlook.com or @outlook.jp)
- Receipt of mail from different overseas locations
- Inconsistent signatures
- Inconsistent responses
- Claims (for breach of contract) addressed to satellite stores, not the headquarters
- Information of evidence of alleged payment not matching the information stated on the alleged wire transfer and other transaction documents
In other words, it is the basic attention to details that should place a reasonably prudent attorney on alert. The unfolding story is usually the same for all. Those attorneys who follow though, would get a check. If crooks are not as sophisticated the check would bounce. If crooks a more sophisticated, the amount would not bounce. For the latter to take place, crooks would need to have someone on the inside (in the bank) to provide routing and account information corresponding to the real account. Eventually, the scheme would be discovered, and the participating attorney would have bad aftertaste at the very least, or money loss at the most.
In New York, the case study took shape in Greenberg, LLP v. HSBC, 17 N.Y.3d 565 (2011). The basic moral of the case, is that even if the check “clears,” the firm is still not protected under “know your client” doctrine. Another moral, is that the banks don’t lose. This firm decided to follow through this experience and, as a result, bring this article to fore, making a very important point that the decision in Greenberg case will likely to lead to bad public policy repercussions for years to come, because it provided a grater shield to the banking sector.
This firm received a check drawn from Chase bank. With some information deleted, the check is reproduced.
Next, was a visit to a local Chase branch with the cashier’s check and a copy of the Greenberg decision. After producing appropriate identification and stating the concern of the fraud to the bank, bank representative was asked to check whether the account information was legitimate. Representative could not verify on her own, and enlisted help of the bank’s fraud department. To the big surprise, even the fraud department was unable to verify the legitimacy of the check (according to the representative). This answer is even more surprising in light of the fact that the check was identified as the “cashier’s check.” (To author’s knowledge, under Chase policy, cashier’s checks are issued to persons who have accounts in good standing with the bank). Question was posed: Why can’t the Chase bank, having its own ABA/routing and account information listed, can at least, if not pinpoint the legitimacy of the source, at least verify the availability of funds? Astonishingly, bank representative advised that one certain way to find out if the check is legitimate would be to deposit it! In the end, Chase branch was unable to either confirm, nor deny the legitimacy of the check or the source of the funds, posted on allegedly their own account!
This seemingly absurd outcome may have been avoided had our state’s judicial system placed a greater responsibility on the banking industry to fight fraud. This should be shared responsibility! Shared by both legal and banking sectors. Greenberg case, however, seems to suggest otherwise.