Written by Mike Jorgenson | Reviewed by John Clardy
Have you ever come across the Attorney Trust Account scam? It recently targeted me, posing not only a financial risk to our firm but also ethical and professional dilemmas. While many of you may already be familiar with this scam, it’s worth reiterating as it continues to circulate.
Three weeks ago, I received a request from a company based in Idaho. They claimed to require an escrow agent to hold money during their inspection of business machinery in Jacksonville. They approached our firm, potentially because I am licensed as an attorney in both Idaho and Florida. At first glance, everything seemed legitimate, as I verified the authenticity of the business in northern Idaho.
An escrow agent agreement was drafted and signed by the buyer and seller, which I promptly emailed to them. The following Monday, I received a check amounting to $244,000, which I deposited into my attorney trust account. So far, everything seemed normal and above board.
The First Red Flag
However, after making the deposit, two immediate red flags raised my suspicions. The first occurred when I received a fax the next day, Tuesday, requesting that I wire the money to the purchaser. Drawing from my past experience representing banks, I knew there was a chance that the check I deposited might not be honored. As a precautionary measure, I informed the alleged buyer that I had to wait for the funds to clear before releasing any money.
The Second Red Flag
The second red flag came in the form of a text from the potential buyer. The message read, “Kindly tell me the status of this.” It struck me as odd because none of my former colleagues from Idaho had ever used the word “kindly” in that context. Coincidentally, we had a guest speaker with a background in law enforcement giving a presentation at our firm. During the session, I asked him to run a check on the buyer’s number through their databases, only to discover it was a “spoof.” A spoofed number appears to originate from a legitimate area code, such as Idaho, but is actually untraceable and may not even be within the United States.
Upon learning that the number was fraudulent, I immediately contacted the bank where my ITOA account is held. The bank shared my concerns and started questioning the deposit. It turns out that the check I deposited was altered and could not be substantiated. Now, I found myself potentially facing charges for depositing a fraudulent check. Thankfully, I promptly reported the situation to the bank to clarify my non-involvement in any illicit activities, hoping it will suffice.
Regrettably, some of our colleagues have fallen victim to this scam, resulting in the burden of making up for the lost funds and potentially facing consequences from the Bar Association.
Prior to the Two Red Flags
It’s important to note that until the emergence of these two red flags, the scam appeared entirely legitimate.
Remember, staying informed and cautious is vital to protect ourselves and our professional reputations. If you encounter any suspicious activities, it is imperative to conduct thorough due diligence before engaging in any financial transactions.
For more insights and tips on safeguarding against scams, visit Garrity Traina, where we focus on providing reliable legal advice and sharing knowledge to help you navigate the complexities of the legal world.