Attention Attorneys: Beware of the Online Fraud

Are you a solo practitioner? Do you have a small or mid size law firm? This article is for you to protect your assets, business, and reputation from scammers that have already defrauded hundreds of lawyers and ruined many practices.

The story line may develop in a several ways, but conceptually it goes as follows. First, you receive an email with a simple question: do you handle breach of contract claims? If you do or if you don’t but are willing to inquire into it, and thus say yes, then you receive a follow up email with a short description of the issue:

We appreciate you giving us a chance to discuss our case. We placed an order for some goods from XXXXXX back in August, 2014 and the terms of the sales contract requires we to pay 50% of the total cost of the ordered goods before delivery and the balance after we have received the same goods. However, after we made the 50% initial deposit, we did not receive any goods as required. The goods ought to be delivered in September of 2014. More time was given to them to deliver the goods, which they were still unable to meet with. Hence, we requested for a refund.

We have made several efforts to have them refund the initial deposit, but to no avail. We have therefore decided to resort to legal means since there is an existing agreement prior to the transaction. Find below details of the supplier for your conflict check.

The email also indicates that the client’s company is overseas, and they might have difficulties coming over because of the distance. You apply your due diligence and surf online seeking whether the foreign company and the local breaching company are real. Both of them exist and usually are serious companies with proficient websites.

So far so good, standard situation between buyer and seller, typical breach of contract – first year of law school. You reply that your fees are contingency based, and you will charge 33% of the recovery. You also say-of course you want to represent a foreign company and may be market yourself in perspective as an international commercial litigation firm-that because the Client suffered losses as a result of the breach, they are entitled to consequential damages as well. Further, you ask them for more documentation to assess the case and the losses.
Same day, the response is in your email box:

Following our request for a refund, they appealed to setup payment in 2 installments within a month interval, of which the first installment was paid on the 20th of November, 2014 in the amount of $497,500.00 after so much reminder and threat of involving a lawyer (payment receipt attached also). The balance was due in December, 2014 and since then, all our efforts to have them remit funds proved abortive. Detailed are all contained in our attached correspondence with XXXXXX.

In summary;
Total amount of goods ordered: $2,540,891.00
Initial deposit made to XXXXXX: (i.e. 50% of the total amount): $1,270,445.00
Amount refunded (on the 20th of November, 2014): $497,500.00
Balance amount due to Kyoei Steel Ltd: $772,945.00

“Oh my God, this is the case I have been waiting for, my prayers have been answered: I will pay off my loans and buy a new car; I am also going to have a vacation in Hawaii and buy a Pomeranian for my daughter.” Not so fast, breath. They asked for a retainer, which you will send them. They also attached all the documentation: contract for sales of goods, payment order, bank remittance application, correspondence with the local company, etc. You check everything carefully: the names, the dates, the goods, the name of the banks: all looks legitimate! OK, you draft a standard retainer probably reading it in its entirety for the first time and fondly attach it to the reply email: inhale, exhale, send. Now, you wait nervously when the wealthy foreign company’s CEO analyzes the retainer and flags down the green light.

You are looking at the famous painting by Salvador Dali “The Persistence of Memory” because time has slowed down drastically, and you have not slept for 3 days thinking about Pomeranian. That sunny and pleasant morning you will never forget, when you receive an email from the foreign CEO where they congratulate you on a new hire and attach the last page of the retainer with the signature. You burst out crying, hug your spouse, and do the victory dance. For the first time in years, you say “hi” to the front desk people, smile, and blow an air kiss to the cleaning lady stunning them for hours. You fly like a butterfly.

Compliment of the day. Having reviewed your retainer agreement, we are unanimously content with the details portrayed therein and have decided to employ the services of your firm to help bring legal action against XXXXXX for breach of the sales contract.

Find the attached signed page of the fee agreement and corresponding mail form XXXXXX. We have informed our debtor XXXXXX of our desire to retain your law firm to take legal action against them. Thus, We received a response from them. Any corresponding mail received from XXXXXX would be forwarded to your attention.

Once in the office, you shoot an email to the local breaching company advising them that you represent the overseas company in the breach of contract claim and all the communication between the companies should cease. The contract also provides for the attorney’s fees to the prevailing party. Now you own them.

You start drafting a complaint and strategize the litigation pattern. But you cannot believe your eyes when you receive an email asking not to file a suit because XXXXXXX company magically decided to comply after a year of negotiations. Hm, that is definitely because you were hired. The breaching company now promise to issue a partial payment within days:

We plead for you to give us a week to remit full payment. A Part payment of $489,650.00 would be remitted between today and Wednesday. We assure you that you would have your funds/Damages caused by our company in less than seven working days to avoid taking the case to court, for this will dent our company reputations.

The day X has come. You are having penne a la vodka with a Greek salad ordered from the local Italian restaurant, when the secretary brings you an envelope with the back address of the local breaching company XXXXXX. The chills go down your body. With the shaking hands you open up the envelope and… you black out, because you received the check for partial payment in the amount of $489,659.00 from XXXXXX company and the letter promising to issue another check with the balance within a week.

You are lying on the floor with a silly smile and glazing at the ceiling. When your staff brings you back to conscious, you start acting swiftly. First, shoot an email to the client; second, deposit the check to the trust account; third, place an order for a three-month Pomeranian, and order a case of Cuban cigars.

You walk in a local bank like a boss. You don’t look at any one. Everyone feels the vibe that you are the one. The branch manager rushes to you, shakes your hand, and asks if he can help. You slowly take the check out of your folder and hand it to the manager. You see how his pupils expand, breath drops, and sweat comes out on his forehead. You know exactly what he thinks. He runs back in his office and from this minute chaos settles in the bank. When the check is deposited, you walk out of the bank like a champion: the manager holds the door for you, and everyone is looking at you because they know: you have succeeded in your life.

Your client is delighted. They thank you and praise you, they want to hug and kiss you, but they cannot because they are overseas. The client asks you to remit the funds (minus the 33% contingency of $163,219.67) within 24 hours as they have responsibilities under other contracts. At this moment, you do not see, hear, speak or understand. You carefully subtract your contingency from the total and promptly wire $326,439.33 to the foreign bank and close the office earlier giving everyone two paid days off. Life is great!

Two days goes by. You drive to your office listening to the latest news that Donald Trump has just filed a law suit against dark forces requesting issuance of the injunction, when your personal banker calls you and tells you that the check you posted a few days ago bounced…

You are parked at the Shell gas station. You are bluntly looking at the passing by cars and people. Seconds turned in minutes, minutes in days, days in eternity. The brutal realization slowly takes over your mind.

Don’t want this to happen to you? Here some tips to determine the scam:

• Call the local allegedly breaching company and inquire into the contract matter.

• Look at the email address form which you receive the emails: make sure it is from the same server the company has its website at and not from @comcast.net; @XXX.edu and like.

• If the company overseas, calculate the time difference and track the time when you receive emails from them: see if the calculations match the normal or maybe extended work-day schedule in the country where the client is from.

• Be aware of the competence of the client in the legal field. The more expertise the client possesses the more suspicion you should have.

• Ask for a Skype call.

• Use common sense and listen to your guts.

Feel free to contact me with any questions regarding this scam at sshamayev@shamyevlaw.com or call 954-361-1222

Article Source: http://EzineArticles.com/expert/Stanislav_Shamayev/2216384