HSI issues warning about financial scam targeting attorneys

HOUSTON - Homeland Security Investigations (HSI) Houston issued a warning Oct. 8 cautioning attorneys to beware of a scam that's on the rise where the fraudster poses as prospective clients requesting assistance with a routine legal matter.

While some of the details may vary, the scammers have typically contacted the attorney through email or online messaging posing as a potential client who needs assistance with a legal matter that can be resolved quickly, such as a debt collection or settlement. The scammers, who also act as the opposing party of the legal matter, send a large check to the attorney by U.S. mail, courier, or FedEx that appears to resolve the legal dispute and may initially appear to clear through the bank.

The scammers then contact the attorney as the client requesting that they quickly wire a portion of the funds to them, a third party, or another account. Immediately after the attorney wires the funds, the scammers remove or transfer the money before the bank realizes the check is fictitious or fraudulent and can reverse the deposit.

"It's extremely difficult to recover the funds once they've been wired to the account controlled by the scammers because they immediately remove or transfer the money to an overseas account where it can't be traced," said HSI Houston Special Agent in Charge Lucia Cabral-DeArmas. "That's why it's so important that we get the word out to make sure the legal profession is aware that this is occurring and knows what steps to take to avoid becoming a victim."

Among the warning signs that attorneys should look for include:

• A client who only contacts the attorney by email or online messaging and is reluctant or unable to meet in person or by video
• The client needs assistance with a legal matter that involves minimal work and can be resolved quickly such as a settlement, debt collection, or some other dispute that involves a payment of some kind
• The client claims to be owed settlement funds from an equipment rental company or another business entity, but the underlying facts are vague or difficult to verify
• A large check arrives unexpectedly by mail, courier, or FedEx that purports to be from a company, insurer, debtor, or settlement counterparty that the attorney has not independently verified
• The opposing party, debtor, or company representative communicates in a manner that appears coordinated with the purported client
• The client pressures the attorney to disburse the funds quickly

Attorneys who suspect they have been contacted by scammers should consider taking the following steps before depositing or disbursing funds:

• Independently verify the identity of the prospective client
• Confirm the legitimacy of the legal matter and all parties involved, including any company or business entity identified in the claim
• Contact the issuing bank directly using a verified phone number, not one provided by the client or listed in suspicious correspondence
• Independently contact any company named in the matter using verified contact information from official sources
• Wait for the bank to confirm that the check has fully cleared and that funds are final before disbursing any money
• Be cautious of urgent requests to wire funds
• Review applicable trust account rules and firm procedures before handling client funds
• Consult with the firm's bank, ethics counsel, or risk management personnel if anything appears suspicious

If you believe you or your firm has received a fraudulent check or wired funds as part of this scheme:

• Contact your financial institution immediately and request a stop payment of the wire transfer
• Report the incident to local law enforcement or HSI by contacting the HSI tipline at (866) 347-2423
• Preserve all communications, emails, envelopes, shipping labels, checks, bank records, wire instructions, and transaction details
• Do not continue communicating with the suspected fraudster except as advised by law enforcement, your financial institution, or counsel

A check that appears to clear is not always valid. Attorneys should not disburse funds from settlement checks or similar payments until the legitimacy of the check, the client, the paying entity, and the underlying matter have been independently verified.

For more news and information on HSI Houston's efforts to stop financial fraud follow us on X at @HSIHouston.