Lawyers Warned to Be Wary of Client E-Mail Scams

Houston lawyer Richard T. Howell Jr., whose firm was scammed out of $182,500 by a client who contacted and hired him through e-mail, says he is talking publicly about the situation so he can prevent other Texas lawyers from making the same mistakes. "I'm a capital 'D' Dumbass," says Howell, who has practiced law for 23 years and is a partner in Buckley, White, Castaneda & Howell. In October 2008, Howell became the victim of a sophisticated, international version of a classic check-fraud scam, say two Texas consumer law attorneys, as well as Dan Parsons, president of the Better Business Bureau of Greater Houston and South Texas. "What has happened to him is a typical form of check fraud," says Richard Tomlinson, of the Law Office of Richard Tomlinson in Houston. Because he is responsible, Howell says, he did not ask his partners to help him cover the loss, which stemmed from collections work Howell did for a client who said he was a businessman in Japan. To reimburse his firm, Howell says, he had to borrow money on a home equity loan. In December 2008, Howell's firm sued Citibank in state court in Houston, alleging the New York bank was negligent and engaged in negligent misrepresentation when it represented to Howell that a $367,000 check -- that was supposed to be a payment to Howell's client from a customer -- had cleared when, in fact, it was a bogus check. [See the petition.] In an answer filed in December 2008 in Buckley, White, Castaneda & Howell v. Citibank, Citibank denies the allegations and seeks a take-nothing judgment. "We are not liable for those funds," says Citibank's attorney, Yasmin Atasi, a shareholder in Winstead in Houston. She says she cannot comment further because the litigation is pending. [See the answer.] The suit is set for trial in July in 61st District Judge Al Bennett's court in Houston. Howell says that with a 33.3 percent fee, the prospect of collecting $3.6 million in unpaid invoices for the client was a big lure. "To me, it sounded like it could be a potentially lucrative client from Japan," Howell says. But Howell has little hope he will ever recover the money from his former client. Tom Kelley, a spokesman for the Texas office of the attorney general, says the U.S. Secret Service typically handles investigations into crimes like the e-mail scam that Howell describes. Howell says he called the Secret Service and the Houston Police Department, but he did not file complaints with either agency. He says the HPD declined to investigate because it involved multiple jurisdictions, and the Secret Service was not interested in investigating his firm's loss, because the amount was too small. However, Cynthia Marble, assistant special agent in charge of the Houston field office of the Secret Service, says there's no threshold amount that would lead her agency to investigate a loss like Buckley White's. "It's more the dynamics of the case and not so much the amount," she says. Marble says the field office has no complaint on file from Howell's firm so it is not investigating the firm's loss. The investigations are difficult, she says. "Most of these cases are scams that originate overseas, and once it [money] leaves here and goes to some unknown entity overseas, it's difficult to track," she says. Howell says he did file a complaint with the U.S. Postal Service Office of the Inspector General, but the agency hasn't reported any progress in the investigation to him. To somewhat mitigate his embarrassment, Howell says, he has spoken to another Texas lawyer who also was the victim of similar check fraud, to the tune of $300,000. (Howell declines to identify the other lawyer.) That just proves to Howell that e-mail swindlers are preying on lawyers and running a very sophisticated scam. "It was moving fast with me. I thought I was covering any base," Howell says. Parsons, the Better Business Bureau official, says what Howell describes is a version of a check-fraud scheme known as the "Nigerian Scam," which the urban myth-busting Web site snopes.com says often involves a putative wealthy foreigner who needs help from the victim in moving money from one place to another. Snopes.com says the scam lures in victims by presenting an opportunity to get something for nothing. "They have evolved with that to so many new layers, so many new variations," Parsons says. "The fact that money is being shipped around internationally, it has the smell of it [the Nigerian scam]. Good luck at getting it back," Parsons says, noting that the U.S. government isn't much help. Craig Butterworth, a communications specialist for the Va.-based National White Collar Crime Center, says the scam Howell's firm describes in its petition sounds like a variety of a "confidence fraud" in which a scammer gains the confidence of a victim, and then takes the victim's money. "The law firm essentially fell for it -- took the bait, for lack of a better term. They gained their [the firm's] confidence. It's not all that different from the Nigerian Letter Fraud, because the circumstances are 'we did this for you, and you do this for us,'" he says. According to the 2007 Internet Crime Report, the Internet Crime Complaint Center (IC3) received 206,884 complaints of crimes perpetrated over the Internet during 2007, with more than 90,000 of them referred to law enforcement agencies and amounting to nearly $240 million in reported losses. The IC3 received a total of 12,918 complaints in Texas in 2007, according to the most recent statistics from IC3. IC3 is a joint operation between Butterworth's group and the Federal Bureau of Investigation.

"Loved reading this piece by Abhishek?
Join LAWyersClubIndia's network for daily News Updates, Judgment Summaries, Articles, Forum Threads, Online Law Courses, and MUCH MORE!!"

Join our Telegram group

Join our Whatsapp group